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Ghana discovery sparks fight over oil
Question of the Day
Kosmos officials said they had been invited to a meeting but had not been provided with a date. Kosmos CEO Brian Maxted said he was hopeful the situation can be resolved and achieve a “win-win for all.”
“We have always viewed the possibilities of the project as a success story for everyone, especially the Ghanaian people,” he said.
But Jennifer Cooke, director of the Africa Program at the Center for Strategic and International Studies, a bipartisan international policy organization, said she guessed that “oil deals will become politicized.”
She said Ghana is considered “a strong performer” because it has had five successful elections and most recently had transfer of power from the ruling party to the opposition, but added that the United States “should not be blind to the problems that still exist” in Ghana.
“Many Ghanaians are concerned about continued corruption,” she said. “We need to look a little closer and not take continued success for granted. Ghana has to be careful that the vast influx of oil revenue does not reverse a lot of the progress on governance and democracy.”
She pointed out that “very few oil-producing countries in Africa have really solid democracies.”
Both the Obama and Bush administrations have praised Ghana for its successful transition to democracy. The country is viewed as a stable nation in a volatile subregion.
“The people of Ghana have worked hard to put democracy on a firmer footing, with peaceful transfers of power even in the wake of closely contested elections,” President Obama told the Ghanaian Parliament in July. He noted that Ghana had shown that “development depends upon good governance,” which he said had been missing in too many places in Africa.
Even as Mr. Obama told the members of Parliament that “oil brings great opportunities,” the newly elected Ghanaian government was quietly beginning to challenge Kosmos for control of the offshore oil sites - which promise to bring billions of dollars in revenue to the country.
Kosmos Energy, a Dallas firm founded in 2003, sent its oil exploration team to Ghana in 2004 to search the deep waters off the shore of Western Africa. The team had made major oil discoveries in Equatorial Guinea a few years earlier with a different company.
Backed by two of the world’s largest private equity firms, Blackstone Group and Warburg Pincus, Kosmos signed a petroleum agreement with the Ghanaian government, then headed by President John Kufuor. The deal opened up 483,600 acres for exploration and possible production. An additional 273,298 acres was added in late 2006.
Some critics have said the deal was too favorable to Kosmos, shortchanging Ghana on potential revenue. But others in the oil industry defend the deal, saying Kosmos took a huge and expensive risk on a deepwater project that had no guarantee of success.
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