The bid will compete against Exxon Mobil Corp.'s (NYSE: XOM), $4 billion offer for 23.5% of the discovery, known as Jubilee.  The new oil field is thought to hold more than 1.8 billion barrels of light, sweet crude oil, the world's most sought-after category, The Wall Street Journal reported today (Monday).

The announcement that the two are in advanced talks to put together a bid came as a surprise after Dallas-based Kosmos Energy told bidders last week it had "entered into an exclusive binding agreement" with Exxon to sell the stake in Jubilee.  Kosmos is partially owned by private equity firms Blackstone Group LP (NYSE: BX) and Warburg Pincus.

The rival bid, which is expected to be about the same amount or slightly above Exxon's offer could set up legal and political battles lasting for months, one person familiar with the matter told the Journal.

Kosmos feels it can sell the stake to whomever it wants, so long as the Ghanaian government gives its consent, and the Ghanaian government "can't be unreasonable in their refusal," the unidentified source added.

But the Exxon-Kosmos deal riled the Ghanaian government and GNPC, which had been trying to increase its 13.8% stake in the field.

"I don't see the deal as done," said GNPC chief executive Thomas Manu told the Journal in an interview, adding he believed the country had the right to block the offer.

The news follows recent reports that China, the world's second-largest oil consumer, is also in talks with Guinea, another resource-rich West African nation, over possible financing for infrastructure and minerals projects – and to prospect for oil, the Financial Times reported.

Guinea, China International Fund and the Angolan state oil company have signed a "memorandum of understanding" to explore for oil, the paper said.