Four local insurance companies have successfully secured a deal to underwrite the Ghana Gas infrastructure project at Atuabo to the tune of about US$801million, B&FT has gathered.
The deal, which is one of the biggest to be underwritten locally, is a major milestone toward ensuring local content participation in the emerging oil and gas sector.
Persons familiar with the deal told B&FT it was made possible through a consortium of insurers that include SIC, GLICO, Phoenix Insurance and Vangaurd Assurance, and will cover the production phase of the biggest gas project in the country which is expected to start early next year.
Information available indicates that SIC will assume 50 percent of the risks cover while GLICO will take up 30 percent, with Phoenix Insurance and Vanguard Assurance acquiring 10 percent each.
SIC is not new to the Ghana Gas project, as it provided insurance cover for the US$1billion project during the construction phase.
However, some insurance practitioners are curious at the non-participation in the deal by three of the top-five biggest insurance companies in the country who together boast an asset base of over GH₵178million.
Nonetheless, the local risk cover for the Ghana Gas project is seen as a way to ensure that activities of the burgeoning oil and sector are consistent with provisions in the local content and insurance laws.
The deal also negates concerns that risks-cover in the petroleum industry is beyond the capacity of domestic insurance companies.
Ghana currently has a gas deposit of about 200 billion standard cubic feet offshore the Jubilee Field, which the country wants to utilise as a source of cheap fuel to power its thermal plants to generate electricity.
The Energy and Petroleum Minister, Emmanuel Kofi Buah, argues that when in full production the Atuabo Gas Processing Plant is expected to save the nation over US$500million a year from importing light crude to power the thermal plants, as gas costs barely half the price of light crude oil.
Officials say intake of raw gas from the Jubilee Field will be done as a gradual process, starting from 30 million standard cubic feet per day for the first month, 60 million standard cubic feet for the second month, 90 million standard cubic feet for the third month, and finally 120 million standard cubic feet for the fourth month.
The processing plant can process all the 150 million standard cubic feet of gas per day capacity of the Jubilee Field partners.
Ghana started commercial production of oil almost four years ago, opening up a several billion dollar industry. Government last year enacted the Petroleum (Local Content and Local Participation) Regulations, 2013, in a bid to ensure that the country benefits from more than just fiscal receipts of oil revenue by enhancing participation for local firms in the sector.
According to the Petroleum Local Content and Local Participation Regulations, the provisions are meant to among other things promote maximisation of value-addition and job-creation in the petroleum sector through the use of local expertise, goods and services.
The regulations also provide that entities in the petroleum sector must submit their local content plans regarding the use of local goods and services, and the transfer of advanced technology and skills, to the Ghana National Petroleum Corporation (GNPC) or the Petroleum Commission and Ghanaians.