October 2009


Oct. 6 2009 – U.S. oil giant ExxonMobil has bought Kosmos Energy’s stake in oil blocks offshore Ghana that contain large oil discoveries … The deal marks the first entry by one of the world’s major oil companies into what is proving to be a significant new oil province and may pave the way for further acquisitions.

Top: Kosmos’ discovery of the Jubilee Field will enable the Republic of Ghana to join the ranks of significant West African oil exporters. Bottom: Kosmos’ deepwater Jubilee Field development scheme offshore Ghana includes the design and installation of sophisticated subsea architecture connected to a floating production, storage and offloading vessel (FPSO).

Top: Kosmos’ discovery of the Jubilee Field will enable the Republic of Ghana to join the ranks of significant West African oil exporters. Bottom: Kosmos’ deepwater Jubilee Field development scheme offshore Ghana includes the design and installation of sophisticated subsea architecture connected to a floating production, storage and offloading vessel (FPSO).

Analysts at Morgan Stanley put a value of $3.3 billion to $5 billion on Kosmos’ stake in the blocks.

ExxonMobil declined to comment. Kosmos was not immediately available to comment.

The Kosmos blocks contain the Jubilee field, which is operated by Tullow and is estimated to hold between 1.2 billion and 1.8 billion barrels of oil equivalent. A separate discovery offshore Sierra Leone last month by Anadarko, at the western extreme of the same geological formation that contains Jubilee, signaled the potential for further multi-billion barrel discoveries stretching eastward for 1,100 kilometers through the waters of the Ivory Coast and Liberia.

“The Ghanaians should be very pleased. They’ve got an embryonic oil industry,” and now they have the involvement of one of the largest, most experienced and technically qualified oil companies …

A large number of major international and state-owned oil and gas companies were among potential buyers of this strategic asset. These companies have been informed by letter that Kosmos has entered into an exclusive arrangement with ExxonMobil, the person said.

Kosmos holds 30.875% of the West Cape Three Points Block and 18% of the Deepwater Tano block. Its partners are Tullow Oil PLC (TLW.LN) and Anadarko Petroleum Corp. (APC).

Jubilee field straddles both blocks and Tweneboa discovery in Deepwater Tano is thought to be another large oil reservoir.

Here is a map, with a bit more info from Kosmos Energy.

Kosmos map, oil blocks off the coast of Ghana

Kosmos map, oil blocks off the coast of Ghana, click to enlarge

Today, Oct. 7, Reuters updates:

ACCRA, Oct 7 (Reuters) – State-run Ghana National Petroleum Corp (GNPC) is studying an agreement by Exxon Mobil (XOM.N) to buy Kosmos Energy’s stake in the Jubilee oil field in Ghana before passing it to the energy ministry for its blessing, a Ghanaian government source said on Wednesday.

“GNPC is required to look at the entire deal as negotiated,” said the government source involved in the energy sector.

“The idea is to ensure that it is the best offer not only in monetary terms but also it should come with the technical expertise,” the source told Reuters.

The Jubilee field is one of the largest oil finds in West Africa in the past decade.

Sources close to the matter said on Tuesday Exxon had agreed to buy a stake which analysts have previously valued at up to $5 billion.

Under the Ghanaian vetting process for the deal, the energy ministry will pass it on to President John Atta Mills’ cabinet for approval, the government source said without giving a timeframe for a decision.

From the Dallas Morning News:

Exxon Mobil Corp. is in talks to buy a stake in a massive oil field off the coast of Ghana for around $4 billion from Dallas’ Kosmos Energy LLC, according to media reports and a person familiar with the deal.

Kosmos, a privately held oil and gas company that focuses on West Africa, sent a letter to other bidders terminating the process, according to a knowledgeable industry source, and entered exclusive talks with Irving oil giant Exxon. A sale would require approval from Ghana’s government, said two people familiar with the process.

