Records available to The New Crusading GUIDE show that some aspects of the �messy politics� confronting Ghana�s Oil Industry in the wake of assumption of office by the Mills Administration are directly attributable to the conduct and actions of a giant US oil company, ANADARKO.
The �romance� and/or �love affair� between ANADARKO and the NDC (3) Administration led by President Mills found expression in a fast-track congratulatory message it (ANADARKO) dispatched to the then newly appointed Minister of Energy, Dr. Joe Oteng-Adjei on February 24, 2009 to the effect that �Please accept our congratulations upon your appointment as Minister of Energy in President Mills� new government.
THE NATION IS FORTUNATE TO HAVE YOU IN SUCH A KEY POSITION IN THE CRITICAL OIL AND GAS SECTOR. WE LOOK FORWARD TO WORKING WITH YOU�.
It is the same ANADARKO�s due diligence investigations on Kosmos/EO Group prior to its entry into the Jubilee Oil Fields upon the invitation of Kosmos in 2006, that the Mills-led Administration has been relying on to pursue its �witch-hunt� of the EO Group since it assumed office in January 2009.
This is in spite of the fact that ANADARKO officials, at a meeting held in Washington on June 15, 2009, had told a Ghanaian government team led by the Attorney-General and Minister of Justice, Mrs. Betty Mould-Iddrisu that their $2.5m investigations had found no �smoking gun� pointing to any criminality and illegality on the part of Kosmos and its local partners, the EO Group in connection with their acquisition of exploration and production rights in the West Cape Three Points Block in July 2004.
NOT SURPRISINGLY, IT WAS (IS) YET ANOTHER ALLEGATION/COMPLAINT OF ALLEGED LACK OF TRANSPARENCY AND UNFAIR TREATMENT MADE BY ANADARKO AGAINST THE GNPC WHICH INFORMED THE STRANGE AND PATENTLY ILLEGAL DECISION OF THE MINISTER OF ENERGY TO ABROGATE THE NOVEMBER 5, 2008 PETROLEUM AGREEMENT (PA) SIGNED AMONG THE GOVERNMENT OF GHANA (GOG), GHANA NATIONAL PETROLEUM CORPORATION (GNPC), AKER ASA AND CHEMU POWER COMPANY LIMITED.
THE MINISTER�S DECISION WHICH AKER ASA HAS SINCE CHALLENGED, WAS CONTAINED IN A LETTER DATED DECEMBER 30, 2009 ADDRESSED TO THE PRESIDENT OF AKER ASA (See The New Crusading GUIDE, January 21, 2010 for the full text of that letter and the editions of January 26, 28 & 29, 2010 for the reactions of the Norwegians (Aker ASA) and GNPC�s Legal Opinion given to the Minister prior to his �abrogation letter�).
To authenticate the preceding information relative to the positions of ANADARKO and GNPC, the Special Investigations Team (SIT) of The New Crusading GUIDE, courtesy our well-placed sources at the Ministry of Energy (MoE), publishes in today�s edition, some relevant documents/letters for the perusal/scrutiny of our readers and the general public.
Please read on and stay tuned for more�
�FROM ANADARKO�s VEEP TO GHANA�s MINISTER OF ENERGY (FEBRUARY 24, 2009)
The Honourable Joseph Oteng Adjei
Minister of Energy
Republic of Ghana
Dear Minister,
Please accept our congratulations upon your appointment as Minister of Energy in President Mills� new government. THE NATION IS FORTUNATE TO HAVE YOU IN SUCH A KEY POSITION IN THE CRITICAL OIL AND GAS SECTOR. WE LOOK FORWARD TO WORKING WITH YOU.
Mr. Minister, we feel it our duty to bring to your attention an issue that we believe has negatively affected the best interests of Ghana and our respective companies. On 21 July, 2008, Hess and Anadarko were encouraged by GNPC to put in a joint bid for the Ultra Deepwater, Tano block and asked to combine the best elements of our earlier, individual bids.
We were informed that if we made such a strong bid, it would overcome a previous demand by then Chairman of GNPC, Stephen Abankwa, that we carry an unknown Ghanaian party for five percent (5%) something neither Hess nor Anadarko can do given that we are both subject to the US Foreign Corrupt Practices Act and other related US legislation.
We then submitted the combined bid, a summary of the work program and fiscal terms of which are attached, but were shortly thereafter informed by Chairman Abankwa that if we did not accept the third-party carry of five percent (5%) that another company, the Norwegian company Aker, had already agreed to do so and would be awarded the block.
