With Ed Crooks
Ghana has long seen itself as a torchbearer for African aspirations, as it has been relatively stable and democratic in recent decades compared to some of its fellow West African states.
Will the country’s recently-discovered oil wealth change that?
Yet Ghana’s newfound hydrocarbon riches inevitably prompt comparisons with Nigeria, another Anglophone country just a few hours drive away by bush taxi, and US President Barack Obama on his first state visit to Africa at the weekend will warn Ghana against falling prey to the curse plaguing almost every oil-rich country.
A senior White House official said in a briefing ahead of the trip: “New oil wealth is slated to come online within the next couple years, which always creates an interesting governance challenge.”
The warning comes as Ghana has expressed concern that its interests are not being sufficiently respected in the sale of one of its most important oil assets.
Kosmos, the small Texas-based exploration group – which owns a 30 per cent stake in Jubilee and is backed by Warburg Pincus and Blackstone, the two US private equity groups – is in the process of selling itself in a deal analysts have valued between $3bn and $6bn.
It is a danger of which Joe Oteng-Adjei, Ghana’s energy minister, is well aware. Mr Oteng-Adjei, Ghana’s told the Financial Times he wanted to find a “win-win” solution to reward investors in Kosmos while maximising the potential of Ghana’s resources.
“We are committed to doing the right thing for investors and for the country…Our concern is that we bring in a third party to deliver the synergies that we expect.”
Ghana is widely thought to prefer that Kosmos is bought by a western oil company with the most advanced management and technology, rather than a Chinese oil company that has less of a proven track record, but perhaps would be willing to pay more to secure a geographically well-positioned new source of oil supply.
To help it achieve its aims, Ghana National Petroleum Company, the state oil group, last week hired Morgan Stanley, the investment bank. The country has also been advised by Norway, the country best known for having avoided the oil curse.
Ghanaian officials have begun to grumble about having been left out of the negotiations surrounding the Kosmos sale. At the same time the deadline by which bids are due has again slipped, this time by almost three weeks, to July 17.
The industry has known Kosmos was up for sale since the end of last year, but Ghana’s government believes it was not given enough information about what was going on.
Mr Oteng-Adjei said the time-frame for the sale was too short for Ghana, whose new government was elected in February.
“They set all these timetables without reference to the government. We do not even formally have a road-map that has been given to us,” he said.
He added that he did not want to try to block the sale process and that he wanted to protect Ghana’s interests “without cheating or deceiving anyone who has benefited the country by investing in our oil industry.”
Yesterday Mr Oteng-Adjei’s deputy, Kwabena Donkor, suggested GNPC itself, which owns a 10 per cent stake in the Jubilee field, may be interested in the Kosmos’ Jubilee stake
Ghana in the past months has been criticised for slowing the development of its resources by delaying necessary approvals, a charge the energy minister rejects, noting that he was close to approving the plan of development for the Jubilee field. Reaching this point has been a complex process, because the licence terms on the two blocks of the field differ widely and had to be unified.
This is especially important to Tullow, the UK-listed company, which operates the Jubilee field and whose shares have doubled since the end of last year (see chart) as its geologists discovered more and more evidence that the company had found one of Africa’s most exciting new oil fields.
In fact it, other than ordinary Ghanaians, it may well be this British company that has the most riding on whether Ghana heeds or dismisses President Obama’s warning on good governance and avoiding the oil curse that has turned Nigeria into one of the most miserable countries.