Ghana is set to become West Africa’s newest oil exporter in late 2010, when output begins at the Jubilee field. The deal comes at a time when Exxon’s oil production has declined and the company has said it might fail to meet its 2009 target for 2 percent output growth.

Exxon, Kosmos and the private equity companies involved in the negotiations declined to comment publicly on the deal.

“Exxon Mobil routinely evaluates potential development opportunities around the world. We do not comment on the details of commercial discussions or opportunities,” Exxon spokesman Patrick McGinn said in an e-mail.

Kosmos is led by James Musselman, former chief executive at Triton Energy Ltd. Triton discovered oil off the coast of Equatorial Guinea and was sold to Hess Corp., then known as Amerada Hess Corp., in 2001.

Musselman and his partners started Kosmos in late 2003 after raising $800 million from private equity investors Blackstone and Warburg Pincus.

The Jubilee sale marks the company’s first asset sale. Rather than producing oil, Kosmos’ business model is finding oil fields and selling them.

The Wall Street Journal reports:

Blackstone Group LP (BX) and Warburg Pincus LLC’s stake in Kosmos Energy has turned out to be black gold, indeed.

The agreed-to sale of the company’s stake in several oil discoveries off the coast of Ghana to Exxon Mobil Corp. (XOM) for $4 billion represents a cash on cash return of approximately four times for the two buyout firms over a period of five years or so.

Blackstone declined to comment on the deal’s internal rate of return; Warburg Pincus could not be reached for comment. The two firms own most of the company, with Warburg Pincus holding the larger share, at 55%. Management also owns a small stake.

The two initially invested $300 million in the business in 2004 to help it explore for oil and gas in West Africa. Upon the 2008 discovery of the Jubilee field, one of the larger recent finds off the West African coast, they put in an additional $500 million.

It was a big bet in a geographic region that other oil companies had scoured for years with little luck. But Warburg Pincus and Blackstone were willing to place their faith in Kosmos Chief Executive Jim Musselman and his team, who had delivered a home run for private equity before. The Kosmos team had previously led Triton Energy Ltd., a company backed by Hicks Muse Tate & Furst Inc. that was sold to Amerada Hess Corp. in 2001. Hicks made back $1 billion on that $350 million 1998 investment.

It is fairly common for private equity firms to provide capital to experienced management teams in the oil and gas industry, allowing them to develop resources to the point where the company can go public or draw the interest of a larger strategic player. That model is now being seen increasingly in emerging markets as well as private equity firms expand their global reach.

Another major player off the coast of West Africa, Cobalt International Energy Inc., filed for a $1.15 billion initial public offering last month. That company is backed by First Reserve Corp., Carlyle/Riverstone, Goldman Sachs Group Inc. and Kern Partners Ltd., and in April partnered up with French oil giant Total S.A. (TOT) to prospect for oil in the U.S. Gulf of Mexico’s deepwater.

First Reserve also recently set up a new venture in Southeast Asia, KrisEnergy Holdings Inc., to explore for oil and gas, committing $500 million to support it.

Older deals include a $35 million 2008 investment by Emerging Capital Partners in Ocean & Oil Investments Ltd., a Nigerian investment company; and a $380 million investment led by Pine Brook Road Partners LLC in 2007 in Asia Pacific Exploration Consolidated LP.

The sharks are out in full force. Ghana will need to swim like a dolphin. As most readers here already know, the problem with the oil resource curse is not just that it keeps people poor, it actively makes them poorer than if there was no oil.

You can see a range of Ghanaian reaction in the comments to the original article on GhanaWeb, here are some samples:

Idiots in Govt writes: Yes, let’s go for the big boys. They may not give you as much on the side but they will do a good job. Good Job Mills.

Sir Jay writes: with America company now on board, Ghanaians must tightened their belts and hope for the worst for Ghana. just look at the Ogoniland and its people and it will not be hard to see what Exxonmobil is capable of doing.
Now the future is bleak.
I am scared !!!!!!!!!

