Undeveloped parts of Kosmos Energy’s West Cape Three Points (WCTP) Block offshore Ghana, is up for grabs from next month, when the exploration phase of the petroleum agreement covering the block comes to an end and the operator is required to relinquish that part of the block. Reporting to the U.S. Securities and Exchange Commission (SEC) on its licenses in Ghana, Kosmos said even though the petroleum agreement covering the WCTP Block (the “WCTP Petroleum Agreement”) extends for a period of 30 years from its effective date, its exploration phase ends in July 2011, when it would be required to “relinquish the parts of the WCTP Block that we have not declared a discovery area or a development area over.”
“We and the other block partners have a right to negotiate a new petroleum agreement with respect to these undeveloped parts of the WCTP Block, but we cannot assure you that any such new agreement will either be entered into or be on the same terms as the current WCTP Petroleum Agreement,” Kosmos reported to the SEC in its filing on January 13th this year. The petroleum agreement covering WCTP Block, like other petroleum agreements, has a seven-year exploration phase, during which exploration requirements are to be met and plan of development for discovered fields agreed on. Regarding the Tullow-operated Deepwater Tano (DT) license, Kosmos reported that “DT Petroleum Agreement” also extends for a period of 30 years from its effective date and contains similar relinquishment provisions to the WCTP Petroleum Agreement.
The exploration phase for this block, however, ends in January 2013. “We and the other block partners also have a right to negotiate a new petroleum agreement with respect to the undeveloped parts of the DT Block, but we cannot assure you that any such new agreement will either be entered into or be on the same terms as the current DT Petroleum Agreement. The terms of the WCTP petroleum agreement has been described as over generous by analysts, with WoodMckenzie suggesting that compared with the Tullow-operated “DT Petroleum Agreement”, the former left Ghana worse off by billions of dollars.
It is therefore envisaged that government and the GNPC would like to negotiate to improve on the terms of the block and therefore would welcome a situation of competitive bidding, which many Ghanaians have proposed the country resort to. Kosmos Energy operates the WCTP Block with 30.875% interest, the same as Anadarko, with Tullow Ghana Limited having 22.896% interest, whilst Ghana National Petroleum Corporation (GNPC) increased its holdings from 10.0% to 2.5% on commerciality and the EO Group with a 3.5%, and Sabre Oil and Gas Holdings having a 1.854% working interest.
Tullow Ghana Limited operates the DT Block with 49.95% with partners, Anadarko WCTP (18%), Kosmos (18%), GNPC (10%), taking up additional 5% upon commerciality and the Sabre Oil and Gas Holdings Limited (4.05%) as partners. Under an Unitisation and Unit Operating Agreement (UUOA) signed among the Jubilee Partners on July 13, 2009 with the Ministry of Energy, GNPC and the partners in the two blocks, entered into, the discovered fields were to be jointly developed to optimize resource recovery.
Tullow Oil became the Unit Operator, with Kosmos Energy as Technical operator. The Jubilee field is currently producing crude oil at around 70,000 barrels/day and straddles the two WCTP and DT blocks.