China gains ground in battle over Ghana's offshore oil
The Aug. 18 announcement that Exxon Mobil will not purchase a stake in Ghana's offshore oil fields opens the door for China, which is setting a new standard for how to woo Africa's petrol powers.
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The door has opened for the China National Offshore Oil Corporation (CNOOC) to purchase a stake in Ghana's coveted offshore oil bed after the Ghanaian government pressured Kosmos Energy LLC to scrap a $4 billion deal to sell its stake to fellow Texas-based company Exxon Mobil.
Kosmos, an oil exploration specialist with scarce history deep sea drilling, will extract the crude for now. If and when it goes to sell its stake, analysts say that Ghana's government will likely push for a partnership between its own state-owned oil company and CNOOC.
The turn of events has analysts wondering what China may be offering Ghana in exchange for oil rights. In an emerging pattern, China’s state-run resource extractors have been wooing Africa's petrol powers by including the construction of power plants, ports, and roads as a part of their bids – a far cry from the fine print of a typical Exxon Mobil proposal.
What Ghana wants
"For a poor country with poor infrastructure, these are pretty tempting offers," analyst Keith Myers at Richmond Energy Partners said in a telephone interview. "It’s uncomfortable for Western oil companies, because they’ve got more competition. But competition in markets is supposed to be good, no?"
Ghana is very much a country in need of infrastructure, despite its ample supplies of gold, cocoa, and light crude oil, not to mention its increasingly skilled workforce. Most of the country’s power comes from a single rain-fed hydrodam – a gorgeous but aging relic of 1960s Nkrumahism that draws away water from its thirsty capital, Accra.
Brandishing its stamp of approval over multi-billion dollar oil block transactions may be a way for Ghana to rectify its infrastructure shortage.
Emerging oil providers
Kosmos discovered oil off Ghana’s coast in 2006 and in October 2009 agreed to sell its 23 percent stake in the Jubilee oil field to Exxon Mobil Corp. Ghana's government immediately opposed the deal, saying it wanted to purchase Kosmos’s stake through state-owned Ghana National Petroleum Corp. Kosmos announced Aug. 18 that it was nixing the deal with Exxon and would instead pull up the oil through its own coalition of small-scale drillers.