Suspension of $225m insurance for FPSO not likely to affect Ghana’s first oil
It does not appear that the suspension of a $225 million political risk insurance for the Production Storage and Offloading (FPSO) vessel which is due to produce Ghana’s first commercial oil at the Jubilee oil field would affect production in anyway.
Tullow Oil, the major stakeholders in Ghana’s emerging oil sector says arrangements are on track to produce the first commercial oil in Ghana, early December. It has said that an initial 50,000 barrels of oil per day would be produced.
The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group and its partners suspended a $225 million political risk guarantee contract for the FPSO sometime in July.
In a joint statement issued on MIGA’s website Thursday July 29, 2010, it said the parties agreed to this suspension in order to conduct due diligence into the conditions of a service contract between MODEC and Strategic Oil and Gas Resources (Strat Oil).
“The parties note they agreed on a suspension because of the importance of the project in Ghana and their shared intention to have all issues resolved as soon as possible so that the project can be resumed,” it added.
When ghanabusinessnews.com enquired from MIGA, how soon the due diligence would be completed, an offifial, Mallory L. Saleson who is the Senior Communications Officer responded by email and said, “The evaluation is still ongoing. There is no conclusion yet.”
Meanwhile, a GNPC source has given a contradictory information to ghanabusinessnews.com, saying the companies have been cleared by MIGA. But from MIGA’s response, if the investigation is not concluded, then the companies involved could not have been cleared.
MIGA has said on its website that investors and lenders in today’s dynamic investment climate understand the potential benefits of investing in emerging markets. They also understand the critical importance of addressing the political risks that may accompany an investment in an untested environment. MIGA can help investors and lenders deal with these risks by insuring eligible projects against losses relating to: Currency transfer restrictions , Expropriation , War and civil disturbance , Breach of contract , Non-honoring of sovereign financial obligations
Adding that MIGA guarantees offer much more than just the assurance that losses will be recovered. Our insurance also benefits investors and lenders by:
Deterring harmful actions: MIGA’s relationship with shareholder governments provides additional leverage in protecting investments.
Resolving: As an honest broker, MIGA intervenes at the first sign of trouble to resolve potential investment disputes before they reach claim status, helping to maintain investments and keep revenues flowing. If MIGA is unable to prevent a claim, our strong balance sheet allows us to make prompt payments.
By Emmanuel K. Dogbevi