Later, the then Minister of Energy informed Anadarko representatives that the block had indeed been awarded to another company, without explanation as to the respective strong points of the bids in play.
Indeed, there was no transparency whatsoever in the entire bid process. We never received a formal written notification that our bid had failed, and it was to our dismay that we learned later that Aker, had indeed been awarded this extremely complex, deepwater block. According to the press and other public sources, we learned that the Aker bid also included a third party for five percent (5%).
WE WERE UPSET AND SERIOUSLY CONSIDERED AT THAT TIME ALERTING THE HIGHEST LEVELS OF THE US GOVERNMENT AND ASKING THEIR INTERVENTION, BUT THE GHANAIAN PRESIDENTIAL ELECTION WAS UPON US AND WE DECIDED THAT THIS ISSUE MIGHT PERTURB THE DEMOCRATIC PROCESS, WHICH WE STRONGLY SUPPORT.
Now that the election is over, WE ARE CONFIDENT THAT YOU, MR. MINISTER, WILL WISH TO REVIEW THE BID PROCEDURES AND PROCESSES OF THE AWARD OF ULTRA DEEPWATER TANO BLOCK. AFTER SUCH REVIEW, YOU WILL UNDOUBTEDLY NOTICE THAT THE COMBINED BID OF HESS AND ANADARKO, TWO WORLD-CLASS DEEPWATER OPERATORS WITH SUCH A STRONG COMBINED BID, WOULD HAVE BEEN IN GHANA�S BEST INTEREST.
Please accept, Mr. Minister, the expression of our most sincere respects.
Ian J Cooling
Vice President Business Dev�t & on behalf of
Anadarko International Energy Company HESS
24 February 2009
�FROM THE GNPC MANAGEMENT TO MINISTER OF ENERGY (MARCH 9, 2009)
HON. DR. JOE OTENG-ADJEI
MINISTER FOR ENERGY
MINISTRY OF ENERGY
ACCRA
RE: ANADARKO
Dear Sir,
In response to the allegation we first want to give a background of GNPC�s relationship with Anadarko.
Kosmos on 17/02/06 introduced Anadarko to GNPC Board as their proposed farm in partner. The Board at that time interrogated Anadarko to ascertain their financial and technical capability.
At the meeting, the Board, acknowledging Anadarko�s deepwater experience, asked whether Anadarko was going to be the operator of the Kosmos block, to which they answered no, and that they were just going to be partners with Kosmos being the operator. The meeting ended after further discussions.
The Board after the meeting, requested Management of GNPC to undertake due diligence on Anadarko. When Kosmos submitted a formal application for farm in into their block by Anadarko, the Board approved the application and recommended same to the Minister after which a farm in agreement was executed.
WHEN THE JUBILEE FIELD OIL GAS DISCOVERY WAS MADE IN JUNE 2007, AND AUGUST 2007, IT BECAME CLEAR THAT THE TWO FINDINGS WERE IN THE SAME RESERVOIR AND THEREFORE REQUIRED UNITIZATION OF THE APPLICATION OF THE FIELD. THIS IS WHERE THE PROBLEM STARTED WITH ANADARKO.
Anadarko, realizing the enormous potential of the discovery, BEGAN TO IMPOSE THEIR STRENGTHS AS A BASIS FOR BECOMING THE OVERALL OPERATOR WHICH, IN THE ABSENCE OF THE MUTUAL UNDERSTANDING OF THE PARTNERS, THE PA DOES NOT CONFER ON ANADARKO.
AT ONE TIME THEY JOINED TULLOW TO MARGINALIZE KOSMOS UNTIL THEIR ATTENTION WAS DRAWN TO THE FACT THAT IT WAS KOSMOS WHO BROUGHT THEM INTO THE BLOCK AND THAT KOSMOS WAS THE OPERATOR. AT ANOTHER TIME ANADARKO TRIED TO SEEK THE SUPPORT OF KOSMOS TO UNSEAT TULLOW AS THE OPERATOR. THESE MACHINATIONS OF ANADARKO HAVE GONE ON TILL EVEN TODAY.
It was at a meeting in London in early 2008 when Anadarko started to prove difficult again for the partnership as they initially found fault with the Tullow leadership that after the meeting the Chairman, MD and Director of Operations called the representative of Anadarko, Provost Chuck to an informal discussion.
