Editorial: GNPC Threatens Business Climate

Yesterday, we started an editorial on what is beginning to unfold as an apt test for the sincerity of the incumbent government�s so-called commitment to encouraging investors to pitch camp in the country.

The international community is watching with keen interest and would review the ranking of the country�s business climate, vis a vis government�s promises.

The Ghana National Petroleum Corporation (GNPC) is at the forefront of the raging uncertainties and confusion as they churn out lies upon lies about the Kosmos arrangement.

GNPC say they want to increase their stake by buying the Kosmos stake and that, this is in the best interests of the people. Is it? Acquiring the asset is one thing. Developing it is another.

This is a highly sophisticated and expensive business and Jubilee will easily absorb $10 billion over the next eight years or so, which means the right parties must be involved. Companies who are technically and operationally very strong, with proven experience and financially very sound, are needed.

GNPC doesn�t have the capability to operate and where are they going to get the money from to buy the Kosmos stake?

Borrow it when the country is already deeply indebted? Or bring in another company, as they say they are going to do?

The Chinese have been mentioned. Well, they don�t have the technical wherewithal to do this. BP has been mentioned.

Will they do it better than ExxonMobil? The Minister of Energy says Tullow and Anadarko have the necessary expertise and resources. Do they?

He recently disclosed that the manufacture of the FPSO (Floating Production, Storage and Offloading) vessel is on course for commercial oil production in the last quarter of 2010. Well guess what? Kosmos is the operator of the development!

Bringing Ghanaians up to speed on an integrated strategy in order to ensure benefit for this country in the longer term is much more important than immediately achieving a gain.

As at now, Ghanaians don�t even know exactly what the Ministry�s plans are for the oil and gas industry. As with much of what we do, we know what we want to do now, but how it fits into the big picture is not so clear.

The assumption that GNPC will do what is best for Ghana is not good enough. They have to tell Ghanaians what their long-term plan is so we can tell whether their actions are helpful or not.

For example, what will they do after they have increased their stake? Who do they plan to partner to develop the field? Is this party the best option?

Are they planning to go ahead with the rest of the current partnership � Tullow and Anadarko? Are the current partners capable of doing the job fully? There are more questions than answers.

Industry watchers have expressed concern about the amount of time being spent on this Kosmos matter when there are many challenges in the downstream and mid-stream as well.

What are the plans for refineries? What are the plans for gas processing plants? Can Ghanaians look forward to cheaper electricity and fuel? And if so, when?

Kosmos is still drilling for oil offshore Ghana and if their success rate is anything to go by, the value of the assets is increasing by the day. Industry experts say Jubilee could be dwarfed by what lies elsewhere offshore Ghana. Perhaps, GNPC should be encouraged to acquire its own block and get into exploration.

That�s probably why it wants money badly. But that is no reason to deny Kosmos the market value it seeks.

Worse still, that is no reason to wrongly accuse it of illegal actions in order to do with it as it pleases; telling the whole world that they are in negotiations to buy the stake when in reality they are nowhere near that, is rather disingenuous.

Well, so what would they do if Kosmos decided not to sell its stake after all? How would that affect GNPC�s plans? Kosmos Energy is backed by two of the world�s largest private equity firms.

They could decide to stay in this longer than they usually do. Sources close to Kosmos have indicated that they are considering this option among several others. After all, they don�t have to sell now.

It is too early for the Minister of Energy and the Director of Operations at GNPC to go around raising false hopes. Or perhaps, they are so confident because they are hoping to scare off Kosmos with accusations of illegality?

The last time we heard of Kosmos in the news, its assets were frozen and �defrozen� a couple of days later. Other tactics are being used to try to distress the company.

Don�t be too surprised to hear that Kosmos is in trouble for something or the other. Know that they have something that GNPC wants at all costs and they are interfering with, intimidating and harassing the company to force it to want to sell quickly and cheaply.

Is this how we should behave and treat a foreign investor who has brought the country so much wealth?

In the final analysis, there has to be a compromise, and the sooner, the better. More importantly, there doesn�t have to be a winner and a loser.

There is enough at the table for everyone�s need but not for everyone�s greed.

Source: Daily Guide