GNPC, CNOOC Bid $5B to Buy Kosmos Stake

NEW DELHI(Dow Jones Newswires), Nov. 1, 2010

State-owned Ghana National Petroleum Corp. and China's Cnooc made an unsuccessful joint bid to buy U.S.-based Kosmos' assets in the African nation for $5 billion, a GNPC official said Monday.

The deal included a stake in a massive oil field that was once sought by U.S. oil giant Exxon Mobil, and is a sign of the heated global competition among Western and Asian oil companies in one of Africa's hottest oil frontiers.

GNPC Chief Geophysicist Gabriel Q.A. Osatey said that the bid was rejected by Dallas-based Kosmos. Speaking on the sidelines of an oil conference, Osatey said that "GNPC wanted to buy" Kosmos's assets, but wasn't able to do so.

The joint bid from GNPC and and Cnooc is the lastest sign of Chinese interest in a country that contains massive offshore oil reserves. Last September, China Export Import Bank loaned Ghana $10.4 billion for infrastructure projects, and the China Development Bank provided a separate $3 billion loan for the development of the country's oil and gas sector.

Ghana's entry into the ranks of major African oil producers will be heralded in December by first production at the giant Jubilee oil field, estimated to hold 1.5 billion barrels. Exxon Mobil last year bid $4 billion for Dallas-based Kosmos's 23.5% stake in the field, generating strong opposition from Ghana's government. But last August, Exxon Mobil backed out of the deal for unspecified reasons.

Kosmos, which is backed by private equity firms Blackstone Group and Warburg Pincus, shares the Jubilee field with Anadarko Petroleum, Tullow Oil, EO Group and GNPC. Kosmos declined to comment for this story.

Some analsyts said that Kosmos may not be willing to sell because the price offered by GNPC and Cnooc is too low. The Buckingham Research Group said in a note to clients in September that Anadarko's stake in in Jubilee, which is identical to Kosmos's, has an estimated value of $6.75 billion.

Fadel Gheit, an analyst at Oppenheimer Research, said Kosmos is in a difficult situation because even if the company has other potential buyers willing to pay more for its assets, Ghana's goverment and its economic ally China will keep applying pressure to have the first option on the deal. "The value of the stake is in the eye of the beholder," Gheit said.

Cnooc is China's largest offshore oil producer by capacity. The majority of Cnooc's production comes from China, but the company also owns oil fields in Nigeria, Australia, Indonesia and other countries. Recently it agreed to a $2.16 billion investment in a South Texas oil and gas shale field, the first major U.S. foray for a state-run Chinese oil company.

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