by Daniel Oppong
I have been looking for the right word to describe being in a position in which you cannot quit, but stay and fight. A situation in which all odds are against you, yet the only option left for you is to push until you win. That’s the exact situation that the author of the book, “In Pursuit of Jubilee”, George Yaw Owusu finds himself soon after he had led the country to discover “the black gold”, as he puts it.
The Story
George left the country in the 1970s to seek greener pastures in the USA. There he started a life as a 27 year old young man, earned a degree, and later worked in a chemical plant. All through to his mid fifties thereabouts, he had worked in several petrochemical companies, and had become a commodities manager at Shell in Houston. Living his independent life and hoping to one day return to Kumasi from where he had left. Then one evening he receives a call, that would change the course of his life for the next decade.
When the President Kuffor assumed office in 2001, his administration made oil discovery a national priority. Ghanaians in the Diaspora were actively encouraged to source for oil companies, a focus that made Houston a frequent destination for energy sector officials. It was during such trips that George received a call, which ultimately led him to meet with Mr. Van Dyke, CEO of Vanco Energy. Although George would eventually lead Vanco to Ghana to solicit for an oil block in 2002, George was unpleasantly taken off the deal. Heartbroken, with a paltry compensation, George could have returned to his work, and forgot about doing anything for his country.
Instead, he hooked up with another group Ennex, and quickly formed the EO group and came back to Ghana and worked his way through the Ministry of Energy, the GNPC and got a signed petroleum agreement between the government of Ghana, and Ennex/EO group. Ennex group pulled out because it couldn’t guarantee funding. Owusu is left alone with a timeline to secure a partner or the deal is over. He spoke to anyone who would listen, but they said, no thanks. Because they all knew Ghana was an oil graveyard. He pulled more strings and finally, met Jim Mussleman, the CEO of Kosmos. Subsequently other partners came on board (Tullow, & Anadarko) and work began. Eureka! They struck oil!
Mid 2007, they had discovered the black gold where everyone had called a graveyard. Celebrations began, George was bestowed the Order of the Volta for being instrumental in bringing about the discovery of Oil which took almost forever to discover. Plans for production was underway, but a change of government administration would alter the trajectory for these oil explorers. Partners needed different role specifications (who would be the Operator). The new government had refused to go ahead as planned. They believed that, the EO group was a front group for the former President Kuffor, and that they had paid their way through. The new government found it questionable that ordinary Ghanaians would lead a team of investors to discover oil where everyone had declared an oil graveyard. Something must be wrong somewhere. However, Anadarko’s due diligence which was conducted by the U.S. DOJ had cleared George of involvement in all suspected illegal activities. But the A.G of Ghana refused to believe it.
In the coming months, George was faced with several interrogations from the CID, FBI, and partner’s lawyers. He was afterwards sacked from a job he created at Kosmos and had to deal with the antagonistic attitude of his partners and the government. All because he was perceived to be a criminal. His account being frozen, the media publishing untrue stories about him, his house being searched, having to live on friends’ benevolence, and frantically searching for investors who would buy his share of the jubilee fields, because he could not raise the funds to participate in the daily operations of the field. He was vilified, accused, and opprobriously thought of in the world of business across the world.
Tullow came to his rescue, bought his 3.5% share of Kosmos’s share in the Jubilee field for $305million. And with the inadvertent help of wikileaks, documents of his interrogations with the FBI was released to the public. His detractors began to ease up. Hope came through for him. He heaved a deep sigh as he bowed out of the petroleum venture, that at the beginning was seemingly adventurous but turned out to be a journey of vehement antipathy, bedevilling, and impasse.
The Lessons
Here are the critical points of thought for me, as I engaged my mind in the masterclass of “In the Pursuit of Jubilee
- Game Theory:
It’s a simultaneous imperfect game. Every move was critical! After George was painfully taken off the Vanco deal. He became aware of the business world. Passion is not enough. He knew he had to put his acts together, and get on the game. As I read through the book I was watching how George was handling his share of Jubilee. Kosmos offered him a pittance of $18million to buy his share. He rejected the offer. Sonagol offered $20 0million, that he also rejected. It was a lose-win situation, that was ominously heading towards a lose-lose. Time and tide were chasing widely against him. Even at the last minute, he was still objective in his analysis of his worth, to negotiate for the $305million he finally got from Tullow Oil. He inadvertently was pursuing a Pareto improvement game strategy, always keeping in mind what the other party stands to gain in the overall deal. This was indeed a strategic decision science. He could have been outstripped of his share
2. The Law:
As much as it was a tactical game, it was only to be played with skill. And the law was one of George’s tools. He knew he had to stay clean from the Foreign Corrupt Practices Act (FCPA). His vindication of this law did give him the confidence for negotiation. At the very last moments of his freedom from his persecutors, the GRA attempted to charge him for a tax that didn’t apply to him. They sent him a tax bill of $61million. Here again, the law rescued him. The GOG and approved by Parliament specifically stated that no tax shall be levied on petroleum operations other than that was stipulated in the Petroleum Income Tax Law. The GRA told him that he had defaulted the Natural Resource Tax (NRT). They were saying that even though there was a general tax code and rates for the entire country, and everything else was taxed under that code, the NRT still applied. This was a wrong interpretation.
