Kosmos Energy LLC, the U.S.-based oil explorer focusing on West Africa, ended its plans for a $4 billion sale of fields in Ghana to Exxon Mobil Corp. after government opposition to the deal.
The company will focus on further exploration of Ghana’s deposits and together with partners plans to start pumping oil from the offshore Jubilee field in the fourth quarter, Dallas- based Kosmos said today in a statement. The field, operated by Tullow Oil Plc, will reach 120,000 barrels a day of production next year.
The decision highlights the risk of oil and gas investment in Africa, analysts said. In October, the explorer agreed to an exclusive sale of its 23 percent stake in Jubilee to Exxon, in a deal valued at $4 billion. The same month, Ghana National Petroleum Corp. said it would buy the stake from Kosmos after the government declined to approve the agreement.
“It’s bad news for Ghana, because it’s going to put off some potential investors,” said Dougie Youngson, an analyst at Arbuthnot Securities Ltd. in London.
Emma Heywood, a spokeswoman at Exxon in the U.K., declined to comment.
Kosmos, backed by Blackstone Group LP and Warburg Pincus LLC, will become an oil producer with the Jubilee start-up, diverging from its strategy focusing on exploration.
“We are very encouraged by our recent exploration results, other discoveries we are appraising, and additional developments being planned,” Kosmos Chief Operating Officer Brian Maxted said in the statement.
Tullow, the U.K. explorer with the most licenses in Africa, in July said that together with partners including Kosmos it discovered a “major new oil field” offshore Ghana after drilling the Owo-1 well. The explorers had been targeting a 1.4 billion-barrel find of oil equivalent in the Owo-Tweneboa-Ntomme area, according to Tullow’s July presentation.
With potential resources of 1.8 billion barrels, the Jubilee field, discovered in 2007, has attracted attention from Chinese producers as well as BP Plc. It will be the first field to pump oil and gas off Ghana’s coast.
Tullow is lead operator of the $3.1 billion Jubilee project, where it holds 34.7 percent. Anadarko Petroleum Corp. controls 23.49 percent; Sabre Oil & Gas has 2.81 percent and EO Group 1.75 percent. GNPC holds 13.75 percent.