American boy writes: ExxonMobile is quite possibly the worst company you’d want coming into your country.
I guarantee you this will happen. There will be a few, maybe 100 corrupt Ghanaians who will get rich from the oil.
Everyone else will not even know oil was discovered anywhere and will continue to be poor.

Unfinished Vision writes: Let the rip off begin — I mean resume.

Diamond replies to Unfinished Vision: Strong message with a humorous twist.
Beautiful.
All we have to do is to tell them what we want. If they do not like it, we can seek other partners.
Nobody is totally safe, but maybe the Chinese? Russians?
Boy, I pain for Ghana.
Is there hope in any direction?
The Saudis, the Emirates, the Kuwaitis?
Can anyboby give us an honest deal?
Can any of our politicians work for us?
Mabey & Johnson (Ghana), Scancem (Ghana), British Aerospace (Tanzania), Haliburton (Nigeria).
Oh, Afrika.

Annex writes: These guys are such bad news. They are so tied to the U.S imperialism, I feel so sad for Ghana. They will influence our politics and corrupt are leaders. NDC are proving to be worse capitalists than NPP. It may true Obama showed up because of oil.

DRAGON alexandria.VA writes: they are the cause of nigerias oil calamity.environmental degradation,pollution,corruption etc..mills be careful with this company

Nana Kwame writes: Exxon/Mobil is a unscrupulous oil predator. Ghana should not rejoice because of their interest.
It is about time GNPC raises enough funds from China, remember China has a $1.95 trillion foreign reserves to lend, so that we buy this Exxon/Mobil interests out of the venture.
Exxon/Mobil is just a gigantic oil predator and parasitic company. It simply has not got the development interests of developing countries at heart.

emmanuel writes: Why should this be any surprise? The purpose of ANY corporation is to make money for the stockholders. If you don’t like that then try communism and see where that gets you.
If Exxon had priorities other than making money for the shareholders then it would have gone bankrupt a long time ago. It is a damn successful and well-run company–in fact it is the biggest corporation in the world.
Should corporations have limits placed on how they do business to protect citizens and employees from abuse? Absolutely. Just make sure that Exxon does things in manner prescribed by law (and if they are allowed to get away with such things in Ghana then whose fault is it, really?

Kaakyie_Nua writes: This is the same Exxon/Mobil which packed up, sold its assets to Total and left town rather unceremonously. The question our politicians should be asking is this: Why do they want back in?
U see they got the daylight kicked out of them by Hugo Chavez and so they want to weasel their way back into Ghana and take advantage of us again.
While Ghana is open and receptive to mutually beneficial foreign investments, Prof. Mills and his team should make it abundantly clear to all commers including Exxon/Mobil that the “rules of the game” have changed and that the benefits of the oil find should should be enjoyed, first and foremost, by Ghanaians particularly the local inhabitants. For this to happen they should take steps to prevent excessive “Flipping” that is commonplace in the oil industry.
If Exxon/Mobil has come back to stay, then they are welcomed to help us develop our oil industry. If this is not the case, then they will be better off somewhere else. Perhaps in Alaska their own backyard.

Lin writes: I am an American and know how American corporatons operate. Ghana
is in the driver’s seat now. But if it isn’t careful it will be riding in the back seat and the driver won’t be a chauffeur. Before the game begins be sure they ante up and above all cut the cards. Also stop the ngame from time to time and get a new deck.

Ogyam writes: what is all these? can someone explain? just confused. SIMPLE!!

Kaakyie_Nua writes: Have done their bit and the “big players” the likes of Exxon/Mobil etc have come in to take over.
They have paid Tullow a decent price plus handsome profit for the leg work they have done.
The trouble for Ghana is that the value of this find on paper has shot up substantially when nothing has changed in terms of the physical assets on the ground.
Look, I am sure made all kinds of promises to the local residents and the govt and we live to see if Exxon/Mobil will honour all of them.
Look at it this way: Instead of the corner mechanic servicing ur automobile, u have a delearship taking care of it. Do u think ur maintenance costs are going to be lower? Remmember the R&D operations take place in the home country and the local operations have no say how much they have to pay headquarters in the States.
True a similar thing would have transpired under Tullow but to a much lesser degree. U see size matters a lot in business dealings.

