Ghana: Mills Complained to U.S. About Oil Company

Tullow Oil
Eirik Raude, semi-submersible rig, drilling offshore Ghana for Tullow Oil.
17 December 2010
allAfrica.com
document

President John Atta Mills complained to the United States in February this year about the behaviour of an oil company involved in the exploitation of the country's oil resources, according to a U.S. diplomatic cable published by WikiLeaks.

The February 16 cable reported on a meeting between the president and the top U.S. official on Africa, Johnnie Carson, on February 3.

The cable reported Mills as telling Carson that when the Texas-based company, Kosmos Energy, were rumoured to be interested in selling their asset in the Jubilee Field off Ghana, they had denied it. (Kosmos has described its Jubilee discovery as "one of the largest oil discoveries worldwide in 2007 and the biggest find offshore West Africa during the last decade.")

The cable continued: "Later, when Kosmos announced their intention to sell, he [Mills] said the GOG [Government of Ghana] expressed interest in buying shares.

"According to President Mills, Kosmos invited a delegation to go to London to discuss a potential sale, but before the meeting the CEO of ExxonMobil informed Mills that Exxon had entered into an exclusive agreement with Kosmos to purchase the asset.

"Mills acknowledged the right of Exxon to enter into such an agreement, but said that he felt both Ghana and he personally had been misled and disrespected by Kosmos."

The full text of the cable published by WikiLeaks follows:

C O N F I D E N T I A L SECTION 01 OF 04 ACCRA 000139

SIPDIS

WHITE HOUSE FOR USTR LAURIE-ANN AGAMA
USDOC FOR MAC/ITA
TREASURY FOR ADAM BARCAN
DEPARTMENT FOR EEB/CBA SUE SARNIO
DEPARTMENT FOR EEB/OIA BRADLEY STILWELL

EO 12958 DECL: 02/03/2020
TAGS EPET, ECON, ELAB, EINV, ENRG, PGOV, PREL, SNAR, IV,
NI, TO, GH
SUBJECT: PRESIDENT MILLS DISCUSSES OIL AND WEST AFRICAN
ISSUES

Classified By: Econ Chief Philip Cummings for reasons 1.4 (b) and (d).

¶1. (C) SUMMARY. During a February 3 meeting with Assistant Secretary Carson, Ghanaian President Mills expressed his commitment to rule of law and transparency. He also stressed the importance of respect and openness in the way oil companies engage with Ghana, highlighting Kosmos Energy as a case where he felt that was lacking. Mills expressed his support for an observation mission to Guinea and said that ECOWAS approval was likely. Mills said he has been in contact with President Faure in Togo and President Gbagbo in Cote d'Ivoire to encourage free, fair, transparent and peaceful elections in those countries. Mills acknowledged that he was worried about the prolonged absence of Nigerian President Yar'Adua from Nigeria and expressed his hopes for a democratic transition there. He acknowledged the problem of child labor in Ghana, but highlighted the challenges of an inadequate number of schools and a cultural acceptance of children working to support their families. Mills said that Ghana is struggling with drug trafficking and increased drug use, and said he is ordering increased checks at Ghana's airports. END SUMMARY.

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TRANSPARENCY IN OIL REVENUES
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¶2. (C) Assistant Secretary Carson, accompanied by the Ambassador, Special Assistant Cook and Econoff, met with President John Atta-Mills on February 3, 2010. Carson strongly emphasized the need for leadership in ensuring that Ghana's oil resources are managed for the benefit of the country. He stressed the importance of adherence to rule of law and transparency to maintain Ghana's attractiveness for investment and its ultimate success in developing its oil resources. Mills said he is determined to ensure oil will be a blessing, but that a number of corrupt (unnamed) oil company representatives have attempted to bribe him. He said that he refused the money and was offended by their efforts.

¶3. (C) Mills stated without reservation that he was committed to the rule of law and transparency. He also added that Ghana would account for all oil revenues in a transparent manner. He noted that he had recently sent a Right to Information bill to Parliament that would increase transparency. He said he regarded governance of the oil sector as a serious responsibility, and stressed that oil revenues belong to the people of Ghana, not their political leaders. He said that Ghana has faced challenges, but that its leadership will do what is right.

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KOSMOS OFFENDED PRESIDENT MILLS
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¶4. (C) Carson stressed the importance of fair and legal processes as oil development ramps up. He cautioned that, once tarnished, the image of Ghana would be difficult to improve. Mills agreed and said that he has spent many hours discussing the importance of rule of law with his officials. He stressed that many Ghanaian officials were educated in the U.S., so they are not inclined to discriminate against American companies. That said, Mills claimed that many of the petroleum agreements negotiated under the former administration were inexplicably very different from each other, implying that some contracts were gained unfairly. He gave no details on what contracts he felt might be unfair.

¶5. (C) Mills emphasized the importance of respect in dealing with the GOG, claiming multiple offenses by Kosmos Energy. Mills claimed that Kosmos initially denied that they were planning to sell their asset in the Jubilee Field when they were rumored to be interested in selling. Later, when Kosmos announced their intention to sell, he said the GOG expressed

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interest in buying shares. According to President Mills, Kosmos invited a delegation to go to London to discuss a potential sale, but before the meeting the CEO of ExxonMobil informed Mills that Exxon had entered into an exclusive agreement with Kosmos to purchase the asset. Mills acknowledged the right of Exxon to enter into such an agreement, but said that he felt both Ghana and he personally had been misled and disrespected by Kosmos. Mills seemed to separate ExxonMobil from Kosmos to a degree, praising ExxonMobil's expertise in oil exploration and production. Mills raised the problem of Kosmos letting other companies view sensitive data in what he described as a violation of Ghanaian law. He said that according to Ghanaian law, GOG consent is required before such access can be granted, and that Kosmos had allowed 26 companies to view the data. Mills asserted that Kosmos has not been transparent in their dealings with the GOG, but that the GOG will adhere to transparency and rule of law in its dealings with Kosmos. He also said that he did not want to create the impression that the GOG is singling out any one company for mistreatment.

