FPSO â??MIGA Insurance Suspension Storyâ?? True!

…As MODEC & GNPC ‘Internal Records’ Vindicate ‘New Crusading GUIDE’ Against Denial By Insurers Association Boss!



The New Crusading GUIDE’s story published in yesterday’s edition to the effect that the Multinational Insurance Guarantee Agency (MIGA) had suspended its Guarantee Contract for the insurance cover (POLITICAL RISK INSURANCE) for the FPSO Kwame Nkrumah, was (is) true and factual notwithstanding a denial by Mr. Atsu Menyawovor, the Executive Secretary of the Insurers Association of Ghana on Joy FM’s Super Morning Show (SMS) yesterday morning. Mr. Menyawovor's position was reinforced by the Chief Executive of the State Insurance Company, Mr. Benjamin Acolatse, in an interview with Citi FM yesterday.



Official documents emanating from within the corridors of MODEC/MV 21 and the Ghana National Petroleum Corporation (GNPC) which were intercepted by our Business Intelligence Desk (BID), indicate that MODEC officials communicated MIGA’s decision to the Jubilee Partners and GNPC on July 23, 2010, the very day MIGA informed MODEC of its decision to suspend its Guarantee Contract on the FPSO Insurance Cover until further notice.



Top officials of MODEC and GNPC (identities withheld for now) on July 23, 2010, informed the Jubilee Partners and GNPC that MIGA had decided to “TAKE A PROVISIONAL ACTION ON ITS GUARANTEE CONTRACT WHICH HAS BEEN EFFECTIVE SINCE JUNE 30, 2010. THE SAID ACTION IS A SUSPENSION OF THE GUARANTEE STARTING TODAY (JULY 23, 2010) UNTIL THE DUE DILIGENCE IS COMPLETED”.



“THEY SAY THAT THEY DO NOT WANT TO MAKE AN IMMEDIATE TERMINATION OF THE GUARANTEE CONTRACT BUT FOR MUTUAL BENEFIT WOULD PROPOSE SUSPENSION AS A MITIGATED WAY”, the MODEC officials underscored.



MIGA, according to the MODEC officials, anticipated that there should be no penalty or a disadvantageous effect on the Guarantee Contract after resumption of the Guarantee.



“During the suspension, there will be no guarantee fee (i.e. paid fee will be refunded for the suspension period)”, explained the MODEC officials.



Our sources at GNPC, who requested anonymity, indicated that even though there was an assumption on the part of the Jubilee Partners that MIGA’s decision to suspend its Guarantee Contract was linked to the IFC/World Bank due diligence, they (Jubilee Partners) on the same day (July 23, 2010) nevertheless entreated MODEC to provide further details on what might have informed MIGA’s “Suspension Decision”.



MODEC officially responded same day (July 23, 2010) that in view of the fact that MODEC knew of the ‘close affinity’ between MIGA, the IFC and the World Bank, MODEC decided to inform MIGA about the IFC’s decision to conduct due diligence on the Advisory Services Contract awarded to Mr. Tsatsu Tsikata’s Strategic Oil & Gas Resources Ltd (SOG) only to be told by MIGA that they (MIGA) were already aware of the due diligence exercise and that they (MIGA) had already been in consultation with the IFC over the matter.



MODEC officially explained that MIGA found itself in a very difficult position relative to the Guarantee Contract in the wake of the IFC’s decision to suspend the Loan Agreement and Shareholders Agreement for MODEC Financing pending the conclusion of the due diligence exercise.



“IF MIGA HAD KNOWN ABOUT THE SOG ISSUE BEFORE SIGNING THE GUARANTEE, MIGA WOULD HAVE UNDERTAKEN THE SAME DUE DILIGENCE THAT THE IFC IS DOING”, they (MODEC) indicated to the Jubilee Partners.



“MIGA BELIEVES THAT CONTRACTUALLY MIGA CAN TERMINATE THE GUARANTEE CONTRACT BUT UNDER THE UNCERTAIN SITUATION OF THE SOG ISSUE, MIGA MANAGEMENT AGREED TO MAKE A SPECIAL COMPROMISE TO SUSPEND THE GUARANTEE CONTRACT UNTIL THE SOG ISSUE IS SOLVED, CONSIDERING THE IMPORTANCE OF THE PROJECT AND RELATIONSHIP WITH ALL PARTIES”, disclosed MODEC.



