Out-Law News 2 min. read
17 Jan 2017, 10:54 am
UK Export Finance (UKEF) said the GE Oil & Gas contract it is supporting marks “the first time a European export credit agency has supported a financing structure of this kind”.
UKEF’s support includes a loan under its direct lending facility and is the agency’s first direct loan for a project in Africa, UKEF said. “UKEF support will finance the specialised systems and equipment, a significant proportion of which has been sourced from the UK.”
GE Oil & Gas, which is headquartered in the UK, is providing subsea production systems to the project, which will develop oil and gas fields approximately 60 kilometres offshore from the western side of Ghana’s coast. The contract, which is worth a total of $850m, will also support UK jobs in Aberdeen and Bristol, UKEF said.
Following first gas production in 2018, “the new fields are expected to continuously feed Ghana’s thermal power plants for more than 20 years”, UKEF said.
Support for the contract is a result of a memorandum of understanding (MOU) signed between GE and UKEF in 2015, which UKEF said affirmed its “support for GE and GE’s commitment to continued investment in its UK operations”.
UK trade and investment minister Greg Hands said: “OCTP will greatly improve Ghana’s energy security. Thanks to the UK government’s support, via UKEF, and our global leadership in oil and gas, UK companies are ideally placed to support Ghana’s future development and seize the huge export potential that brings.”
According to UKEF, “total investment in the development of the OCTP is estimated to be $7.9 billion over the life of the project and represents the largest foreign direct investment in Ghana’s history”.
UKEF said its support is provided as part of a larger $1.35bn financing package alongside that of the International Finance Corporation and the World Bank’s Multilateral Investment Guarantee Agency as well as commercial banks HSBC, Standard Chartered Bank, the London branch of France’s Société Générale, ING Belgium, Natixis, Bank of China’s Singapore branch, Mizuho Bank and MUFG (Europe).
GE Oil & Gas president and chief executive officer Lorenzo Simonelli said: “This contract represents GE’s ability to invest to build local partnership, resource and infrastructure capabilities, and will utilise engineering and manufacturing expertise from the UK, across the supply chain. Export credit agency financing is an important source of support for our customers, and the MOU signed with UKEF in 2015 has helped to support this success.
OCTP is an integrated oil and gas development project that will provide domestic gas supply to national thermal power plants for more than 15 years, addressing energy requirements in urban and rural areas and where needed most. Eni Ghana Exploration and Production Ltd is the Operator (47.222%) of the Project with Vitol Ghana Upstream (37.778%) and the Ghana National Petroleum Corporation (15%) as partners.
According to Eni Ghana, the first oil is expected this year and first gas in 2018 with a combined (oil and gas) production peak in 2019 reaching 80,000 barrels of oil equivalent per day. “The development of the Sankofa and Gye Nyame fields, which are located within the OCTP block, is the pillar for enhancing Ghana’s balance of payments and powering the growth of the economy,” Eni Ghana said.
Ghana’s government has said Sankofa will be “a game changer” for Ghana and other middle income sub-Saharan African countries as it is set to shape the country’s energy sector for the next 20 years.
The UK said last year that its support for infrastructure development in Africa aimed to encourage further investment on the continent. Former Africa minister James Duddridge told an infrastructure conference hosted by the international and current affairs think-tank Chatham House in London last March: “Infrastructure is a pipeline for money. Airports, railways and roads are all pipelines for economic activity. This requires local knowledge and skills but also global expertise and help to get people and money moving.”
