The Offshore Cape Three Points Project (OCTP) will involve the development of oil and gas fields about 60 km offshore from the western side of Ghana’s coast.
The gas reserves expected to generate an additional 1,100MW of power for Ghana will alleviate the country’s reliance on energy imports, providing long-term energy security and supporting Ghanaian industrial development.
The OCTP will also help Ghana achieve its COP21 commitments for climate mitigation by displacing heavy fuel oil use with natural gas- equivalent to taking 1.2 million cars off Ghana’s roads each year or planting 152 million trees.
According to the UK Minister for Trade and Investment, Greg Hands, UK companies are ideally placed to support Ghana’s future development and seize the huge export potential that brings thanks to their global leadership in oil and gas.
UK company GE Oil and Gas will provide the subsea production systems for the project whose first gas production is scheduled for 2018.
Lorenzo Simonelli, President and CEO of GE Oil & Gas 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.”
UKEF will provide $400 million of support to the OCTP project including a loan under its Direct Lending Facility, its first direct loan for a project in Africa which will go towards financing specialised systems and equipment for the project.
The project is said to be the world’s first upstream oil and gas development transaction where a European export credit agency (ECA) has supported a major hybrid finance structure comprising both project finance and reserve-based lending.
UKEF played a pioneering role in establishing this precedent, as the sole ECA for the OCTP.
The transaction has been named Project Finance International’s African Oil & Gas Deal of the Year for 2016.
At an estimated $7.9 billion in total investment for the development and over the life of the OCTP, this becomes the largest foreign direct investment in Ghana’s history.
UKEF’s support is provided as part of a larger $1.35 billion financing package alongside that of the International Finance Corporation and Multilateral Investment Guarantee Agency of the World Bank Group, commercial banks HSBC Bank plc, Standard Chartered Bank, Société Générale (London Branch), ING Belgium SA/NV, Natixis, Bank of China, Singapore Branch, Mizuho Bank Ltd and MUFG (Europe) N.V.
The new fields are expected to continuously feed Ghana’s thermal power plants for over two decades.