JO ZONGO writes: I think that´s good news as well. Most experienced and qualified companies can help our stuation more in. But where from this infomation? GHANAIAN NEWS or GHANA NEWS?

Nana Kwame asks: When was the last time the CEOs of the major oil companies helped you?

Pastor Ernest Opoku Agyeman writes: I think in dealing with the contract of the oil, political divisions should be set aside. The focus should be Ghana and the people of Ghana. Secondly, the managers representing Ghana should be careful in dealing with every aspect of the wording of the contract and consider inflation in the next 50 to 100 years. We should not forgotten the timber, gold, diamonds, bauxite contracts that did not help Ghana due to the fact that our people did not think about the future before undertaking that contract. All the politicians must come together and think through what the benefits or development shall we need from these companies. Next…

Big Talk writes: 10 %.Can you beleive this? And they have started taking loans even before their ……%.

No Wonder writes: It looks good yet it’s a death warrent to many folks to come. This is a company whose dealings has cost so many human lives and burn the earth around the globe including their own home country, talk to the Alaskan, south Americans – Amazon forest etc. Now they are coming to Ghana and will support both political parties like they do in their own homeland but in our case they will do what they do best take the oil out send the funds back in arms – weapons so we could distroy ourselves. Look at Nigeria etc. so before we go out singing and dancing please listen to the tune and watch the drummers carefully before they change the beat on you.

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Full-spectrum dominance means the ability of U.S. forces, operating alone or with allies, to defeat any adversary and control any situation across the range of military operations.”[link]

Full Spectrum Dominance diagramed

Such overblown rhetoric is out of touch with reality, dangerously delusional, and even arguably insane. It is however useful, even vital, to those corporations who have become accustomed to profiting from the Cold War, and who faced deep cuts in U.S. defense and intelligence spending in the first years after the collapse of the Soviet Union. They are joined by other groups … These include the new purveyors of privatized military services, or what can be called entrepreneurial violence

The Real Grand Chessboard and the Profiteers of War by Prof. Peter Dale Scott writes about how the military industry has used the War On Terror to replace and expand the Cold War across the globe.

Advocacy disguised as expertise, the people making and controlling US military policy are also the ones who profit from violence, profit when the US is at war. Increasingly US foreign policy is military policy.

Scott quotes Zbigniew Brzezinski:

” … the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together.” (p.40)

This kind of brash talk is not unique to Brzezinski. Its call for unilateral dominance echoed the 1992 draft DPG (Defense Planning Guidance) prepared for Defense Secretary Cheney by neocons Paul Wolfowitz and Lewis “Scooter” Libby: “We must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role.”[link] It is echoed both in the 2000 PNAC Study, “Rebuilding America’s Defenses,” and the Bush-Cheney National Security Strategy of September 2002 (NSS 2002). And it is epitomized by the megalomanic JCS strategic document Joint Vision 2020 “Full-spectrum dominance means the ability of U.S. forces, operating alone or with allies, to defeat any adversary and control any situation across the range of military operations.”[12]

The Real Grand Chessboard: Those Profiting from Enduring Violence

In March 2001 the biggest oil majors (Exxon Mobil, Chevron, Conoco, and Shell) had their opportunity to design the incoming administration’s energy strategies, including Middle East policy, by participating secretly in Vice-President Cheney’s Energy Task Force.[17] The Task Force, we learned later, developed a map of Iraq’s oil fields, with the southwest divided into nine “Exploration Blocks.” One month earlier a Bush National Security Council document had noted that Cheney’s Task force would consider “actions regarding the capture of new and existing oil and gas fields.”[18] Earlier the oil companies had participated in a non-governmental task force calling for “an immediate policy review toward Iraq including military, energy, economic and political/diplomatic assessments.”[19]

