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You Are Here: Home » Investment, Lead Story » BP said to battle ExxonMobil over Ghana’s Jubilee oil field
The largest oil field discovered in West Africa in the last 10 to 15 years, the Jubilee oil field located in the Western region of Ghana is increasingly becoming a battle ground for the world’s major oil and gas industry players.
The field became a centre of interest when one of the stakeholders, closely guarded oil and gas company, Texas-based Kosmos Energy decided to sell its stake in the field.
Several global oil companies have shown interest in buying the stake, but none has succeeded yet in their bid.
According to a report by Timesonline of the UK, the British energy giant and the third largest oil and gas company in the world BP is set to begin an intense battle with US oil giant ExxonMobil over the field.
In October 2009, Kosmos Energy announced a deal to sell its stake to ExxonMobil for $4 billion, but the deal could not be realized because the Ghana government has to approve it, but it did not, instead Ghana chose to buy the stake. The decision effectively jettisoned ExxonMobil’s chance of buying the stake even though Kosmos Energy officials said they had signed a binding agreement with ExxonMobil.
Before the deal was announced though, several other global oil industry players have declared interest in buying the field; these are Royal Dutch Shell PLC, Chevron Corp., Italy’s Eni SpA, and India’s Oil & Natural Gas Corp (ONGC). The China National Offshore Oil Company (CNOOC) also declared interest in the field. There were even indications that the Ghana government favoured a China deal.
The Timesonline report is suggesting a battle between ExxonMobil and BP will intensify this month ahead of a key January deadline.
ExxonMobil the report said has argued that the sale agreement it had with Kosmos is legally binding and is thought to be considering taking Ghana to court if it refuses to approve the deal.
According to the report, it is understood that ExxonMobil’s purchase agreement lapses in January and if it is allowed to expire it could pave the way for BP’s rival bid.
BP is waiting for the row between the government and ExxonMobil to be resolved before reopening talks with the Ghanaians, it added.
Meanwhile, the GNPC says it had been in talks with Kosmos to buy the stake before the ExxonMobil deal. It now says it has secured the necessarily funding from a consortium of banks to buy the stake.
Tullow Oil, a UK oil company has a 38% stake in the Jubilee oil field which it says contains about 1.8 billion barrels of oil and has 17 wells. Commercial production of oil is expected to start in June 2010.
Dr Kwabena Donkor, Deputy Minister of Energy had said that under Phase One of the Jubilee Field project, 120,000 barrels of oil and 120,000 million standard cubic feet of dry gas per day would be produced in 2010.
Production would be increased to 240,000 barrels of oil and 240,000 million standard cubic feet of gas per day under the second phase of the Jubilee Field project which is expected to commence in 2013.
According to him, “the appraisals so far conducted indicate that the Jubilee Field contains expected recoverable reserves of about 800 million barrels of light crude, with an upside potential of about three billion barrels”.
By Emmanuel K. Dogbevi