Oil and gas insurance pool to lose millions of dollars in insurance premium
There are strong indications that the Ghana Oil and Gas Insurance Pool (GOGIP) is set to lose in excess of $1 million in insurance revenue.
GOGIP is the exclusive body mandated by the National Insurance Commission to provide insurance for assets and liabilities for the upstream and midstream petroleum sectors in the country.
Investigations by Joy Business reveal that the agreement signed in China between Tema LNG Terminal Company Limited and the China Harbour Engineering Company for the construction of the liquefied natural gas (LNG) terminal at the Tema Port also made Heritage Energy Insurance Company the insurer.
Meanwhile, the Ghana Oil and Gas Insurance Pool (GOGIP) is the exclusive body mandated to provide insurance for assets and liabilities in respect of all activities and/or operations directly relating to the exploration, appraisal, production, storage and transportation of Crude Oil and Gas in Ghana. This is in accordance with the Insurance Act 2006, (Act 724) and the Petroleum (Local Content and Local Participation) Regulation, 2013, (L.I. 2204).
Further investigations showed that while the local market capacity represented by GOGIP can retain a significant portion of the risk in the country and generate insurance revenue in excess of $1 million, Heritage Energy can retain less than $ 100,000 out of the millions of dollars of the premium from insuring the Tema LNG assets in the country.
To increase local market capacity, and to grow the country’s expertise in the underwriting of some of these complex risks the Ghana Insurers Association formed GOGIP.
Since the establishment of the Pool in 2010, it has built technical and financial capacity to write significant oil and gas risks in the country. The Pool over the years has insured assets of the Jubilee, TEN and Sankofa Fields and the three Floating Production Storage and Offloading (FPSO).
The Pool also insures midstream oil and gas assets such as Ghana National Gas Company (GNGC) Gas Processing Plant in Atuabo and ENI Ghana Exploration and Production Onshore Receiving Facility (ORF) in Sanzule.
If activities of such nature are not checked, foreign insurance companies and overseas reinsurance companies will continue to take advantage of the Ghanaian Insurance Industry.
The Protocol for the Placement of Oil and Gas Insurance Risk in Ghana was drawn by the National Insurance Commission in collaboration with the Petroleum Commission of Ghana to ensure maximum local market participation of all insurable assets are utilized by the insurance industry.
The Pool is a representative of all non-life insurance and reinsurance companies in Ghana licensed to do business in the country.
Since 2014, the Pool has written gross premium of $146 million and paid net claims of $9 million.