GOGIP set to lose millions of dollars in insurance premium

There are strong indications that the Ghana Oil and Gas Insurance Pool (GOGIP), is set to lose in excess of US$ 1 million in insurance revenue.

The Ghana Oil and Gas Insurance Pool (GOGIP) is the exclusive body mandated to provide insurance for assets and liabilities in respect of all activities and/or operations directly relating to the exploration, appraisal, production, storage and transportation of Crude Oil and Gas in Ghana.

This is in accordance with the Insurance Act 2006, (Act 724) and the Petroleum (Local Content and Local Participation) Regulation, 2013, (L.I. 2204).

However, upon signing of the agreement in China between Tema LNG Terminal Company Limited and the China Harbour Engineering Company for the construction of a liquefied natural gas (LNG) terminal at the Tema Port, an individual entity and not the group, Heritage Energy Insurance Company, has secured the business, the B&FT can exclusively report.

Industry experts are worried that a business which falls within the mandate of GOGIP is being underwritten by a direct insurance company.

Further investigations by the B&FT showed that whiles the local market capacity represented by GOGIP can retain significant portion of the risk in the country and generate insurance revenue in excess of US$ 1 million, Heritage Energy can retain less than US$ 100,000 out of the millions of dollars of the premium from insuring the Tema LNG assets in the country.

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“If activities of such nature are not checked, foreign insurance companies and overseas reinsurance companies would continue to take advantage of the Ghanaian Insurance Industry,” an industry source said.

Since the establishment of the Pool in 2010, it has built technical and financial capacity to write significant oil and gas risks in the country. The Pool over the years has insured assets of the Jubilee, TEN and Sankofa Fields and the three Floating Production Storage and Offloading (FPSO).

The Pool also insures midstream oil and gas assets such as Ghana National Gas Company (GNGC) Gas Processing Plant in Atuabo and ENI Ghana Exploration and Production Onshore Receiving Facility (ORF) in Sanzule.

The Protocol for the Placement of Oil and Gas Insurance Risk in Ghana was drawn by the National Insurance Commission in collaboration with the Petroleum Commission of Ghana to ensure maximum local market participation of all insurable assets are utilized by the insurance industry.

The Pool is a representative of all non-life insurance and reinsurance companies in Ghana licensed to do business in the country. Since 2014, the Pool has written gross premium of US$ 146 million and paid net claims of US$ 9 million.

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