Notice

Offshore Cape Three Points Project, Ghana

Published 10 March 2017

1. Description of project

UK Export Finance has agreed to provide a direct loan of US$310m and to issue a guarantee in respect of a US$90m export loan facility for the Offshore Cape Three Points (OCTP) offshore oil and gas project in Ghana (the ‘Project’). The Project will develop oil and gas fields approximately 60 km offshore from the western side of Ghana’s coast. The Project is intended to fuel up to 1,000 megawatts of power generation, helping Ghana meet its growing energy needs and displace oil-fired power generation with a clean-burning alternative.

UKEF’s support will finance provision of subsea production systems to the project by GE Oil & Gas, which is headquartered in the UK.

The Project comprises the following:

Phase 1: Oil Development:

• development of a 14 well subsea oil production system in the Sankofa East oil field; and
• installation and operation of a floating production, storage and offloading unit (FPSO) to receive crude whilst associated gas is re-injected to the reservoir.

Phase 2: Non-Associated Gas (NAG) Development:

• development of up to five gas production wells in the Sankofa and Gye Nyame gas fields, connected to the FPSO;
• installation of a 63 km subsea pipeline to carry Non Associated Gas (NAG) from the FPSO to shore and a 1.5 km onshore pipeline;
• construction and operation of an onshore gas receiving facility (ORF); and
• onshore buried gas connection from the ORF to the existing Ghana national Gas Company (GNGC) pipeline.

The financing is structured as a limited recourse project financing. UKEF’s support is provided as part of a larger US$1.35 billion financing package alongside that of the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, as well as 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.

2. Project sector

The project is in the oil and gas sector.

3. Project sponsor

A joint venture comprising Eni Ghana Exploration and Production Limited (the operator), Vitol Upstream Ghana Limited, and Ghana National Petroleum Corporation.

4. UK exporters

GE Oil & Gas UK Limited.

5. Export Credit Agent Bank

Standard Chartered Bank (UKEF Covered Facility and Direct Facility Agent) and ING Bank N.V. (Global Facility Agent).

6. Amount of UK Export Finance support

The direct loan facility amount is US$310 million. The buyer credit loan guarantee facility amount is US$90 million.

7. OECD Common Approaches

UK Export Finance categorised the Project as Category A - having potentially significant environmental, social and human rights (ESHR) impacts - in accordance with the definition in the 2012 OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the OECD Common Approaches).

As required by the OECD Common Approaches, UK Export Finance disclosed its possible involvement in the Project. A notification was posted on the UK Export Finance web site on 2nd December 2015, which contained links to published environmental and social impact assessment (ESIA) reports for the two phases of the Project, described above. The Notice directed interested parties to a contact point for any enquiries related to environmental, social and human rights (ESHR) matters. UK Export Finance did not receive any comments from interested parties.

8. Environmental, Social and Human Rights (ESHR) standards

Project-related ESHR information was reviewed by UK Export Finance’s Environmental Advisory Unit (EAU) for alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines. The applicable IFC PS and World Bank Group EHS Guidelines were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts
• PS2: Labour and Working Conditions
• PS3: Resource Efficiency and Pollution Prevention
• PS4: Community Health, Safety and Security
• PS5: Land Acquisition and Involuntary Resettlement
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
• PS8: Cultural Heritage
• General EHS Guidelines, 2007
• Industry Sector Guidelines for Offshore Oil and Gas Development, 20015
• Industry Sector Guidelines for Onshore Oil and Gas Development, 2012

IFC PS7 (Indigenous Peoples) is not considered relevant for the project as people in the nearest communities are not considered Indigenous Peoples for the purposes of the application of PS7.

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues:

• emissions to the atmosphere (including water and air), including greenhouse gas (GHG) emissions, noise and light emissions
  • wastewater and process water treatment
  • waste and hazardous material management
  • land and marine habitats and biodiversity, including species of conservation concern and natural and critical habitat characterisation
  • water and energy efficiency
  • emergency planning and response, including spill response planning, containment systems and well blowouts
  • management of third party contractors and suppliers
  • grievance mechanisms
  • occupational health and safety
  • community safety, including major accident hazard risk and security management
  • on-shore traffic and marine traffic management
  • decommissioning
  • worker conditions of contract and accommodation
  • land acquisition, resettlement and livelihood restoration
  • fisheries management
  • cultural heritage
  • community engagement

10. Assessment of ESHR impacts

A review of environmental and social impact assessments, policies, procedures, management and mitigation plans, stakeholder engagement and community investment plans, and other relevant documents regarding the Project was undertaken in line with the OECD Common Approaches. The review sought to identify potential environmental and social impacts and risks related to the Project and how these will be managed.

Standard Chartered Bank, an Equator Principles Financial Institution (EPFI), and IFC each independently conducted or commissioned environmental and social due diligence on the Project. The approach taken by both IFC and Standard Chartered (via an independent consultancy) consisted of a review of Project-related documentation, multiple site visits, and interviews with the Project Sponsor at a corporate and Project level and with external stakeholders, such as community members, local government, and other oil and gas operators in the area.

The results of these due diligence efforts were considered to be robust and to be a reliable source of information for UK Export Finance’s review. As such, the environmental and social review conducted by IFC and due diligence report commissioned by Standard Chartered, along with reviews of additional Project-related documentation and interviews with Project management personnel by the EAU, formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

The EAU’s review found that a suite of ESHR controls has been developed to mitigate and manage the significant Project-related environmental and social impacts and risks over time.

11. Decision

Various actions have been agreed between the Project company, operated by Eni Ghana Exploration and Production Limited, and the lenders involved in the financing which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the project cycle and UKEF therefore decided to provide support to the Project in respect of the supply of capital goods and services by UK exporters to the Project.

A condition of support is that Project will be subject to monitoring by an Independent Environmental and Social Consultant so it can be satisfied that the Project is aligned with the relevant international standards throughout the duration of support.