How Kufuor's Friends Got Hold of Ghana's Oil

Authorities in the U.S. and Ghana are investigating the Ghanaian company EO, which hit the jackpot with a share in the largest of all recent offshore discoveries in Africa – the Jubilee oilfield.

EO is suspected of using ties to the Kufuor administration to gain preferential terms, according to a finacial times report.

Who is behind EO?

EO was created by two US-based Ghanaians. Kwame Bawuah Edusei, the E in the company, is a medical doctor, stalwart of the former ruling New Patriotic Party(NPP), and according to his political allies a friend of ex-president Kufuor. He was appointed ambassador first to Geneva and then Washington, where he served until last January.

George Owusu, the O in the group, was a Houston-based businessman who worked for oil companies including as a commodities manager for Royal Dutch Shell. Until recently he was also the representative for Kosmos in Ghana.

The two men played a central role in bringing the Texan company to Ghana in 2004 when interest in the country’s potential had ebbed after more than a decade of promising but inconclusive exploration along the coast.

They moved the company from Ghana to the Cayman Islands where it is registered as KG (after Kwame and George) shortly before elections ended in opposition victory a year ago.

Ghanaian officials suspect that EO used its political connections to top officials in the former government to gain a hold on the offshore oil block and win more favourable terms both for themselves and Kosmos.

John Craven, an Irish oil man with much experience in Ghana said his company, Ennex, withdrew from a possible deal on the same oil block in 2003. “Geologically we wanted to do the deal. We could have raised the money to do it but we were uncomfortable with EO’s demands” which included financing a share in the block and fees, he said.

EO gained a stake in what turned out to be the billion-barrel plus Jubilee oilfield when it brought in Kosmos in June 2004.

According to a contract seen by the Financial Times, Kosmos agreed to finance EO’s share of exploration and development costs up to the production of first oil.

Payments made by Kosmos to EO, whose stake could now be worth more than $200m, are also under investigation, according to officials. Kosmos told the FT that “all payments to EO were for operational services rendered and all those fees have been exhaustively audited and documented by Ernst & Young”.

Read the complete article in the Financial Times