SUMMARY OF PROPOSED INVESTMENT (SPI)
Description of the Project:
In July 2008, Tullow Ghana, Ltd. (“Tullow Ghana”), the operator of the Jubilee Field,
awarded MODEC Inc. (the “Sponsor”) the contract to provide and operate a Floating Production Storage and Offloading (“FPSO”) facility for the Phase I development of the
Jubilee Field in Ghana. The FPSO, named Kwame Nkrumah, is currently being constructed
in the Jurong shipyard in Singapore. After completion, the FPSO will have a contractual production and processing capacity of 120,000 barrels of oil per day and 160 mmcf of gas per
day and a storage capacity of 1.6 million barrels of oil. Construction of the FPSO is
primarily on time and on budget and is scheduled to leave the shipyard in May 2010 for Ghana, with first oil expected during 4Q 2010. The economic life of the FPSO is 20 years,
during which no dry-docking is expected to be required. The FPSO will be leased if Tullow Ghana and MODEC agree on the terms and conditions of Charter Agreement under
negotiation, with a fixed 10 year lease period and 10 x 1 year extension options to Tullow
Ghana. The FPSO will be operated by MODEC Management Services Pte Ltd., a wholly owned subsidiary of MODEC.
Project Sponsor and Major Shareholders of Project Company:
Sponsors
MODEC is a Japanese company specialized in engineering, procurement, construction and
installation of floating production systems. Its operations are carried out through two
divisions: (i) FPSO construction and engineering and (ii) lease, charter & operations of FPSOs. To date, MODEC has built a total of 17 FPSOs, 10 Floating Storage and Offloading
vessels and 5 Tension Leg Platforms and is the second largest contractor in the industry
with a 15% market share. MODEC is a publicly listed company on the Tokyo Stock Exchange with a market capitalization of US$666 million as of February 26
th
2010. Its shareholders
include: Mitsui Engineering & Shipbuilding Co. (50%), Mitsui & Co. Ltd (7%) and Neuberger Berman (5%).

The Company
The FPSO will be owned by Jubilee Ghana MV21 B.V. (the “Company”), a special purpose
company incorporated in the Netherlands. The Company’s shareholding structure is currently being finalized but is expected to include the following investors: MODEC,
Marubeni, IFC, Sociéte Générale, Jubilee Partners (Tullow Oil, Kosmos Energy and
Anadarko Petroleum) and some other potential investors.

Total Project Cost and Amount and Nature of IFC’s Investment:
The total project cost is approximately US$875 million, to be financed by a limited recourse
long-term debt facility and shareholders’ equity.
The proposed IFC investment involves: (i) an A Loan of around US$50 million for IFC’s own
account, (ii) a syndicated B Loan in an amount of up to US$519 million for B Loan
Participants’ accounts; and (iii) equity/quasi-equity investments for IFC’s account of up to US$60 million.

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Location of Project and Description of Site:
The FPSO will be the first one in Ghana and will be located on the Jubilee field, 60
kilometers offshore Western Ghana.

Expected Development Impact of the Project:
The FPSO is one of the essential, central elements of the Phase I development of the Jubilee
Field. The construction, installation, and operation of the FPSO will be critical to achieve
successful and timely implementation of the Jubilee project in accordance with the Jubilee Field’s Plan of Development, which was approved by the Government of Ghana (the “GOG”)
in July 2009. As such, the Project will support the development of Ghana’s nascent oil and
gas sector and help to secure the significant economic and developmental benefits to the country of Ghana. These benefits come primarily in the form of notable government
revenues from the Jubilee field, including royalties and taxes of approximately US$900
million per year at peak production (based on (i) Phase I production profile from proved reserves, and (ii) other assumptions such as the prevailing oil price), providing the GOG
with the fiscal space to finance other much needed development programs.
In addition, development of the Jubilee Field also provides for development opportunities
along the energy sector value chain, such as construction of onshore gas processing facility that will process the associated gas produced by the FPSO, development of gas distribution
infrastructure, development of gas-to-power projects, etc. Once onshore gas infrastructure is
in place, the FPSO will become an integral part of the gas supply chain as envisaged by the GOG. In addition, direct development impacts of the Project also include local employment
and training of Ghanaian nationals for the oil and gas industry. According to the Sponsor’s
plan, over 80% of their staff will be Ghanaian nationals in five years. Key indicators that will be tracked during the investment period include: (i) taxes and other payments to
government; (ii) direct local employments of which 88% are to be Ghanaian nationals, and
(iii) production of hydrocarbons; and (iv) the uptime of the FPSO operations.

IFC’s Assessment of the Governance Risks to Development Impacts:
This project will provide, production, storage and offloading services to Tullow Ghana and
therefore support the generation of benefits associated with the Jubilee Field Development,
including substantial revenues to government and the development of the energy sector and downstream industries. The Company’s payments to the Government of Ghana consist
mainly of withholding taxes from lease revenues only. The FPSO is a facility associated with IFC’s prior investments in Tullow and Kosmos for the development of the Jubilee Field, for
which an assessment of governance risks was undertaken. IFC has come to the conclusion,
upon review of several governance and corruption metrics, including t
he World Bank
Institute’s Governance Indicators and Transparency International’s Corruption Perceptions
Index, that risks to project benefits are limited. Ghana has demonstrated commitment to
promoting transparency in the extractives sector, with EITI validation expected shortly for its mining sector, and with the announcement of extending it to the hydrocarbon sector last
year.