¶6. (C) (NOTE: Two days prior, the Minister of Energy wrote a letter to ExxonMobil CEO Tillerson, saying the GOG is unable to support an ExxonMobil acquisition of Kosmos's Ghana assets as long as the companies retain their exclusivity agreement and deny the GOG a role in the asset acquisition process. The Ambassador already raised objections to statements in the ExxonMobil letter with the Minister of Trade and Industry and the Foreign Affairs Advisor to the President. END NOTE.) Assistant Secretary Carson thanked Mills for his candor and agreed with the need for transparency and courtesy in business deals. He stressed again, however, the absolute importance of adhering to the rule of law and transparency in resolving any disagreements with Kosmos and Exxon.

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OBSERVATION MISSION IN GUINEA LIKELY
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¶7. (C) Assistant Secretary Carson asked if the GOG supported an observation mission of 30-40 civilians, diplomats, and military to monitor developments in Guinea. Mills agreed and expressed confidence that ECOWAS would approve the mission at its upcoming meeting in Abuja on February 15. He noted that Ghana condemned Guinea's government after the September 28 massacre, a stance Mills described as difficult. He said the military had no right to take power, and Ghana wants to see a return to normality.

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GHANA ENCOURAGING FREE ELECTIONS IN TOGO AND COTE D'IVOIRE
--------------------------------------------- -------------

¶8. (C) Assistant Secretary Carson brought up the importance of peaceful elections in Togo. Mills described a close relationship with Togolese President Faure Gnassingbe. Mills said he has spoken to him on multiple occassions about the need for free, fair, transparent and peaceful elections. Based on their private conversations, Mills expressed confidence that his intention to maintain peace is sincere, but he needs moral support and encouragement. Mills said that he also visited Cote d'Ivoire and urged President Gbagbo to hold free, fair, transparent and peaceful elections.

--------------------------------------------- -------------
GHANA WANTS DEMOCRATIC SOLUTION TO THE ABSENCE OF NIGERIAN PRESIDENT
--------------------------------------------- -------------

¶9. (C) Assistant Secretary Carson described the absence of Nigerian President Yar'Adua as a political vacuum, and stressed the need for democracy, stability, and adherence to the laws and constitution of Nigeria. Mills agreed and said he found the situation in Nigeria difficult to understand,


ACCRA 00000139 003.2 OF 004


because under Ghanaian law the Vice President always assumes the President's duties when the President is out of the country, even if only for a short time. He said that Nigeria must follow a democratic path, or it could trigger "unfortunate developments."

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CHALLENGES IN REDUCING CHILD LABOR
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¶10. (C) Assistant Secretary Carson praised the improvements Ghana has made with regard to combating the worst forms of child labor, but urged a continuing commitment to progress, including in the cocoa industry. Mills acknowledged that criticisms against Ghana for child labor are valid, but described major challenges. Many areas where children work do not have schools. He praised the work that USAID and MCC have done to build schools, and was hopeful that as education opportunities increase, child labor will decrease. In addition, parents often want to pass on traditional work skills to their children. He noted that some cases of child labor can be valid, such as the work he did on his family farm on weekends and vacations as a youth. Mills, however, was firm in his disapproval of any work that interferes with education. The Assistant Secretary urged President Mills to ensure that Ghana continues to focus on progress on the issue, noting that it is viewed very seriously in the U.S. and has very specific attention in Congress.

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COUNTER-NARCOTICS COOPERATION VALUED
------------------------------------

¶11. (C) Assistant Secretary Carson expressed great concern about increasing drug trafficking in West Africa, and stressed the need for sustained USG-GOG cooperation to combat it. Mills said he was grateful for U.S. cooperation and acknowledged that many problems in West Africa can be traced back to trafficking. He explained that some countries in the region do not have the capacity to enforce their CN laws, but he is personally committed to enforcement in Ghana. For example, whenever he leaves Ghana, he asks to be screened to demonstrate that all travelers, even those departing from the VIP lounge, should be screened. He was also concerned that Ghana is no longer just a transit point for drugs, but is becoming a user country, and said that drug use would lead to a bleak future for the Ghanaian people. He thanked the USG for provision of a body scanner and noted that he would like assistance in acquiring a second scanner for use in the VIP area. He also added that the GOG is working to strengthen the navy to target drug-carrying ships, but that he would discuss the matter in greater detail with the Ambassador.

¶12. (C) COMMENT. As usual, Ghana has shown that it will strongly and publicly oppose any unconstitutional changes of power in the region. On the issue of oil, however, we are concerned that President Mills's very real personal commitment to rule of law and transparency may not be reflected in the real life treatment of investors. President Mills's sense that Kosmos has not treated the GOG with respect and transparency is problematic, but his clear acceptance of the primacy of rule of law should ultimately counterbalance this. Perhaps significantly, Mills stopped well short of statements in recent letters from the Minister of Energy and GNPC to ExxonMobil and Kosmos saying that the GOG would not support the sale of Kosmos's asset under the firms' current agreement. He was positive in his statements about ExxonMobil. There may still be room to create positive outcomes for Kosmos and ExxonMobil in Ghana. END COMMENT.

¶13. (U) Assistant Secretary Carson has cleared this message.


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TEITELBAUM

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