Of course, oil companies were not alone in pushing for military action against Iraq. After 9/11, Rumsfeld, Wolfowitz, and Douglas Feith established the Pentagon’s neocon Office of Special Plans (OSP), which soon “rivalled both the C.I.A. and the Pentagon’s own Defense Intelligence Agency, the D.I.A., as President Bush’s main source of intelligence regarding Iraq’s possible possession of weapons of mass destruction and connection with Al Qaeda.”[20] Neocon influence in the Administration, supported by Lewis Libby in Vice-President Cheney’s office, trumped the skepticism of CIA and DIA: these two false charges against Saddam Hussein, or what one critic called “faith-based intelligence,” became briefly the official ideology of the United States. Some, notably Dick Cheney, have never recanted.

Many journalists were eager to promote the OSP doctrines. Judith Miller of the New York Times wrote a series of articles on Saddam’s WMD, relying, like OSP itself, on the propaganda of Iraqi exile Ahmed Chalabi.[21] Miller’s book collaborator Laurie Mylroie went even further, arguing that “Saddam was not only behind the ’93 Trade Center attack, but also every anti-American terrorist incident of the past decade, from the bombings of U.S. embassies in Kenya and Tanzania to the leveling of the federal building in Oklahoma City to September 11 itself.”[22] Many of these advocates, notably Feith, Libby, and Mylroie, had links to Israel, which as much as any oil company had reasons to wish for U.S. armies to become established militarily in Central Asia.[23]

Private Military Contractors (PMCs), Whose Business is Violence for Profit


The inappropriateness of a military response to the threat of terrorism has been noted by a number of counterterrorism experts, such as retired U.S. Army colonel Andrew Bacevich:

… the concept of global war as the response to violent Islamic radicalism is flawed. We ought not be in the business of invading and occupying other countries. That’s not going to address the threat. It is, on the other hand, going to bankrupt the country and break the military.[24]


To offset the pressure on limited armed forces assets, Donald Rumsfeld escalated the increasing use of Private Military Contractors (PMCs) in the Iraq War. At one point as many as 100,000 personnel were employed by PMCs in the US Iraq occupation. Some of them were involved in controversial events there, such as the Iraq Abu Ghraib prison scandal, and the killing and burning of four contract employees in Fallujah. The license of the most controversial firm, Blackwater, was terminated by the Iraqi government in 2007, after eight Iraqi civilians were gratuitously killed in a firefight that followed a car bomb explosion.[28] (After much negative publicity, Blackwater renamed itself in 2009 as Xe Worldwide.)

Insufficiently noticed in the public furor over PMCs like Blackwater was the difference in motivation between them and the Pentagon. Whereas the stated goal of Rumsfeld and the armed forces in Iraq was to end violence there, the PMCs clearly had a financial stake in its continuation. Hence it is no surprise that some of the largest PMCs were also political supporters for pursuing the ill-conceived “War on Terror.”

Blackwater was the most notorious example; Erik Prince, its founder and sole owner, is part of a family that figures among the major contributors to the Republican Party and other right-wing causes, such as the Council for National Policy. His sister once told the press that “my family is the largest single contributor of soft money to the national Republican Party.”[29]

Private Intelligence Companies and the Provision of Violence

Blackwater has attracted the critical attention of the American Mainstream Media. But it was a mere knight on the grand chessboard, albeit one with the ability to influence the moves of the game.

