Kosmos Beats Retreat

…As it now seeks dialogue with GNPC

…But IFC Succumbs to Lobbyists

By J. Ato Kobbie, Managing Editor

Kosmos Energy, one of the Jubilee Field partners in Ghana, says it now wants to sit down privately with the Ghana National Petroleum Corporation (GNPC) to try and resolve its dispute with the national oil company.

Speaking in an interview with The Business Analyst over the weekend, Brian Maxted, Chief Operating Officer of Kosmos Energy said, “We do not think we have breached any agreement. We’ll not debate the right or wrong of the situation; what we want is to sit down privately with GNPC and try to resolve the matter”

Asked if it wanted the dispute with GNPC resolved without reference to the Petroleum Agreement, he said: “That is our position. They take a different position. I’m not going to argue with that and we understand that; we respect that and hope they’ll respect our position.”

Kosmos’ indication of its willingness to sit with GNPC now to resolve the dispute between them over breaches of data rights is in sharp contrast with earlier reports that the former had turned deaf ears to calls for them to come to table to resolve what the latter called “irregularities” occasioned by the manner Kosmos handled its property.

Maxted’s comments, follows press release issued last week by the company in which it talked about Kosmos being “committed to seeking an amicable and mutually acceptable resolution which offers a win-win outcome that is in the best interests of all parties and the country as a whole”.

Kosmos Energy, which is also the Operator of West Cape Three Points oil block in Ghana, in the said release lauded its achievements in Ghana, emphasizing its involvement in the commercial discovery and development of oil and gas resources in the country.

According to Kosmos, it had since its work in Ghana in 2004, “consistently complied with all of the Petroleum Agreements and all of the nation’s laws.”

It said it found it disturbing to see recent press reports that Kosmos has somehow breached Ghanaian law and its contractual obligations through the disclosure of data and information to third parties, reports that are totally unsubstantiated and without any basis in actual fact.

The statement emphasized that Kosmos “was in full compliance with all of its legal and contractual obligations.”

Kosmos said together with other Jubilee partners, they had at all times used standard international petroleum industry practice and documents to protect data confidentiality.
The company said it had tried on many occasions over the last year or more to resolve concerns over data with GNPC, but without progress.

“But any distorted reports that suggest we have done less than our word simply cannot withstand the facts that are plain to see,” the release read.

According to Kosmos, it will continue to abide by its legal and contractual obligations and hoped that all parties to the process will respect due process and fair treatment under the law.
Breaches
GNPC has accused Kosmos Energy of breaching the petroleum agreement, and petroleum laws relating to the handling of its data, through exposure to over twenty investors without the necessary confidentiality provisions as required under the agreement and without the prior written consent of the Minister of Energy.

One of the oil companies that benefitted from the data disclosure by Kosmos is ExxonMobil, and the two have since signed a sale and purchase agreement (SPA). GNPC has argued further that since the disclosure of data to ExxonMobil by Kosmos Energy was towards the sale of the latter’s stake to the former it has flouted both the petroleum exploration and production law and the petroleum agreement.

Both require that in the event that a contractor wanted to show data to a potential investor it should seek the prior written consent of the Minister for Energy and also GNPC, which is the owner of the data.

The SPA, however, needs the consent of GNPC and the Minister of Energy. Whilst GNPC swiftly denied consent to the deal, while the Minister of Energy is yet to take a decision and Government has set up a committee to assess the situation.

Lobbyists
In a related development, the machinations of a U.S. lobbyist group, KRL International led by Riva Levinson, hired by Kosmos Energy to lobby the International Finance Corporation (IFC), the private sector arm of the World Bank Group, U.S. Congress, USAID etc, appear to have made some inroads as it has managed to get the IFC into making moves that threaten stalling the first oil production from the Jubilee Field in the last quarter of this year.

In a promotional video that is in possession of The Business Analyst, Riva Levinson states categorically that her role as far as the Kosmos Energy investments in Ghana were concerned was to lobby the IFC, the White House, Congress USAID etc. to mount pressure on the government of Ghana to enable her client have its way.
She makes the false claim that the government of Ghana had varied the terms of the original agreement it had with her client, Kosmos and putting impediments in its bid to recoup its investment and make some returns on it.
She then mentions that her role in the Ghanaian situation could be classified as ‘Trouble Maker.”
A web search on Levinson also reveals her as a lobbyist for the Jonas Savimbi –led UNITA Movement that waged war on the Angolan MPLA government for about 20 years. She is cited also as being among the 10 leading beneficiaries of the war against Iraq, where she was reputed to have led the lobbying for war against Iraq.
The IFC, which contributed $50million to the construction of FPSO Kwame Nkrumah, is said to be raising eyebrows over an advisory service contract between Strategic Oil and Gas, a company in which former Chief Executive Officer (CEO) of GNPC, Tsatsu Tsikata has an interest and MODEC, the company that won the bid and constructed the vessel.

The contract for the construction of the FPSO was awarded to MODEC in July 2008, at a time when the former GNPC boss had been jailed under the previous regime.

Flashback: FPSO Kwame Nkrumah
We reproduce below excerpts of The Business Analyst our 11th Edition publication dated June 21 to 27, 2010 on the FPSO acquisition.

‘The FPSO was constructed by MODEC, which won the contract to supply the vessel through a competitive bidding process.
COST
Responding to questions from The Business Analyst last Monday, June 21, 2010 on the reasonableness of the cost of the FPSO, which has been put around $840million, Mr. Kwame Ntow Amoah, Chief Economic Evaluation and Monitoring Officer of the GNPC revealed that the FPSO procurement was done through an open tender and the cheapest quotation came from MODEC.
Mr. Amoah explained that the FPSO price of $840million was therefore a competitive price.

He pointed out that MODEC won also because it had a tanker that it was prepared to convert to the FPSO to meet the fast-track approach to getting the vessel in place as the partners required.

According to Mr. Amoah, MODEC financed the ongoing construction of the vessel together with related procurement.

He explained further that because of the varied participation in the project, the other partners also kept watch, ensuring in the end that the quoted cost of the FPSO vessel was adhered to. According to him industry sources indicate that the cost of FPSO Kwame Nkrumah was one of the cheapest of such facilities to be constructed in the industry.
“A lot of savings was made from the strategy of converting a tanker into the FPSO under the fast-track approach, and also within a record time of one-and-a-half years,” the GNPC official stressed.

Mr. Amoah disclosed that the partners opted for the MODEC bid because the cost of constructing a new FPSO or purchasing one ranged between $1.5 Billion to $2 billion and construction could take between two and three years.

FPSO Kwame Nkrumah is on a charter hire to the Jubilee Partners and is expected to produce first oil from the Jubilee Field in November this year, after successful test runs, under a first phase of operations which would initially be flowing 120,000 barrels of crude oil per day. This is expected to double during the second phase, scheduled to commence in 2013.

Oil reserves in the Jubilee Field are estimated to be between 800 million and 1.5billion barrels of crude oil of the finest grade.

Tullow Oil is the operator of the Jubilee Field with 34.7046% stake, with Kosmos Energy (23.4913%), Anadarko Petroleum (23.4913%); Sabre Oil and Gas( 2.8127%), EO Group (1.7500%) and GNPC (13.7500%) as partners.