Investigations affecting $225m political risk insurance for FPSO to be completed in January

The investigations that lead to the suspension of $225 million political risk insurance for Ghana’s Floating Production Storage and Offloading (FPSO) vessel will be completed in January 2011 and everything will normalise, the World Bank has said.

The FPSO is used to drill oil at the Jubilee oil field. It was used to drill Ghana’s first commercial oil December 15, 2010.

The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group and its partners suspended a $225 million political risk guarantee contract for the FPSO sometime in July 2010 to conduct investigations into allegations into a service contract between MODEC and Strategic Oil and Gas Resources (Strat Oil).

In a joint statement issued on MIGA’s website Thursday July 29, 2010, it said the parties agreed to this suspension in order to conduct due diligence into the conditions of a service contract between MODEC and Strategic Oil and Gas Resources (Strat Oil).

The Ghana Country Director of the World Bank, who conceded though that he does not speak for MIGA but can comment, said he has been told that the investigations will be concluded by January 2011.

Speaking to journalists at a media get-together at the Knowledge Centre of the Bank in Accra, Ishac Diwan said, “I am quite confident that it is not affecting the real side of the business,” adding that , “It is taking longer than we would have wanted.”

He also revealed that it is MODEC and not MIGA that is conducting the investigations.

Diwan however, indicated that “it is good to get political risk insurance, because these are investments for 30 to 50 years But none of us believes that there is serious risk of expropriation in the next few months or few years. And MIGA is for financing that was already in place, so it’s not the case either that rates are going up.”

By Emmanuel K. Dogbevi