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Commentary Page
We invite commentaries from writers all over. The subject is about
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GNPC, The Law and Kosmos
E. Ablorh-Odjidja
The piece from GNPC, “Re: Kosmos Broke No Laws”, defending its
actions against Kosmos, invites comment; if not for any reason
other than to reveal a peculiar mindset the missive attempts to
conceal.
The writer, Mr. Thomas Manu, Director of Exploration and
Production at GNPC, claims Kosmos’ attempt to sell her Jubilee
Oil Field displays a “wanton disregard for the laws of Ghana and
willful indifference to compliance with its obligations under
Petroleum Agreements, to which it is party.”
GNPC is, therefore implying a contractual breach by Kosmos. In
that case, shouldn’t the courts be the arbiter now?
Instead, GNPC has so far preferred to drag this case through a
drama of political grandstanding; all to the detriment of the
country’s budding reputation as an attractive investment
destination.
In the context of the current debate, GNPC could have assumed
right from start that any investor/wildcatter in the petroleum
sector would eventually put her stakes up for sale, Kosmos not
exempted.
To have assumed that a business savvy company like Kosmos would
not sell eventually would be naďve.
Kosmos would sell with profit in mind; certainly, at fair market
price, but now with the $4 bn that Exxon-Mobil has offered as
benchmark. Or perhaps more, for the benefit of her shareholders.
How such a sale of Kosmos stakes could proceed without
substantiation by exploration data is something that wasn’t
explained by Mr. Manu. But more on this later.
What is clear now is that GNPC is under new management. The same
GNPC that managed Ghana’s petroleum affairs under the NPP
government is now the keeper of the same petroleum transaction
laws under the new NDC government. This fact points to a shift
in GNPC business attitude.
For some reason GNPC has become more aggressive in preventing
the sale by Kosmos to Exxon-Mobil, not by acts of the courts but
through a series of political maneuvering and theater.
The appeal to public sentiment, as provided by Mr. Manu’s
missive, seems to suggest that Kosmos is not dealing in good
faith. That she has illegally exposed data belonging to GNPC,
thus Ghana, to a long list of prospective buyers and that,
somehow, the damage done by this exposure is irreparable.
Yet, in spite of the list of grievances alleged, GNPC is still
intent on purchasing the Kosmos stake at a “fair market value.”
What fair market value is for GNPC remains to be seen.
But, for now, does the $4 bn offered by Exxon-Mobil qualify as
“fair market value” to GNPC? Or, are the alleged grievances
meant to force the value down to within a range that GNPC can
afford? Certainly, a lower price will be bonus for Ghana, but
will it entail a fair business practice and how will the global
market react to this ruse? GNPC will not do Ghana’s reputation
any good should this succeed.
According to Mr. Manu, “GNPC, as the national oil company, has a
duty to ensure that all petroleum activities are conducted in
accordance with the laws which have been enacted to protect
Ghana’s interests.”
Kosmos is alleged to be guilty of making “GNPC data available to
over twenty international oil companies, including Exxon Mobil,”
all in the effort to sell her stakes. So why not go direct to
the courts for redress if GNPC has been harmed?
As Mr. Manu explains it, “Over the past one year, rather than
regularizing the data breaches, Kosmos and Exxon Mobil have
engaged in various transactions with each other, and have also
ignored the clear indications from the Government of Ghana that
compliance with the laws of Ghana is a fundamental pre-condition
for investing in Ghana.”
But when and how did GNPC become aware of Kosmos “wanton
disregard for the laws of Ghana,” was it only when the change in
government occurred or when the offer by Exxon-Mobile was
announced?
So after one year of firm knowledge of the above breach, GNPC is
now warming up to the case but is still not in court. Mr. Manu’s
own words beg the question.
Mr. Manu has finely defined the damage as: “The loss of
potential licensing fees as a result of Kosmos’ unlawful conduct
is significant. Reduction in the inherent value of the data, as
a result of making it available to such a wide group of
recipients, has increased the risk of wider dissemination and
unauthorised use… and has irreversibly altered the investment
landscape in respect of these assets in a way that constitutes a
very substantial negative economic impact on Ghana.”
Yet, and again, in spite of the substantial value devaluation
alleged, GNPC still wants the oil stake owned by Kosmos.
As Mr. Manu explains, “no entity can conduct exploration,
development or production of petroleum without partnering GNPC.”
We are yet to understand why a purchase by Exxon-Mobil will
preclude this option. Or who GNPC wants as a partner.
Also unclear is what data Kosmos should have offered on her
business in Ghana to boost chances for sale. Any contract that
severely limits that possibility is not a fair one. Note that
only dupes are offered properties for sale without the necessary
documents or data attached. The Brooklyn Bridge of New York, for
instance, was once offered for sale without the necessary data.
That was long time ago. But soon after, the event was ranked as
one of the biggest con jobs in history.
Obviously, the “financial capabilities” required should not be a
barrier for Exxon-Mobil to become a partner. But the requirement
for “the alignment of their strategic interests (Exxon-Mobil in
this case) with ours” is a notion that can only look innocuous
on paper. In reality, this notion can sink the most competent
and capable potential buyer, should the powers that be insist.
In all, GNPC’s wish to buy the controlling shares of Jubilee is
at best ambitious; but there is a question of competency to
manage the production and distribution of the oil. The history
of our state controlled enterprises doesn’t offer hope, even on
local level. Globally, Exxon-Mobil is better positioned to give
us more bang for the buck than GNPC or any shadowy proxy
partner. It is time to hand over these enterprises to the free
market.
E.
Ablorh-Odjidja, Publisher
www.ghanadot.com, Washington, DC,
August 7, 2010
Permission to publish: Please feel free to publish or
reproduce, with credits, unedited. If posted at a website,
email a copy of the web page to
publisher@ghanadot.com . Or don't publish at all.
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Review of Ghana oil contract holds
up funding
FT, Aug 7, Ghanadot -
International banks have delayed a decision on
financing an $875m oil-processing vessel in Ghana
following revelations about a subcontract linked to a
former state official. The disclosures could complicate
Ghana’s journey towards becoming an oil producer.....More
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Feature: All Eyes on NPP
PeaceFM,
Aug 7, Ghanadot - In fact, I couldn’t agree more to
His Excellency, the former president of Ghana, John
Agyekum Kufuor’s piece of advice to NPP delegates in the
upcoming congress. . ..More
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GNPC, The Law and Kosmos
Commentary, Aug 7, Ghanadot - Also unclear is
what data Kosmos should have offered on her business in
Ghana to boost chances for sale. Any contract that
severely limits that possibility is not a fair one.
...More
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The
Civility of Hand Washing
Commentary, Aug 7, Ghanadot - It is human, and
wise, that hand washing and general sanitation campaigns are
heightened Ghana-wide. It borders on morality, too. Across
Ghana, the sanitation situation isn’t good.
...More |
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