The most vexing matter lately in Ghana's nascent oil industry is which of the two frontrunners snaps up Kosmos Energy's stakes in Ghana's offshore oil, which has a true worth of over US$5billion. Is it the Americans through ExxonMobil, or the Chinese through the China National Offshore Oil Company (CNOOC)? Never mind the posturing of the Ghana National Oil Corporation (GNPC).

In spite of its important advantage of sovereignty, GNPC lacks the financial wherewithal and could only ride on the back of any of the two. This means whoever makes GNPC comfortable bags the booty.

That immediately throws in a big question. Is GNPC well positioned to manage the intrigue and tensions that come with such situations? This single question in turn becomes the implement that opens up a can of many more intriguing questions. Where does GNPC truly derive its authority; is it directly from the Presidency at the Castle or through the Energy Minister, Dr. Oteng Adjei? Or is it from any of Oteng Adjei's two deputies, for that matter? And even at GNPC itself, who calls the shots?

Simply put, who controls GNPC? This is very important because it throws some light on how Ghana's national oil company - which ultimately must grow bigger and truly control the exploitation of our oil and gas assets - would behave in the current matter as well as how it would manage the resources generally for the long-term; whether to the benefit of Ghanaians or wastefully.

Who controls GNPC is not immediately clear; however, speculation is rife that individuals and groups, both within and outside government, are in a locked horns situation for the control of the country's most prized agency.

Recent developments strongly suggest this is largely true.

Murky waters over Jubilee

Early in the year, discussions in the media about the development of the Jubilee field - the world's biggest find in 2007 and West Africa's record find over the past decade which is estimated to hold over 1.8 billion barrels of oil and 800 billion cubic feet of gas mainly focused on whether the small-sized partners operating the field would stay the course of developing the field for early production of oil and not sell out to bigger companies, who may not necessarily be interested in drawing up oil from the field but only to shore up their known reserves.

By end of March, all three major field development partners (Kosmos Energy, Tullow Oil, and Anadarko Petroleum, listed here in order of size from smallest) were mentioned as scheming to offload their stakes in Jubilee because they lacked funding for fast-track field development estimated at anywhere between US$3 billion and US$5 billion.

Of course, all three denied they had any such intentions. Finally, only Kosmos was targeted in the crosshair lines of the media, GNPC and government.

While the matter played out in the media, government - neither through the Ministry of Energy or. GNPC - ever indicated its intentions until it was revealed in the media that it was actually pressuring Kosmos to offload to China's CNOOC.

While Kosmos denied all along that it had any intention of quitting Jubilee's development anytime soon indeed, it dropped hints of being close to securing over US$750 million in funding for its operations to support its assertions - it was obvious by end of May that it was seeking advice from two major banks about offloading its stakes in Ghana's offshore oil.

Government's reaction to the media revelation of its romance with CNOOC was one of silence. When the pressure piled up, its response was that it actually was GNPC that was eyeing Kosmos' stakes.

The hitch was GNPC was worse off than even Kosmos, both in terms of funding and technology. Ultimately, government hinted it was seeking collaboration with CNNOC in the country's oil upstream.

Then Kosmos came up to say it had reached an agreement with US super major ExxonMobil to gobble up its 23.491 percent interest in the Jubilee unit as well as other stakes in the West Cape Three Points and Deepwater Tano blocks.

GNPC says the Kosmos/ExxonMobil transaction was illegal because it was kept in the dark. Kosmos says it informed GNPC long ago but the national oil company was not forthcoming with a counter bid, probably because it was unable to sort itself out with CNOOC.

Now the Kosmos camp drops hints that ExxonMobil - realising it is dealing with a sovereign – is willing to give GNPC an enhanced role in the Jubilee beyond its current 13.750 per cent stake in Jubilee(initially it was 10 per cent carried interest), after having exercised its applicable back-in rights for field development.
So the game goes on. But all the joking aside, there is more to this matter than meets the eye.

The great untold

Much of the behind-the-scenes power-play, intrigue, and other important matters that have occasioned developments in Ghana's oil sector have largely been kept out of the public domain.

The great untold among foreign investors in the country's oil and gas sector is that the presidency lacks ideas of effectively controlling the sector - or has indeed, lost control of it.

The consensus among them is that it is difficult to know whose word at the Ministry of Energy carries the backing of the President. According to them, there often seems to be some conflict between the positions of the Minister, Dr. Oteng Adjei, and one of his deputies, Dr. Kwabena Donkor, on the sector's key issues.

It is now an open secret in the Energy Ministry that the rift between the two is even affecting internal administration; for instance, whereas the Minister favours the natural progression of technocrats in the Ministry to fill vacancies created by the exit of others, his deputy seeks to bring in people from GNPC to fill such vacancies.

The grapevine has it that the two were brought into the Ministry by two other individuals - Ato Ahwoi and Tsatsu Tsikata (the former CEO of GNPC) - who are also engaged in a fierce battle for control of turf at GNPC.

While industry players say they suspect Tsikata of being on an ego trip, they are unsure of Ahwoi's intentions. And worse, nobody knows where the Presidency stands in all this.

And if you think all this is unhealthy for the country's emerging oil industry, I'll bet my last dollar you do not even know that a third phase development of Jubilee would be necessary if the country is to optimise the available oil, which means the country would be drawing more oil from the field than anticipated. This would be more than the estimated eventual 250,000 barrels per day after completion of the second phase by 2012 (from the initial 120,000bpd of phase one) which is now the only information available to the public.

The question is: why is GNPC not even hinting at this possibility to the public? With all their expertise and sophistication, they can't claim they do not know about it. Perhaps their better judgment tells them keeping mute over it is better, but disclosure of such and other information helps curb the preponderance of speculation about intended skullduggery.

Other worrying speculations are that a number of companies registered in the country in recent times to operate in the oil and gas up- and midstreams have government functionaries and other politicians involved with them.

Lending credence to this speculation is information that one such company has approached a reputable international bank for a credit facility, for which it hopes to secure a sovereign guarantee from Ghana.

Of course, the bank will naturally seek some clarification and more concrete information from the company - and probably from government as well. However, the matter is unfolding.

So the charade goes on, raising more questions about the direction of Ghana's arguably best opportunity of transiting from an insignificant country (but with great potential) into a really prosperous and powerful nation on the block, able to influence developments in its troubled neighbourhood.

Analysts argue that the potential for leadership and influence in the Gulf of Guinea could easily be slipping away from Ghana as more countries discover oil in their portion of the continental shelf, which has been proven to be prolific with the de-risking of the area by the discovery of Jubilee and a recent major find in Sierra Leone.

Ghana's attractiveness to more and better investments in the sector, they claim, will greatly depend on government's reliable and clear-cut direction for industry.

With the current mish-mash that characterises the industry's up-stream, perhaps a strong 'Presidential presence is the reassuring signal all important stakeholders are desperately looking forward to... but of course, it is a topic they lack the boldness to broach.


Credit: Emmanuel Kwablah/B&FT