This summary of proposed guarantee was updated on June 16, 2015 to reflect changes to the guarantee holders and provide more detailed information on the project.
This summary covers a non-shareholder loan to Vitol from a group of yet-to-be-identified international financial institutions, including commercial banks, for the development of the Offshore Cape Three Points (“OCTP”) license area, including the Sankofa Gas Fields in Ghana. The investor has applied for a MIGA guarantee of up to $450 million for a period extending to final maturity of the non-shareholder loan. The guarantee will cover against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
The project supports the development of the hydrocarbon reserves of the OCTP block, importantly including Ghana’s most significant accumulation of non-associated gas. OCTP, located 60 kilometers offshore in the western region of Ghana, consists of the Sankofa, Sankofa East, and Gye Nyame fields. MIGA’s proposed guarantee would cover financing used in support of hydrocarbon resource development. The project will be developed by two private investor sponsor groups (Eni of Italy and Vitol of Netherlands) together with GNPC, which will undertake the dual roles of equity participant and aggregator of OCTP gas for resale to the domestic power sector.
Environmental Categorization
The project is a category A under MIGA’s Policy on Environmental and Social Sustainability. Click here to view the Environmental and Social Review Summary prepared by the International Finance Corporation for their proposed loan to the project. The World Bank is also expected to be involved in the project through its Partial Risk Guarantee program.
Development Impact
Ghana faces a shortage of reasonably priced fuel for power generation. Most hydropower potential is already developed, so the bulk of Ghana’s future power generation capacity will rely on natural gas. Interruption to West Africa Gas Pipeline imports and delays to indigenous gas availability have necessitated purchases of up to $50 million per month of light crude oil as fuel supply for power plants. In this context, exploiting OCTP's natural gas reserves will be transformational for Ghana’s energy sector. The project will provide enough gas to fire up to approximately one thousand megawatts, representing about 25 percent of Ghana's total estimated power generation capacity in 2020. The OCTP project will therefore substitute expensive, higher-emission liquid fuels currently used with cleaner and cheaper gas resources. The increased availability of non-associated natural gas will also enhance the power sector’s ability to supply baseload electricity and to migrate to a higher energy conversion efficiency over time.
The project will generate direct and indirect jobs as well as substantial fiscal receipts to the Government of Ghana through royalties, income, and potentially windfall profit taxes.
MIGA’s proposed support for this investment is aligned with the agency’s strategy to facilitate investment into countries eligible for concessional financing from the International Development Association and to support transformational projects. It is also aligned with the second pillar of World Bank Group’s Country Partnership Strategy for Ghana, which emphasized improving competitiveness and job creation.