George was surrounded by teams of law moguls both locally and international. In every thing he did. His lawyers kept him afloat. His lawyers were grounded, and Tactical. They were really Petroleum Business lawyers. If George was not this armed, he would have been kicked out long ago. During his interrogation, George was mindful of the implication of every statement he made. I like the part that the CID wanted to take him on for signing on behalf of his partner, Dr Bawuah-Edusei. This meant there was no EO group, hence there was neither a Petroleum Agreement nor an MOU with the GOG, hence there was no block! However, this was easy to deal with; there was no fraud and no attempt to forge Bawuah-Edusei’s signature. George merely wrote Edusei’s name with permission from him (Edusei). This is done all the time in the business world. A legal expert’s opinion was that even if a jury went against all laws and judged the offender to be forgery, maximum fine was two months imprisonment or a fine of $2000 or both and the error would be ordered to be fixed.
3. Negotiations:
In my Oil and Gas Economics class, facilitated by Dr. Ishmael Ackah, I was taught the fundamentals of the Petroleum Agreement Act. We discussed, each component, and how the GOG, the NOC and the Investors are supposed to benefit. This came to play in understanding how EO group and its Partners engaged the government. The fiscal term was negotiated based on whether the block was in shallow or deep waters, the perceived challenges of the geological formations and the quantity and quality of the existing geological and geophysical seismic data of the block.
The fiscal terms that would be negotiated were; Royalty, GNPC’s participation, carried interest, GNPC’s Additional participation, paid interest, Additional oil entitlement after the contractor has achieved the agreed internal rate of return, and the Corporate income tax rate. They also negotiated the proposed work program, the decommissioning requirements and funding, relinquishment requirement, and the development program for any commercial gas discovery.
At the time of media bickering over the EO group’s share of the Jubilee field, Ghanaians were incensed as to why EO got a “whopping 3.5%” while the GOG was getting “only 10%”. When EO initially partnered with Ennex, it got 15% of Ennex’s share. This was renegotiated to the 3.5% when Kosmos came into the picture. What fell on the blindside of the public was that Ghana’s overall income generated by the deal, including tax income, was between 50-55%, and that EO’s share was not from Ghana’s share. The petroleum business is a risky business. Funds are acquired to run projects whose probability of success was minimal, so at all times, partners are either selling or leasing a share of their holdings for funds.
I love the negotiation tactic employed by George and his team when negotiating the sale of his share to Tullow. It was tense. It was exhilarating. Tullow had done their own estimate of the value of the 3.5%, Wood and Mackenzie (an energy and mining research firm) had previously done some research, and there was their estimate. George had his own estimate at $400million. At the time of this negotiation, EO had received a filing from Kosmos for defaulting in paying their contribution to the daily operations of the field. EO was in debt of $61.7million, and per the petroleum agreement, if EO failed to honour its part in 90days, it would forfeit its share of the field. George was owing friends and relatives, as he had to borrow to pay for his trips. If he lost the deal, he would also lose his share and will eventually walk away with nothing. He was in a stalemate. Here’s the twist, his team pointed out to Tullow that they had already publicly declared the value of Jubilee to its shareholders, which was favourable to EO. This made Tullow to raise the figure and finally rested at $305. George walked away from Jubilee with something substantial
4. Media Frenzy:
I wouldn’t want to say much about this, because it was obvious that portion of the media were out for mischief. Untrue headlines, character assassination, vilification, unverified stories, and “Rent a Press” for perpetuators. My MBA lesson is that one should brace oneself for the media frenzy. As much as the media is powerful in broadcasting our work, it can also be very instrumental in bringing your efforts to disrepute, especially in Ghana. You’d need a good publicist. You’d need tough skin. You’d need to learn when and how to respond. At times just shut up and do your work
5. Something wrong:
It’s alright to think that something must have gone wrong, especially when you believe that these partners were friends with the former President. Nonetheless, suspicion without evidence is baseless. The government that took over after the former President Kuffor, had every right to investigate the EO group, but to what end was it. Why would the then A.G refuse to accept the deceleration of the U.S. DOJ about the innocence and non-violation of any law by EO?
The publication in the media, was quite evident, that EO was being targeted. The interrogations, freezing of accounts were all acrimonious. Even if there was something wrong, is that how you frustrate an illustrious son, whose wish was to be part of the major oil discovery in Ghana
6. That word:
I’m looking for that word that describes someone, in a position in which, he’s got only one option, and that is to win. George in every position he found himself through the several negotiations, he had one option, which is to forge forward. Losing was way too expensive.
When I listened to him speak few weeks ago, before I bought his book, he asked that any person who was afraid of losing, should leave the room, because the petroleum business was for the strong minded. During the Tullow negotiations he alluded to being in an impasse. Being in that state can break anyone.
When Ennex left the deal initially, I thought that it would be an easy ground for quitting. But having signed an MOU with GOG to acquire a block, passed all processes, and what was left was the signatures of the partners, that wasn’t a place to rescind. The petroleum business is a tough space. But it’s achievable! George was determined! He wasn’t deterred. And as he put it, “there’s too much work to be done, I didn’t have time to be depressed.”