This approach, MIGA, according to MODEC, appreciated would be beneficial to all the parties.



It was further indicated that a draft suspension agreement was to be made available to MODEC by MIGA on Monday (July 26, 2010) and that it would in turn be transferred to Tullow upon receipt for its (Tullow’s) attention.



“MIGA’S GUARANTEE CONTRACT IS ESSENTIAL FOR LEASE FINANCING. WE UNDERSTAND THAT TERMINATION SHALL BE AVOIDED”, MODEC noted.



Meanwhile, Mr. Atsu Menyawovor, the Chief Executive of the Ghana Insurers Association which is part of the Consortium of Ghanaian Insurance companies providing insurance cover for the FPSO yesterday denied that MIGA had suspended its Guarantee Contract on the FPSO insurance as reported by The New Crusading GUIDE in its Tuesday, July 27, 2010 edition.



In a chat with Joy FM’s Super Morning Show (SMS) host, Kojo Oppong-Nkrumah, Mr. Menyawevor emphasised that: “THE FPSO IS INSURED BY A CONSORTIUM OF GHANAIAN INSURANCE COMPANIES AND THE STATE INSURANCE COMPANY (SIC) ARE THE MANAGERS OF THE CONSORTIUM. SO I CALLED THEM (SIC) TO CHECK AND AS AT THIS MORNING THE FPSO IS FULLY INSURED AND RE-INSURED AND THE INSURANCE IS IN PLACE. IT HAS NOT BEEN SUSPENDED”.



Asked how much of the value of the FPSO Insurance Cover, the consortium of Ghanaian Insurance Companies was responsible for, the Insurers Association Boss said “the African market has 5% of the insurance and then the London market has 95%”.



In another development, our Business Intelligence Desk (BID)’s sources at MODEC, when contacted to react to the Insurers Association Boss’ denial of the ‘MIGA Insurance Suspension Story’, simply retorted” “MAY BE THE AFRICAN MARKET IS YET TO BE BRIEFED ON RECENT HAPPENINGS. WE ARE SURE SOONER THAN LATER, THEY (AFRICAN MARKET) WILL BECOME FULLY AWARE OF WHAT’S GOING ON. PERHAPS THEY ARE NOT AWARE THAT IF ONE TALKS OF MIGA THEN ONE IS TALKING OF POLITICAL RISK INSURANCE AND NOT THEIR TYPE OF INSURANCE BREIF. LETS WAIT AND SEE”.



Please see page 12 for the re-production of myjoyonline.com’s publication of the interview with Mr. Atsu Menyawovor, and stay tuned for further developments…



PRESS RELEASE FROM TOKYO, JAPAN



MODEC UNDERTAKES DUE DILIGENCE ON JUBILEE FPSO KWAME NKRUMAH



Tokyo, July 27, 2010: MODEC, Inc. announced today that as part of the

lease financing for the Jubilee FPSO, under the Representations and

Warranties provisions, MODEC HAS DISCLOSED TO THE OTHER POTENTIAL EQUITY PARTNERS IN JUBILEE GHANA MV21 B.V., A SPECIAL PURPOSE COMPANY INCORPORATED IN THE NETHERLANDS AND THE LENDING BANKS ALL OF THE CONTRACTS

THAT WERE EXECUTED FOR THIS PROJECT.



AT THE REQUEST OF ONE OF THE EQUITY PARTNERS, MODEC IS CURRENTLY UNDERTAKING A DUE DILIGENCE OF THE SERVICE AGREEMENT WITH STRATEGIC OIL AND GAS RESOURCES LIMITED. MODEC HAS RETAINED OUTSIDE INDEPENDENT COUNSEL FOR THIS PURPOSE.



MODEC WILL PROVIDE AN UPDATE AS MATTERS DEVELOP. IN THE

MEANTIME, IF THERE IS ANY REQUEST FOR INFORMATION KINDLY CONTACT OTORI MASAYOSHI AT Masayoshi.Otori@modec.com.



*Dateline: Tokyo, July 27, 2010

*http:/ www.modec.com / news /2010/20100727344 html