Diligence LLC was licensed to do business in Iraq as a private military contractor (PMC). But it could be called a Private Intelligence Contractor (PIC), since it is virtually a CIA spin-off:

Diligence was founded by William Webster, the only man to head both the Central Intelligence Agency (CIA) and the Federal Bureau of Investigation. Mike Baker, its chief executive officer, spent 14 years at the CIA as a covert field operations officer specializing in counter-terrorism and counter-insurgency operations. Whitley Bruner, its chief operating officer in Baghdad, was once the CIA station chief in Iraq.[31]

Its partner in Diligence Middle East (DME) is New Bridge Strategies, whose purpose has been described by the New York Times as “a consulting firm to advise companies that want to do business in Iraq, including those seeking pieces of taxpayer-financed reconstruction projects.”[32] Its political clout was outlined in the Financial Times:

New Bridge was established in May [2003] and came to public attention because of the Republican heavyweights on its board – most linked to one or other Bush administration [officials] or to the family itself. Those include Joe Allbaugh, George W. Bush’s presidential campaign manager, and Ed Rogers and Lanny Griffith, former George H.W. Bush aides.[33]

The firm of Barbour, Griffith and Rogers was the initial funder of Diligence, which shares an office floor with BGR and New Bridge in a building four blocks from the White House. The Financial Times linked the success of New Bridge in securing contracts to their relationship to Neil Bush, the President’s brother.[34] When Mack McLarty, Clinton’s White House Chief of Staff, resigned, he became a director of Diligence, and also joined Henry Kissinger to head, until 2008, Kissinger McLarty Associates.

Another Private Intelligence Contractor or PIC is Science Applications International Corporation (SAIC), an $8 billion corporation involved in defense, intelligence community, and homeland security contracting. In the words of veteran journalists Donald Barlett and James Steele,

SAIC has displayed an uncanny ability to thrive in every conceivable political climate. It is the invisible hand behind a huge portion of the national-security state—the one sector of the government whose funds are limitless and whose continued growth is assured every time a politician utters the word “terrorism.” SAIC represents, in other words, a private business that has become a form of permanent government….[SAIC] epitomizes something beyond Eisenhower’s worst nightmare—the “military-industrial-counterterrorism complex.”[35]

(Later their article made it clear that SAIC is not a unified bureaucracy, but more like a platform for individual entrepreneurship in obtaining contracts: “at SAIC your job fundamentally was to sell your high-tech ideas and blue-chip expertise to [any] government agency with money to spend and an impulse to buy.”)[36]

Before becoming Secretary of Defense, Robert M. Gates was a member of SAIC’s board of directors. SAIC personnel have also been recruited from CIA, NSA, and DARPA.
[numbers refer to footnotes from the original article]

Scores of influential members of the national-security establishment clambered onto SAIC’s payroll, among them John M. Deutch, undersecretary of energy under President Jimmy Carter and C.I.A. director under President Bill Clinton; Rear Admiral William F. Raborn, who headed development of the Polaris submarine; and Rear Admiral Bobby Ray Inman, who served variously as director of the National Security Agency, deputy director of the C.I.A., and vice director of the Defense Intelligence Agency.[37]

SAIC helped supply the faulty intelligence about Saddam’s WMD that then generated ample contracts for SAIC in Iraq.

SAIC personnel were instrumental in pressing the case that weapons of mass destruction existed in Iraq under Saddam Hussein, and that war was the only way to get rid of them. When no weapons of mass destruction were found, SAIC personnel staffed the commission set up to investigate how American intelligence could have been so disastrously wrong …


Needless to say, this SAIC-stuffed commission did not report that SAIC itself had been a big part of the problem.

What we have been talking about until now is advocacy disguised as expertise. But overseas associates of Diligence LLC and its allies have also been accused of false-flag operations intended to provoke war.

These fusion centers, “which combine the military, the FBI, state police, and others, have been internally promoted by the US Army as means to avoid restrictions preventing the military from spying on the domestic population.”

The passage of the Patriot Act generated a new realm of profit for SAIC contractors — domestic surveillance of U.S. citizens – as well as new intelligence fusion centers to carry this out.

Daniel Elombah captures the essence of this system that bypasses and overrides the American electoral system:

In the United States, the president is less a leader than a manager of policies formulated by corporate elite interests. Thus there is stability of the political system, regardless of who is president. US presidents come and go, but the interests remain constant

.

That constant corporate interest is an unending march to war.

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