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US Securities and Exchange Commission investigate FPSO contractor

Ongoing corruption investigations by US authorities against the Jubilee field FPSO contractor MODEC could have implications for the country’s ability to continue production of crude oil, a statement contained in the IPO prospectus of Kosmos Energy said to have been submitted to the US Securities and Exchange Commission stated.

The investigation by the US authorities revisits the issue of the services contract given to Strategic Oil and Gas Resources Limited, a company partly owned by former GNPC boss, Tsatsu Tsikata.

The report suggests that the contract awarded by MODEC appears to have violated the U.S. Foreign Corrupt Practices Act.

A story culled from the Dow Jones by Joy Business refers to statements contained in Kosmos’ prospectus to raise some 500 million dollars from the US capital market.

According to the documents, filed to the U.S. Securities and Exchange Commission January 13, Kosmos said partners in the field as well as the International Finance Corporation are working with MODEC and its legal advisors to investigate potential violations by MODEC under the U.S. Foreign Corrupt Practices Act.

The report refers to a statement posted by MODEC on its website in July last year about due diligence being conducted on the same five million dollar service agreement with Strategic Oil and Gas Resources Limited, the company partly owned by Tsatsu Tsikata, which led to the suspension of the political risk insurance covering the FPSO Kwame Nkrumah last year.

The Japanese firm, MODEC built and now operates the Floating, Production, Storage and Offloading facility currently being used to produce crude oil in the Jubilee field.

It says "as a result of the concerns, MODEC’s long-term funding from a syndicate of international banks for the repayment of funds originally loaned by [Kosmos, along with partners] Tullow Oil PLC and Anadarko Petroleum Corporation to pay for the construction of the FPSO has been suspended pending this investigation. If MODEC cannot access funding, partners in the field "may be required to contribute more funds before September 15 this year in order to purchase the FPSO outright or find an alternative funding source or buyer.

The company quotes in the statement, "if we were unable to do so and lost access to the MODEC FPSO, we would be unable to produce hydrocarbons from the Jubilee Field unless and until we arranged access to an alternative FPSO", unquote.

Officials of KOSMOS Energy in Ghana have declined any comment on the matter and we have so far been unable to reach officials of MODEC.
http://news.myjoyonline.com/business/201101/59840.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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