What happens when you take one of the world’s most promising
offshore oil and gas finds and mix it with a combination of Texas
money and African ambition? If this combustible mixture is placed
in the Gulf of Guinea within the legal waters of Ghana, the
answer is trouble — lots of it.
To put this roiling situation in perspective, note that the
initial valuation of the richest site found so far was reportedly
$4 billion, the amount ExxonMobil was asked to pay for a stake in
the Jubilee field held by a joint Texas/Ghanaian private
corporate partnership.
The excitement created by the news of the oil strike
offshore Ghana in 2004 has continued to this day, influencing all
aspects of the country’s economic thinking and politics. The
atmosphere in Accra’s government and commercial offices is a
combination of their inherited British restraint and natural
Ghanaian exuberance. In other words, Ghanaian officialdom,
business and the public-at-large just can’t contain their
excitement — though they try. Finally the great bonanza has
arrived for Ghana that had been hoped for all these years after
neighboring Nigeria’s own oil and gas development.
Nothing is simple in West Africa, and Ghana is no
exception. To begin with, the former president, John Kufuor,
apparently was involved in encouraging two of his allies, Kwame
Bawuah-Edusei and George Owusu, to form a Ghanaian — turned
Cayman Island — company to bring in American technological and
financial assistance to participate in the exploitation of the
offshore deposits.
Kosmos, a Texas-based company that includes among its
investors the financial firms of Blackstone and Warburg Pincus,
was a natural selection. In 2007 its operations paid off and
commercially exploitable quantities of oil were found. George
Owusu, who has a residence in Houston, had worked in various
aspects of the oil business before becoming the Kosmos rep in
Ghana. He provided the business knowhow while Kwame
Bawuah-Edusei, named by then President Kufuor as ambassador to
the United States, provided the political entrées in Accra. The
partnership of Owusu and Edusei now owns three and a half percent
of the Kosmos oil block. This stake is reported to have an
eventual worth of up to $200 million.
Unfortunately, this relatively simple oil deal becomes far
more complicated when the politics of the project are taken into
consideration. The current president of Ghana, John Evans Atta
Mills, who has been in office only a little more than a year, has
decided that the entire deal was structured to benefit his
predecessor and his followers. Magnanimity in victory is not
necessarily the usual West African custom — especially if there
are hundreds of millions of dollars involved.
To understand the evolution of the investment environment
of Ghana, one has to reach back to the newly independent days of
the nation a half century ago. Perhaps the most telling quote of
that period was that of the Ashanti activist, Krobo Edusei, the
interior minister in the first post-colonial government of the
famed African socialist, Kwame Nkrumah. In response to questions
posed about the exceptional wealth being accrued by “socialist”
politicians, Edusei was reported to have said, “Socialism doesn’t
mean that if you’ve made a lot of money, you can’t keep
it.”
Krobo Edusei , who died in 1983, had become a leader in the
extended clan to which Ambassador Kwame Bawuah-Edusei of today
belongs. The elder Edusei clearly believed one of the perks of
his political position was the acquisition of wealth. Perhaps to
flaunt this view, his wife famously purchased a gold-plated bed.
Krobo Edusei personified the traditional West African sense of
privilege that has made rich men of most of the vast region’s
winning politicians. The custom continues today, though not that
different from elsewhere in the world — just more
blatantly.
It is hardly a surprise that former President Kufuor now
finds himself involved in an investigation by the new
administration along with George Owusu and Amb. Kwame
Bawuah-Edusei. The current attorney general has been reported to
have compiled a criminal case against these latter two newly
minted millionaires for using “improper influence” in gaining
advantages for themselves and Kosmos from the previous
government.
Supporters of Edusei and Owusu allege that the Ghana
National Petroleum Corporation, the state oil company, has as its
real aim the canceling of the ExxonMobil deal so that GNPC can
obtain the Kosmos stake and sell it to the Chinese. Local
journalists are trying to track down how members of the new Mills
government would benefit from this arcane financial deal.
Meanwhile the U.S. Justice Department has become involved in the
case to see if any American laws were broken.
And so it goes as Ghana’s expected oil wealth is fought
over well before the oil and gas fully comes on line. Production
has been estimated eventually to reach 120,000 barrels per day by
2011. A more conservative reckoning has production at 40,000
barrels, with peak production being reached by 2018. At either
figure, it means a bonanza for Ghana.
There may not be any gold beds involved, but Ghana’s
politics doesn’t seemed to have changed that much in fifty years
— except the amount of money changing hands is much higher and
the corruption far more sophisticated.
