MODEC finds no evidence of corruption in Ghana oil deal

MODEC, the Japanese company now under investigation for bribery in Ghana’s nascent oil sector says it has found “no evidence of any violation” in its role in the joint venture, the Wall Street Journal reports citing a statement from the company.

MODEC, is a Japanese company that owns the floating production and storage offloading (FPSO) vessel used for oil production at the country’s largest oil field, Jubilee.

The company has been cited in documents that Kosmos Energy filed to the U.S. Securities and Exchange Commission January 13 as being investigated for corruption.

In the documents, Kosmos said partners in the field as well as the International Finance Corp. (IFC), part of the World Bank, “are working with MODEC and its legal advisors to investigate” some “potential violations by [the contractor] under the U.S. Foreign Corrupt Practices Act.”

Kosmos added that financing for the FPSO vessel–worth $875 million–used by MODEC had been suspended pending the investigation. It also said as a result of the investigations, costs on the field might go up, saying partners in the Jubilee field may be required to contribute further funds as a result.

But MODEC said in the statement, “This investigation has found no evidence of any violation of the U.S. Foreign Corrupt Practices Act or any other applicable jurisdiction’s anti-bribery laws in relation to its arrangement.”

Commercial production of oil started in Ghana December 15, 2010, and as a result of this investigation, a $225 million political insurance risk from the Multilateral Investment Guaranty Agency (MIGA) of the World Bank has been suspended, MIGA has said on its website in July 2010.


Source: ghanabusinessnews.com

Ghana’s first crude oil sold above $90 per barrel – Tullow

Tullow Oil and the Vitol Group, producers and marketers of Ghana’s oil, have rebuffed claims by a section of the Ghanaian media that the first consignment of 650,000 barrels from the Jubilee Oil Fields was sold below the prevailing world market price.

In a joint statement describing the assertion as incorrect, which was issued over the weekend, Tullow and Vitol said the price per barrel of Ghana’s first crude consignment was sold well over $90.

“We can confirm that the price achieved was well in excess of $90 per barrel, with a small differential linked to the Dated Brent crude price index,” they stressed in the statement issued on their behalf by Infocus PR, a communications, public relations firm.

Tullow and Vitol also stated that as crude oil sales contracts are private and confidential it is not customary to disclose further details.

They however said “It takes a while for the market and, refiners in particular, to assess the fair value of any new crude oil, since ultimately its value reflects the actual yield and quality of products that a refiner obtains as compared with its formal technical and paper yield.”

Confirming that many buyers had expressed interest in Ghana’s sweet light crude oil, Tullow and Vitol said “While we can’t disclose specific details of the actual price obtained for the first sale as these details remain confidential, there was significant interest in buying the new Jubilee crude from at least four major international buyers.”

Tullow Oil and Vitol also hinted of a strong interest from refiners and traders for the new Jubilee crude, which they believe, will contribute to meeting the growing global demand for energy.

The statement further explained that daily prices linked to an index can however move both up and down, as is the case with all crude grades, worldwide.

It expatiated further, that the use of the word “discount” when applied to an index price at the time of a sale, therefore merely indicates its relative value at that actual moment in time, which is a complex but well understood relationship in oil markets.

“It is totally different and should not be confused with the use of the word “discount” as in “sold below its true and fair market value” Ghana’s two oil producers and marketers said.

With an initial production of around 120,000 barrels per day (bpd) Ghana will rank as sub-Saharan Africa’s seventh largest producer.

The Jubilee Oil Fields are estimated to hold up to 1.8 billion barrels and have a lifespan of 20 years.


By Edmund Smith-Asante
ghanabusinessnews.com

Ghana, Turkey in oil barter deal

Turkey says it has reached an agreement with Ghana to buy oil from the country through a barter scheme arrangement.

News in the Turkish media seen by ghanabusinessnews.com says Turkey’s State Minister for Foreign Affairs, Zafer Çağlayan has indicated that he has had talks with two oil producing countries in West Africa – Nigeria and Ghana, and the two countries have responded positively to such an arrangement. The Turkish Minister recently toured Ghana, Nigeria and Equatorial Guinea, all oil producing countries. And while in Ghana, he was reported to have met Ghana’s Vice President John Mahama.

Under the arrangement, he said Turkey will purchase oil from Nigeria and Ghana and pay for it by investing in tourism, energy, health and other infrastructure.

Ghana officially became an oil producing country following the launch of commercial activities by President Mills at the Jubilee oil field yesterday December 15, 2010.

Ghanabusinessnews.com has been unable to reach the Vice President’s office for comments.

Source: ghanabusinessnews.com

Oil contributes over $550m of $1.3b FDI in Ghana

In less than 24 hours, Wednesday December 15, 2010 Ghana would pump its first oil in commercial quantities from the Jubilee oil fields and the country will become one of the world’s producers of oil.

The Jubilee oil field is the largest to be discovered in West Africa in the last 10 to 15 years. It contains 1.5 billion barrels of oil and has 17 wells, according to Tullow Oil, the major stakeholders in Ghana’s nascent oil industry.

And even before commercial production of oil begins in the country, the sector has contributed over $550 million to the total foreign direct investment (FDI) into the country amounting to $1.3 billion according to the Bank of Ghana.

The central bank says the investment in the oil sector has contributed significantly to the country’s Foreign Direct Investments (FDI).

“FDI flows were estimated at over $1.3billion of which the oil sector contributed a portfolio investment of over $550million,” said Kwesi Amissah Arthur, governor of the Bank .

He however, indicated that these developments in the financial and capital account were offset by developments in the current account which recorded a deficit of $1.8billion.

Total transfers of $1.2 billion were accrued into the economy from January to October 2010 as compared with $1.3 billion recorded for the same period in 2009, he said.

By Ekow Quandzie
ghanabusinessnews.com