IFC, Kosmos Energy sign loan agreement for Ghana project
The International Finance Corporation (IFC) has signed a loan agreement with Texas-based Kosmos Energy to finance the development of the Jubilee oil field in Ghana, the IFC has said in a press release copied to ghanabusinessnews.com.
According to the IFC, a member of the World Bank Group, it signed a loan agreement for $100 million with Kosmos Energy, one of the key partners developing Ghana’s Jubilee field. The IFC says the development of the oil and gas project in Ghana, will help diversify the country’s economy and meet domestic power demand.
It said its senior and junior loan tranches are part of a $750 million
debt package for U.S.-based Kosmos that IFC helped mobilize, primarily from commercial banks.
Earlier this year, according to the press release, the IFC signed a $115 million loan agreement with British Tullow Oil, another key Jubilee oil field partner, bringing IFC’s support for the project to $215 million. Kosmos Energy and Tullow Oil are independent oil and gas exploration and production companies.
The project, which is located in deep water some 60 kilometers off the coast of Ghana, will produce domestic crude oil, generating foreign exchange income for the country and substituting expenditures for oil imports. It is also expected to boost government revenues, providing much needed income against the background of the global economic downturn, the release said.
Commenting on the loan agreement, W. Greg Dunlevy, Kosmos Energy Executive Vice President and Chief Financial Officer, said, “IFC’s support for the Jubilee project is critical for the Jubilee
partners and for Ghana,” adding, “IFC’s loan at this time of tight credit markets has been key in securing commercial bank financing in parallel. Equally important, IFC is assisting us in achieving the broad stakeholder participation that we are aiming for.”
“The Jubilee oil field is a landmark project for Ghana,” said Somit Varma, IFC’s Global Head for Oil, Gas, Mining, and Chemicals. “The project will provide a new and vital revenue source in a country that has one of the best governance track records in Sub-Saharan Africa.”
IFC also indicated that it is supporting Kosmos Energy and Tullow Oil in preparing environmental and social management plans for the project. The loans, it added, also are tied to other milestones such as management of biodiversity conservation, safe handling of waste, and emergency response procedures.
Next to oil, the Jubilee field is expected to produce gas to support about 400 megawatts of new power generation, equivalent to about 30 percent of Ghana’s annual power consumption. The project also will stimulate the Ghanaian economy by purchasing goods and services locally.
The IFC is advising the companies on enhancing the project’s benefits for local communities and stakeholder engagement.
Ghana is set to become one of Africa’s newest oil exporters in June 2010 when production begins at the offshore Jubilee field, which was discovered in June 2007 and has potential resources of as much as 1.8 billion barrels, according to Tullow Oil.
The Jubilee oil field has 17 wells and it is said to be the largest to be discovered in West Africa in the last 10 to 15 years.
By Emmanuel K. Dogbevi