Ghana+Petroleum+and+Natural+Gas

=China National Offshore Oil Corporation (CNOOC) And China Petroleum & Chemical Company (Sinopec) Are Highly Likely To Heavily Invest Into Ghanaian Petroleum And Natural Gas Over The Next Five Years=

Executive Summary:
It is highly likely that China will continue to invest heavily into Ghanian based petroleum and natural gas projects in the next five years. In 2012, China Development Bank (CDB) granted Ghana a USD 3 billion loan to be used for development of the oil and gas sectors of the nation. In order to pay for this loan, Ghana National Petroleum (GNP) would transfer their 13.75 percent stake of the newly discovered Jubilee oil field to UNIPEC Asia Company. This agreement guarantees China 13,000 barrels of crude oil daily for the next fifteen and a half years. GNP and Chinese companies, specifically CNOOC, have cooperated in the past; in 2010, CNOOC and GNP combined their bids for Kosmos Energy's 23.49 percent stake in the Jubilee oil field. While their offer of USD 5 billion topped the previous USD 4 billion offered by Exxon Mobil, it was ultimately rejected. It is likely that CNOOC like continue to pursue stakes in the Jubilee oil field, likely with the help of the GNP. In regards to natural gas, part of the deal between UNIPEC and GNP was directed toward to development of the Ghana's petroleum and natural gas sectors. Two natural gas processing plants would be built and operated by Sinopec.

Discussion:
Ghana's petroleum industry is rapidly growing. Currently, it is believed that its oil reserves could be as high as 5 billion barrels making it the sixth largest country in Africa in terms of oil reserves. The Jubilee oil field, located 60 km off of the coast of Ghana, was in 2007 by Tullow Oil. The field is estimated to contain approximately 600 million barrels of oil and have the potential for up to 1.5 billion barrels. Currently, the field produces an average of 115,000 barrels a day as of 2013.

In 2012, the government of Ghana and CDB signed an agreement granting Ghana a USD 3 billion loan to be used for development of the oil and natural gas sectors of the nation. In order to pay for this loan, Ghana agreed to transfer GNP's 13.75 percent stake in the Jubilee oil field over to UNIPEC Asia Company. This stake would guarantee China 13,000 barrels of oil daily for the next fifteen and a half years. This totals to around 750 million barrels of oil which equals to approximately USD 6.4 billion at projected oil prices. While the deal was approved by majority decision in the Ghanian Parliament, it faces criticism from the minority. A law regarding petroleum states that the "nation's oil should not be collateralized for more than 10 years".

In the USD 3 billion loan from CDB, two natural gas processing plants near the Jubilee oil field were listed among the infrastructure projects. These plants would be built and operated by China Petroleum & Chemical Corporation. There were delays in the disbursement of the loan because of difficulties on the part of CDB. As such, Ghana could not pay SINOPEC, which lead to SINOPEC threatening to leave the project. However, in 2013, the loans finally came through allowing Ghana to pay SINOPEC USD 188 million and continue work on the projects. These plants are projected to be fully operational in 2014.

In 2010, a joint venture between GNP and CNOOC attempting to purchase Kosmos Energy's 23.49 percent stake in the Jubilee oil field had the two companies put forth a bid of USD 5 billion. This topped Exxon Mobil's bid of USD 4 billion, but after a year of talks, it was still rejected. However, according to Rolake Akinola from the consulting company Eurasia Group, CNOOC and GNP will still pressure Kosmos Energy for their stake.

Analytic Confidence:
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, did not use a structured analytic method, worked alone, and collaborated with a team. The subject is moderately complex and the deadline was moderately difficult to meet.


 * Analyst****:** Jared DeTal