Ghana’s Petroleum Commission has empowered the country’s home grown insurance companies to gain a significant share of the upstream petroleum business.
After several rounds of conversation involving oil companies, the National Insurance Commission (NIC) and several local insurers, the commission has mandated companies in the upstream petroleum sector to cede their insurance business to local insurers.
The Petroleum Commission (PC) has developed guidelines that will assist various institutions be able to participate in the (oil and gas) sector, according to Theophilus Ahwireng, the PC’s acting CEO of the Petroleum Commission. Risks-cover in the petroleum industry that is beyond the capacity of domestic insurance companies will be provided through syndications and external reinsurance, the commission maintains.
Ghana produces about 100,000Barrels of oil per day through the Jubilee field; the country is looking forward to increasing that to 250,000BOPD by 2017, when the TEN cluster and the Sankofa/ Gye Nyame fields would have come on line. The country is also expected to be producing over 400Million standard cubic feet of gas by then. The activities that will generate these products have ramifications in the local economy, including insurance.
Already, there are two key platforms through which local insurers can take advantage of the localization mandate; Ghana Oil and Gas Insurance pool (GOGIP) which was formed by all the general insurance companies to pool resources and underwrite oil and gas risks and Ghana Insurance Brokers Association (GIBA) has also formed a brokerage pool called GIBA Energy Company to undertake insurance placements in the petroleum sector.
The PC says it had a very long session with the NIC, insurance companies, and E&P companies, whom it respectfully describes as “our international partners”, as well as other institutions, “ to make them understand what they (insurers) need to do and the magnitude of business they can syndicate and can also do with external reinsurance”.
The commission oversees, among other things, the Local Content and Local Participation Regulations, which 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 Ghanians.