During the discussion, GNPC tried to understand the position of Anadarko and encouraged Anadarko to play ball with the other partners in order to get the POD ready in good time. It was at this meeting that the Chairman suggested to Anadarko that GNPC could consider them for a block of their own in future, where they will become their own operators.
A block with good prospects that became vacant later on was the Vanco relinquished area. When this area was declared open, a number of companies including Aker, Sonangol of Angola, Atlas, Hess, and Anadarko applied for the block.
At a point the Board thought that the area was big enough to be divided amongst the deserving applicants. However, the Technical Dept. after studying the area advised that only the Western portion was worth considering since the Eastern portion falls in the ultra deepwater area where technology is not yet fully available.
EACH OF THE APPLICANTS CAME TO SEE MANAGEMENT TO DISCUSS THEIR PROPOSALS, AND WERE EACH REQUIRED TO HAVE A GHANAIAN PARTNER SINCE THAT WAS THE NEW POLICY OF GNPC AND THE MINISTRY OF ENERGY.
ANADARKO INITIALLY INDICATED THAT THEY WOULD NOT BE ABLE TO SECURE A LOCAL PARTNER BUT WOULD GIVE IT A FURTHER CONSIDERATION. WE ARE INFORMED THAT THEY LATER INTRODUCED MR. KEN OFORI ATTA OF DATA BANK AS THEIR LOCAL PARTNER SUBJECT TO DUE DILIGENCE.
Aker also introduced Chemu as their local partner. Of all the companies that had applied, the three, Aker and Anadarko/Hess and Sonangol were considered the most qualified.
In the case of Hess, in addition to not having a local partner, the application was declined on the grounds that they had a block in the same basin which they were yet to drill.
With regard to Sonangol our position was that it was an National Oil Company (NOC) coming from a country which was oil rich and we thought they could delay the exploration work, and so that was declined.
The two companies remaining were Aker and Anadarko. In terms of financial and technical capabilities the two companies were found to be almost at par and GNPC would be indifferent as to which of them was eventually awarded the block.
The Board in trying to be fair to both made a proposal to the two companies to consider joining and putting in one application with Anadarko being the operator so that the Board would recommend the award of the block to the two companies jointly. This proposal was made knowing that as an industry practice risks are shared and for such a deepwater block whichever company was awarded the block would farm out part of the block to reduce/share the risk.
THE LOCAL REPRESENTATIVES OF THE TWO COMPANIES WERE INFORMED OF THIS POSITION AND REQUESTED TO COMMUNICATE WITH THE PRINCIPALS AND REPORT BACK TO US. THE FEEDBACK WAS THAT ANADARKO WAS NOT INTERESTED IN THE JOINT AWARD WITH AKER; AKER ON THE OTHER HAND WAS PREPARED TO MEET ANADARKO FOR DISCUSSION.
Since the Board was not successful in getting the two companies to agree to work as partners, a decision had to be made as to which company was to be awarded the block.
The Board met to deliberate on the issue and based on the following factors decided to award the block to Aker
*(a) Technical and financial consideration���Both companies were found to be at par
*(b) Local partnership��Both companies were prepared to comply
*(c) At this stage the factors that separated the two were the following:
*(i) The Board thought there were relatively too many American companies in the basin, namely, HESS, Kosmos, Anadarko and Vanco. While there were only two European companies � Tullow and Vitol. The decision was to spread and therefore favoured Aker.
*(ii) The Norwegian Government�s support to Ghana in restructuring the oil and gas industry together with their support for training of Ghanaian staff and the keen interest of Norwegian Ambassador in GNPC affairs became a plus in favour of Aker.
*(iii) On a previous occasion when Hess Corporation competed with Norks Hydro, a capable oil and gas company, from Norway, for a block in the deep Tano, GNPC recommended the block to HESS for the reason that HESS Corporation applied first, all other things being equal. On this occasion the two companies had agreed on joint ownership of the block, it was the issue of who became the operator which could not be resolved. Norks Hydro withdrew because it was not appointed the operator in the work on the block.
With this background and in order not to give any impression to the Norwegian Government that GNPC and therefore the Ghana Government were biased against them, Aker was selected. So far as we are concerned these were the factors that Management considered in allocating the block.
Sir, the above represents the state of affairs in connection with the award of this block.
We want to take this opportunity to brief you and justify the introduction of the Ghanaian partnership requirement.
