As WCTP Block Exploration
Period Ends Next Week

KOSMOS, GHANA DISAGREE

By
J. Ato Kobbie, Managing Editor

Information gathered by The
Business Analyst indicate that Kosmos Energy, the US company that was embroiled
in a tango with Ghana’s Ministry of Energy and the Ghana National Petroleum
Corporation (GNPC) for close to two years, is already rolling up its sleeves
for another brawl with the latter, even as the exploration period under its Petroleum
Agreement over the West Cape Three Points block comes to an end next week.

Kosmos, in a press release on July 7th stated that
it had delivered a force majeure notice to the government of Ghana and GNPC,
following an incident that rendered Transocean Marianas, a semi-submersible drilling
rig, which it had contracted
to drill a well within its WCTP block, inoperable.

Ministry of Energy and GNPC
sources say there was no basis whatsoever to invoke a force majeure as Kosmos
was under no obligation to drill the Cedrela-1 exploration well it
intended to drill with the Transocean Marianas.

The petroleum agreement
covering the WCTP block was signed on July 22nd 2011 with a
seven-year exploration period, which ends on July 21, 2011 after which the
US company and its partners automatically
relinquish areas that are not deemed to be ‘Discovery, Development or Production
areas, except where a force
majeure (an act of God) had altered the time frame.’

A force majeure, which is also
termed an Act of God, is ‘an event which cannot reasonably be anticipated or
controlled by parties to a contract and which makes it impossible to fulfil an
obligation under the said contract.

Kosmos Energy operates the WCTP
Block with 30.875% interest, the same as Anadarko, with Tullow Ghana Limited having
22.896% interest,
whilst GNPC increased its
holdings from 10.0% to 12.5% on commerciality, with the EO Group having
3.5%,whilst Sabre Oil and Gas Holdings has 1.854% working interest.

Discoveries within the WCTP
block include, Odum, Mahogany East, Teak 1, Teak 2, as well as Banda.


Whilst official sources of the
Ministry of Energy would only tell this paper that the ministry was still in
discussions with Kosmos over some of its programmes and plans for development of
some discoveries, the paper gathered that one was rejected for not measuring up
to the required standards.

Sources say that while appraisal
on the Odum discovery has been completed by Kosmos, there is no plan yet for
the Banda
discovery.

Aware of the possibility of
losing some of its holdings at the end of the exploration period, Kosmos
disclosed that as a risk factor in its filings with the US Securities and
Exchange Commission (SEC) in the run up to its initial public offering on the
New York Stock Exchange (NYSE), on January 13th this year, that even
if a new agreement was to be secured “we cannot assure you that any such
new agreement will either be entered into or be on the same terms as the
current WCTP Petroleum Agreement.”

The Business Analyst had
gathered as of last week that some IOCs, including some of the
big players in the industry, are positioning themselves to vie for that block,
in a competition that appears likely to earn Ghana the best of offers yet for
its oil fields.

The partners and Ghanaian
authorities are still said to be fine-tuning a confidentiality agreement that
would protect seismic data covering the block and allied fields before they
could be released to third parties.

Under the confidentiality
provisions of the petroleum agreement and also under the terms of the Petroleum
Exploration and Production Law, PNDC Law 84 of, 1984, Kosmos Energy and GNPC,
the parties to the agreement, are to agree on terms for disclosing data
covering the block to third parties.

Other partners with stake in
the WCTP block are Tullow Oil, Anadarko, Sabre Oil and Gas, and the EO
Group.

Indications, however, are that
Kosmos Energy will not let go of its hold on the WCT block without a fight and
is likely to push its differences with state into arbitration. It would be
recalled that in a tango with the Government of Ghana and GNPC over its botched
deal with ExxonMobil, Kosmos, with the backing of the US government turned the
heat on the country, employing the services of an international lobbyist K.
Riva Levinson.

As earlier reported by this
paper, the terms of the WCTP petroleum agreement has been described as over
generous by analysts, with a WoodMckenzie report revealing an inferior fiscal
terms when compared with the Tullow-operated Deepwater Tano Petroleum
Agreement, in a manner that leaves Ghana
worse off by billions of dollars over the lifespan of the Jubilee Field.

Kosmos is also a partner with
18% interest in the Tullow Ghana Limited operated (49.95%) DT Block, which also has
Anadarko WCTP (18%), GNPC (10%), and the Sabre Oil and Gas Holdings Limited
(4.05%) as partners.

Under an Unitisation and Unit Operating Agreement (UUOA)
signed among the Jubilee Partners on July 13, 2009 with the Ministry of Energy,
GNPC and the partners in the two blocks, the discovered fields have been
jointly developed to optimize resource recovery.

Tullow Oil became the Unit
Operator, with Kosmos Energy as Technical operator. The Jubilee field is currently
producing
crude oil at a little over 70,000 barrels/day and straddles the two WCTP and DT
blocks. The field is expected to peak at
120,000 barrels per day by the end of the third quarter of this year.

In June 2007, the Mahogany-1
well, which was Kosmos’ first exploration well within its WCTP block discovered
oil in large commercial quantities. Two
months later, in August, the Hyedua-1 well, drilled just across
the block in Tullow Oil’s Deepwater Tano block also struck oil in sizeable
quantities. The two fields were
unitized in 2008 for joint development as the Jubilee Field, after successful
appraisals.

Jubilee Oil is being produced by the floating production,
storage and offloading vessel Kwame Nkrumah MV 21, from the
Jubilee Field, located 50 kilometres offshore western Ghana.

Whilst Technical Production
commenced from the field on November 28, 2010 the Jubilee Field was officially
commissioned
for First Oil on December 15 of the same year.

Companies currently at various
stages of activities in Ghana’s oil fields include, Afren Plc, Anadarko,
Challenger Minerals, Eni, E.O. Group, Hess Exploration, Kosmos, Lukoil
Overseas, Lushann Eternit, Mitsui Group, Oranto, Sabre Oil, Stone Energy, Tap
Oil, Tullow Oil, Vanco Energy, and Vitol Upstream.

J.atokobbie@yahoo.com