Ghana Blocks Exxon Oil-Field Deal

By WILL CONNORS
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."

Instead, it "supports the strategic intent and efforts of [Ghana National Petroleum] to acquire Kosmos's Ghana assets at a fair market value," the letter said.

"We felt that it had gone far enough that we needed to make a clear-cut policy statement to [Exxon] that if they want to come into the country, let them come in through another avenue and respect our laws," Mr. Oteng-Adjei said Monday in an interview. "We want to do things right from the beginning."

The decision is the second recent setback for Exxon's expansion plans in Africa, after an attempt to buy a stake in a big Uganda field also fell through.

With huge reserves in nearby Nigeria and recent discoveries up the coast in Sierra Leone, the Gulf of Guinea has emerged as a major new oil region.

Jubilee is one of the largest oil discoveries in recent years and, like Nigeria, holds the type of light, sweet crude oil that is in high demand globally.

Kosmos, which is funded by private-equity firms Blackstone Group LP and Warburg Pincus LLC, agreed in October to sell its 23.5% stake in Jubilee, which holds an estimated 1.8 billion barrels of oil. The deal was valued at an estimated $4 billion.

A person close to Kosmos said neither the Ghanaian government nor its state-owned company has the right to "withhold consent for a technically qualified and financially capable company."

The person said Ghana National Petroleum failed to make a proposal for Kosmos's stake when it had the opportunity.

Mr. Oteng-Adjei said Ghana has retained Morgan Stanley as its adviser and remains ready to negotiate with Kosmos. "If they change their minds and decide to stay and work with us, we will work with them like any other partners," Mr. Oteng-Adjei said.

Mr. Oteng-Adjei declined to comment on talks with other parties, including Cnooc.

A Ghana National Petroleum official didn't respond to requests for comment.

"Exxon Mobil routinely evaluates potential development opportunities around the world," an Exxon spokesman said by email. "We do not comment on the details of commercial discussions or opportunities."