The Parliament of Ghana on Wednesday approved an offtaker agreement between the Ghana National Petroleum Corporation (GNPC) and the UNIPEC Asia Company Limited for the lifting of crude oil from the Jubilee Field.
The agreement is under the Master Facility Agreement (MFA) between Ghana and the China Development Bank (CDB).
Under the agreement, UNIPEC Asia Company would purchase and lift from GNPC, 13,000 barrels of Jubilee Crude Oil per day, amounting to five cargoes a year at a cargo size of 950,000 net US barrels.
In pursuance of Government’s agreement with the CDB, for three billion dollars to undertake various infrastructure projects in the country, the MFA requires government to enter into separate subsidiary agreements with the CDB for each project to be implemented under the loan facility.
The first subsidiary agreement for $850 million for the financing of the Western Corridor Gas Infrastructure Project was approved by Parliament last week.
As part of the requirement for the draw down on the facility, the GNPC is to enter into an Offtaker Agreement with UNIPEC Asia Company Limited for the sale and purchase of Jubilee Crude and part of the proceeds paid into a special account at the Bank of Ghana (BOG) for the purposes of servicing the facility.
As a consequence, Government, the CDB, the BOG, the GNPC and UNIPEC Asia entered a Five- Party Agreement for the purpose.
As per the terms and conditions of the agreement, which has a tenure of 15 and a half years, the agreement could be terminated automatically if at any prior time to the expiration of the MFA, all outstanding amounts are irrevocably repaid in full and any outstanding commitment to provide financial accommodation are cancelled, or the seller has discharged in full its obligation in respect of agreed volumes to be delivered under the Offtaker Agreement.
The quality of crude to be delivered is the normal export quality grade of Jubilee Crude oil as available at the time of lifting at the Jubilee Terminal. The agreement provides for the GNPC to deliver the Jubilee Crude Oil to the buyer in bulk FOB (Free on Board) at the Jubilee Terminal on to a vessel provided by the buyer.
The Minority in a spirited debate for the approval of the agreement contended that it iniquitous for government to constitutionally collaterise the Ghana’s oil beyond 10 years because it contravened the dictates of the Constitution as contained in the Petroleum Revenue Management Act.