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EO Group denies wrongdoing in deal with Kosmos

The EO Group of Companies has denied any wrongdoing in its business dealings with Kosmos Energy, which culminated in the oil discovery at Cape Three Points.

The Attorney General’s Department is considering prosecuting EO and its managers on suspicion of breaking Ghanaian laws in its business dealings with Kosmos.

According to a leaked document from the AG’s Department, money laundering and fraud are some of the charges being considered.

But in a statement published on the internet, the company says its managers – George Yaw Owusu and Dr. Kwame Barwuah-Edusei – were the honest brokers who had the willingness, persistence and vision to invest themselves in bringing a sophisticated exploration company to Ghana.

The statement said all the recent bad press about the company is sending bad signals to the international investor community. Here are excerpts from the statement.

Statement Of EO Group Limited

It is time to separate fact from fiction, and end the destructive rumors circulating about EO Group’s role in the discovery of oil and gas reserves in Ghana. Here are the plain facts concerning the central issues:

Who is EO Group Limited?

EO Group Limited is the successor to a Ghanaian corporation established in 2002 by George Yaw Owusu and Dr. Kwame Bawuah-Edusei – two respected Ghanaian ex-pats who were then private individuals living in the United States and looking for ways to bring economic opportunity and investment to their native land.

There are no other owners, officers or directors of EO Group. No one else has any stake or interest in this company, and no one else ever did.

How did EO Group become a part of the jubilee field oil and gas discovery?

It was EO Group that brought Kosmos Energy to Ghana and introduced Kosmos to the Ghana National Petroleum Corporation (GNPC) and the Ministry of Energy (MoE). The principals of EO Group were the honest brokers who introduced Kosmos to Ghana and encouraged Kosmos to commit to apply for the right to explore the West Cape Three Points Block in Ghana’s waters. It was this project that yielded the Jubilee Field discovery.

It was EO Group that impressed upon the GNPC and MoE Kosmos’ integrity, technical expertise and financial capability. Long before anyone knew whether there was oil under that block, EO Group signed on with Kosmos as the Ghanaian member of the team in the application for exploration rights that made the discovery possible.

EO Group and its principals never paid or promised anything to anyone in the Ghana government in order to secure its role with Kosmos or in the block. Its principals simply had the willingness, persistence and vision to invest themselves in bringing a sophisticated oil and gas exploration company to Ghana at a time when no discoveries had been made for many decades and the few oil and gas companies in the country were leaving.

How did EO Group obtain such a potentially profitable interest in the West Cape Three Points block?

EO Group entered into contracts with Kosmos setting forth plainly, in writing, that in return for introducing Kosmos in Ghana and directing its attention to the West Cape Three Points block:

Kosmos and EO Group would each have an interest in the block, Kosmos would pay EO Group an initial fee and would bear some of the exploration and development costs for eo group’s 3 1/2 % interest in the block, and EO Group would reimburse Kosmos for those development costs.

The MoE, GNPC, Kosmos and EO Group then negotiated and entered into a Petroleum Agreement for the block that followed a common division of interest then being used in Ghana:

The contractors would bear 100% of the exploration and development costs and divide among themselves 90% of the production before taxes,

GNPC would receive a 10% share of production with no exploration or development costs, as well as certain highly profitable opportunities to obtain an additional share and a supply for the domestic market, and

The government would receive the royalty of 5% on production and taxes on the income of the contractors from the project.

In reality, because GNPC does not have to front exploration and development costs or incur risk, the profitability of the government’s take from this project is far greater than publicly reported.

The West Cape Three Points petroleum agreement yields good value to Ghana, and is both reasonable and fair in view of the near complete absence of success in prior efforts to find oil in Ghana. Only through the contractor group’s application of great technical expertise, investment of the massive funding required for deep-sea exploration and undertaking of enormous risks could this discovery have been made.

Is EO Group’s share of this find fair?

EO Group, through its principals, quite literally brought the parties together to achieve the discovery of the Jubilee Field that is a country-changing event for all Ghanaians. EO Group’s principals invested themselves, their credibility and their resources in the effort. It was a huge gamble, and it succeeded beyond anyone’s imagination.

In fact, prior to bringing Kosmos to Ghana, EO Group had joint ventured with another exploration company that sought this same block but lacked the commitment and financial heft to see it through to conclusion. EO Group reached out to Kosmos and set in motion this enormously successful effort.

EO Group stands to receive the same benefits any business venture can achieve through innovation, dedication and risk tolerance, when the effort results in a huge discovery of petroleum. If no oil had been found, they would have been paid only their initial fee for their time and no one would have been concerned with their wasted effort. If the discovery was only marginally successful, no one would think the deal unfair. Because the project was hugely successful, they should not now be second-guessed and punished.

What is the impact of the continued uncertainty about EO Group?

EO Group and its principals have been subjected to an incomprehensible campaign of character assassination, false allegations of misconduct, and abuse. No one should suffer such treatment for bringing such great benefit to their countrymen, and certainly not innocent men such as the two EO Group principals.

The people of Ghana are watching. Who will risk themselves to bring economic development to a nation that then turns on them, vilifies them, attempts to destroy them?

The world is watching. The international community hailed our democracy last summer and reminded us that we must abide and honor our legal and contractual obligations. Yet, now we are sending a message to the economic investment community across the globe that Ghana might reject and reform contracts to flow with the shifting political tides. What worthy investor would risk its money and effort by subjecting itself to such uncertainty, such cost, such arbitrariness?

It is time for this ordeal to end. It is time for Ghana to move forward.

http://news.myjoyonline.com/business/201001/41243.asp

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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