Move Ends Talks on Chunk of Big Oil Discovery, Opens Doors for Other Players

By WILL CONNORS, SIMON HALL and DAVID WINNING

ACCRA, Ghana—Exxon Mobil Corp. said Wednesday it has canceled plans to buy $4 billion in oil assets here controlled by Kosmos Energy LLC, dealing a blow to the U.S. oil company’s drive to tap an important new oil region in West Africa and possibly triggering a scramble for a stake in a new frontier market.

“ExxonMobil has terminated the share purchase agreement with Kosmos Energy,” an Exxon spokesman said. The spokesman declined to provide further details of the talks.

The move ends fraught negotiations over a large chunk of one of the oil industry’s biggest recent discoveries and opens the door for other players—namely Chinese state-run oil company Cnooc Ltd.—to enter the Ghana oil market just months before production begins.

In June, Ghana’s state-run oil company GNPC signed an agreement with Cnooc valued at more than $4 billion to purchase the Kosmos stake, according to a person in Ghana familiar with the situation. This month, President of Ghana John Atta Mills had scheduled a meeting with the State Department’s top official for Africa, Johnnie Carson, to inform him that the government of Ghana would not approve the Exxon-Kosmos deal.

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LAGOS, Nigeria—The government of Ghana blocked the estimated $4 billion sale of a stake in a huge oil field, foiling months of talks between potential buyer Exxon Mobil Corp. and the stake’s owner, Kosmos Energy LLC.

The government accused Dallas-based Kosmos of cutting Ghana’s state-run oil company out of discussions about the field’s development and then sharing information about the field with potential buyers without government permission. The government in recent months itself has scouted for partners to work with Ghana’s oil company, including state-run China National Offshore Oil Corp.

Ghanaian Energy Minister Joe Oteng-Adjei said state-run Ghana National Petroleum Corp. would be the only entity allowed to buy the Kosmos stake in the so-called Jubilee field.

Last week, he sent a letter to Exxon informing the company that a deal with Kosmos wouldn’t receive government approval.

The letter, reviewed by The Wall Street Journal, said the government is “unable to support an Exxon Mobil acquisition of Kosmos’s Ghana assets.”

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By Will Connors
Of THE WALL STREET JOURNAL

LAGOS, Nigeria — Kosmos Energy said Monday it signed an exclusive deal with Exxon Mobil Corp. (XOM) to sell its stake in a significant oil discovery off the coast of Ghana, the first confirmation from either company of the deal, said to be worth $4 billion.

“I can confirm that Kosmos has entered into an exclusive binding agreement with a third party (an affiliate of Exxon Mobil) in relation to the sale of its Ghana assets,” Kosmos Senior Vice President and Chief Financial Officer Greg Dunlevy said in an email to The Wall Street Journal.

The announcement comes a day after it emerged that China National Offshore Oil Corp. (CEO, 0883.HK), or Cnooc, is in advanced talks with Ghana National Petroleum Corp. to make a rival bid for Kosmos’ stake in the field, known as Jubilee.

Dunlevy did not disclose the deals’ price tag, but sources told the Journal over the weekend that the deal was worth an estimated $4 billion.

(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)