The news reaching the Business Intelligence Desk (BID) of The New Crusading Guide newspaper is not pleasant to the ear! A Bird within the corridors of the Ghana National Petroleum Corporation (GNPC) has whispered into our ears that the insurance on the FPSO Kwame Nkrumah has been suspended until further notice.
Apparently the decision to suspend the insurance cover was taken by Multinational Insurance Guarantee Agency (MIGA), the company responsible for the insurance on the FPSO Kwame Nkrumah, IN RESPONSE TO THE ON-GOING DUE DILIGENCE EXERCISE JOINTLY BEING UNDERTAKEN BY THE INTERNATIONAL FINANCE CORPORATION (IFC) AND THE WORLD BANK (WB) ON THE AWARD OF THE JUBILEE PARTNERS’ AWARD OF THE FPSO CONTRACT TO MODEC AND THE LATTER’S AWARD OF AN ADVISORY SERVICES CONTRACT TO MR. TSATSU TSIKATA’S STRATEGIC OIL & GAS RESOURCES (SOG) COMPANY.
Though sources close to the hierarchy of MIGA could neither confirm nor deny that the decision to suspend the insurance had anything to do with the IFC/WB investigations, most Oil Industry Players our BID spoke to, indicated that it was most likely that there was (is) a connection between the two events.
“ONE OF THE FIRST CASUALTIES OF THE IFC/WB INVESTIGATION IS (MIGA), THE COMPANY INSURING THE FPSO. WE JUST RECEIVED A MESSAGE ON THE LINE THAT THE INSURANCE ON FPSO KWAME NKRUMAH HAS BEEN SUSPENDED UNTIL FURTHER NOTICE. SO TECHNICALLY, THE FPSO CANNOT OPERATE, VIRTUALLY ASSURING AND/OR ENSURING DELAY OF FIRST OIL”, confided a source close to one of the Jubilee Field Partners who requested anonymity. He blamed some unimaginative and ‘too known’ elements within the GNPC and the Ministry of Energy for the spate of unwarranted challenges occurring on Ghana’s Oil Industry front just months before first oil in the last quarter of the year (2010).
In another development, AFRICA ENERGY INTELLIGENCE (AEI), one of the five newsletters of AFRICA INTELLIGENCE, a business news site (portal) gathering exclusive, strategic and actionable intelligence, published by INDIGO PUBLICATIONS, and which specializes in gathering and analysis of hard-core, factual information/data on trends in Africa’s energy/oil sector, has reported that CONTRARY TO THE GHANAIAN GOVERNMENT’S EARLIER DECLARED POLICY NOT TO FLARE GAS AT FIRST OIL, SOME OF THE JUBILEE FIELD’S ASSOCIATED GAS WILL BE FLARED OFF UNTIL COLLECTION NETWORKS CAN BE BUILT.
Ghana’s Government pushed through a bill in Parliament banning flaring but the Jubilee Field’s operators won’t be able to re-inject all of the associated gas in order to build up pressure and increase production. That could snuff out the reservoir.
“AS A RESULT THE SURPLUS GAS WILL NEED TO BE FLARED. UNDER PRODUCTION SHARING CONTRACTS THE GAS IN JUBILEE WILL PARTLY BELONG TO THE GOVERNMENT. THIS MEANS THAT GHANA WILL BE PARTLY RESPONSIBLE FOR INSTALLING GAS PIPELINES LEADING TO THE COAST. HOWEVER, WHEN JUBILEE WAS DISCOVERED IN 2007 ACCRA DIDN’T IMMEDIATELY KICK OFF TECHNICAL AND ENVIRONMENTAL STUDIES THAT WOULD BE REQUIRED FOR THE CONSTRUCTION OF GAS PIPELINES”, the AFRICA ENERGY INTELLIGENCE (AEI) report noted.
The AEI report also underscored that THE GHANAIAN GOVERNMENT DOESN’T APPEAR TO HAVE THE MEANS TO PAY ITS SHARE (US$80 MILLION) IN SUCH INFRASTRUCTURE, WHICH HAS BEEN ESTIMATED AS COSTING A TOTAL OF US$1 BILLION. The government’s problem, according to AEI’s analysis, SUITS AT LEAST ONE OF THE FIRMS CHOSEN BY THE GNPC GURUS TO CONSTRUCT THE PIPELINE, NIGERIA’S OANDO, WHICH HAS RUN INTO FINANCIAL TROUBLE OF ITS OWN.
Other companies selected by the GNPC are Italy’s Saipem and the Japanese Concerns, MODEC and ITOCHU.
Construction of the offshore and onshore gas pipelines will start when all of the studies are completed, probably at the end of this year.
“WORK IS EXPECTED TO TAKE A LITTLE OVER 12 MONTHS. AS THE FIELD IS DUE TO START PUMPING OIL AT THE END OF THIS YEAR, ITS GAS WILL BE FLARED IN THE INTERVAL, UNTIL THE PIPELINES BECOME AVAILABLE”, underscored the AEI report.
The above challenges and lapses, according to insiders in the Oil Industry are as a result of the pursuit of selfish and parochial interest of the same personalities in the Ministry of Energy and the GNPC whose agenda since the advent of the Mills Administration, has been to ‘rock the boat’ and seek interest clearly detrimental to the interest of Ghana.
“SOME POWER-BROKERS IN GNPC, PARTICULARLY PERSONS WHO HAVE NOT BEEN OFFICIALLY APPOINTED TO ANY FORMAL POSITIONS IN GOVERNMENT/GNPC, AND WHO HAVE BUSINESS CONNECTIONS WITH OANDO, MODEC, ETC., ARE THE SOURCE OF ALL THESE UNWARRANTED, UNNECESSARY, AVOIDABLE AND POTENTIALLY DESTABILIZING CHALLENGES CONFRONTING GHANA’S OIL INDUSTRY TODAY”, emphasised a senior officer of GNPC.