IT WAS AT ONE OF OUR OIL AND GAS CONFERENCES THAT WE ATTENDED IN LONDON, IN APRIL 2007 THAT A PAPER WAS DELIVERED WHICH STRONGLY RECOMMENDED TO AFRICAN COUNTRIES TO ARRANGE LOCAL PARTICIPATION IN THE ACTUAL OIL AND GAS OPERATION NO MATTER HOW SMALL THE PARTICIPATION WOULD BE. THE REASON ADDUCED WAS THAT NORMALLY WHEN THE OIL FIELDS PRODUCED TO CERTAIN LEVELS, THE FIELDS WERE ABANDONED BY THE FOREIGN OIL COMPANIES. WHEN THERE IS A LOCAL PARTICIPATION HOWEVER THE PARTNER MIGHT CONTINUE TO PRODUCE THIS MARGINAL FIELD WHICH BY LOCAL STANDARDS MIGHT BE CONSIDERED PROFITABLE.
SUCH ARRANGEMENTS LEAD TO FULL MAXIMIZATION OF THE FIELD, AND THIS IS WHAT PERTAINS IN NIGERIA AND THE NORTH SEA OIL AND GAS FIELD. WHEN THIS WAS REPORTED TO THE BOARD, IT WAS CONSIDERED INTERESTING AND USEFUL AND SO THE BOARD ADOPTED IT AS A POLICY. IT WAS AFTER THIS THAT THE POLICY OF ASKING FOR GHANAIAN STAKE WAS IMPLEMENTED.
We also provide as an attachment, the comparative fiscal summary and work program of Anadarko/Hess and Aker for your perusal.
Yours faithfully,
M.O. BOATENG
MANAGING DIRECTOR
March 09, 2009
Encl:
ANADARKO AND AKER ASA APPLICATION FOR TANO DEEPWATER COMPARISON
Application/Proposals Hess & Anadarko Aker ASA & Chemu Power
Date Applied July 2008 June 2008
Area South Deepwater Tano South deepwater Tano
Acreage Size 2,700 sq.km 3,583 sq km
Participation Interest 50/50 95/5
.....................................................................
Proposed Work program
Initial Exploration Period:
(3 years)
HESS & ANADARKO
* Acquire 2,700 km 3D Seismic
* One (1) Well (minimum depth 1,200 m below seabed or 100m into Albian
* Minimum Expenditure: US$70 million
No Relinquishment
AKER ASA & CHEMU POWER
* Acquire 1,500 sq km full-fold 3-D seismic data
* Acquire 1,000 km of Electromagnetic (EM) data.
* Drill 1 Exploration Well
* Minimum Expenditure: US$70 million
No Relinquishment
....................................................................
Proposed Work program:
First Extension Period:
HESS & ANADARKO
* No seismic acquisition
* Drill One (1) well (minimum depth 1,200 m below seabed or 100m into Albian)
* Minimum Expenditure: US$30 million
25% Relinquishment
AKER ASA & CHEMU POWER
* Acquire 800 km of 2-D seismic data
* Drill One (1) Exploration Well
* Minimum Expenditure: US$50 million
40% Relinquishment
....................................................................
Proposed Work program:
Second Extension Period:
HESS & ANADARKO
* No seismic acquisition
* Drill One (1) well (minimum depth 1, 200 m below seabed or 100m into Albian)
* Minimum Expenditure: US$30 million
AKER ASA & CHEMU POWER
* Reprocess existing seismic data where required
* Drill 1 Exploration Well
* Minimum Expenditure: US$50 million
....................................................................
Proposed fiscal terms:
HESS & ANADARKO
Royalty: 4% (Oil): 3%(Gas)
Income Tax: 35%
GNPC Carried Interest: 10%
Additional Interest: 5%
AKER ASA & CHEMU POWER
Royalty: 10% (oil); 5% (Gas)
Income Tax: 35%
GNPC Carried Interest: 10%
Additional Interest: 15%
....................................................................
AOEs Rate of Return Thresholds AOEs AOEs
12.5% 5% 10%
17.5% 10% 12.5%
22.5% 15% 20%
27.5% 20% 30%
SURFACE RENTALS US$/sq. km US$/sq. km
Initial Exploration Period 30 30
First Extension Period 50 50
Second Extension Period 75 75
Development/Production Period 100 100
Training Allowance/year US$1,000,000
Technology Support US$2,000,000
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