IFC’s Expected Additionality:
-

Provision and Mobilization of financing: The Project has experienced significant difficulties in securing long-term debt and equity financing, mainly due to the

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reduced liquidity in the financial market as a result of the 2008 financial crisis. IFC
has been requested by MODEC, the Jubilee Partners, and the GOG to support the
financing of the Jubilee FPSO project. IFC’s proposed equity investment and A Loan financing will help bridge the financing gap and complete the financing plan of the
Project, which has become critical in achieving first oil as envisaged by the Plan of
Development. In addition, IFC will also help to mobilize commercial bank debt through the IFC B Loan.

-

Country Risk Mitigation: There are risks associated with the fact that the upstream oil and gas industry in Ghana is in a nascent stage. The commercial banks and
MODEC have sought IFC’s involvement to provide country risk mitigation by
mobilizing the bank funding through an IFC B Loan syndication.
-

E&S Expertise: As a result of IFC’s prior investments in Tullow and Kosmos, the
Jubilee project will apply IFC’s Performance Standards, as well as IFC Offshore Oil & Gas Guidelines. Through this proposed financing, IFC will work directly with
MODEC as the FPSO operator, and assist the latter in operationalizing a best-
practice Environment, Health and Safety and Social Management System, which will in turn implement the already established oil spill and emergency response plans.
Environmental and Social Issues B – Limited:
This is a Category B project according to IFC’s Environmental and Social Review Procedures,
because a limited number of specific environmental and social impacts may result that can
be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. The key issues identified during appraisal of the project, and
described in detail in the Environmental and Social Review Summary, were:

-

Implementation of the sponsor’s integrated health, safety and environment (HSE)
management system at project level during construction and operation of the FPSO,
and integration with the management system of the Jubilee Field Unit Operator;
-

Implementation of the FPSO hull integrity and safety measures, including
operations, maintenance and inspection;
-

Management of production water, bilge water, deck drainage water, ballast water, and hydrostatic testing water;
-

Implementation of the emergency response plan, including oil spill preparedness and response measures;
-

Compliance with IFC and the International Convention for the Prevention of
Pollution from Ships (“MARPOL”) requirements for the management of air emissions (particularly related to minimization of flaring and venting, and greenhouse gas
emissions), produced water, other wastewater and contaminated waters, and
hazardous materials and wastes;
-

Occupational health and safety management during operation of the FPSO,
including job hazard analyses, fire and explosion prevention and control, personnel
transfer and vessels, workplace air quality, and housekeeping; and
-

Labor and working conditions for MODEC’s Ghana operations.

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For inquiries and comments about the project contact:
Mr. Hideo Miyashita
Deputy Director General Manager, Asset Management Dept.
MODEC Inc.
Kasumigaseki Common Gate West Tower 25
th
Floor, 2-1, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo 100-0013
Japan Telephone: +81 3 6203 0270
Local access of project documentation:
Mr Craig Duthie
Region Manager West Africa and Country Manager Ghana MODEC Ghana Ltd.
No 22 Angola Road
Casa Maria Osu Kuku Hill Accra, Ghana
Telephone: +223 2178 3616

For inquiries and comments about IFC
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

ENVIRONMENTAL AND SOCIAL REVIEW SUMMARY
Overview of IFC's scope of review:
IFC’s review of this project consisted of appraising technical, environmental and social
information submitted by the project sponsor (MODEC Inc. or “MODEC”), including a review of the:

- Corporate Health, Safety, Environmental (“HSE”) Policy, HSE Standards and HSE Management System,
- Contractor HSE Performance Requirements,
- Project HSE Plan and implementation procedures, developed for the construction phase of the floating, production, storage, and offloading system (the “FPSO”) for the Jubilee Field,
- Development of the Worksite Management System for the FPSO operations phase, - Technical specifications and other information relevant to the design of the FPSO, with
specific focus on the pollution prevention and control measures, the environmental risk
reduction and mitigation measures and the occupational health and safety protection measures, and
- Corporate and project human resources management policies and procedures.
In addition, IFC has held discussions with MODEC’s corporate HSE management in
Houston, and MODEC’s Jubilee FPSO Project team and Jubilee FPSO Operations team in
Tokyo and Singapore, and visited the FPSO, which is currently under construction at the Jurong Shipyard in Singapore.

MODEC is a general contractor specializing in engineering, procurement, construction, installation and operation of floating production systems including FPSO vessels, floating
storage and offloading (“FSO”) vessels, and tension leg platforms. MODEC constructed 23
FPSO/FSO units currently in operations worldwide, out of which 13 units are also operated by MODEC. In addition to the Jubilee FPSO, there are currently four other projects under
construction by the contractor.
Beginning in October 2008, IFC extensively reviewed the environmental, health, safety and
social assessments, and the policies, procedures and management plans, prepared by Tullow Oil plc (“Tullow”), the Jubilee Field Unit Operator, and Kosmos Energy Ghana HC
(“Kosmos”), its partner, for the Jubilee Field in Ghana. IFC’s due diligence for this project,
therefore, has benefited from relevant information on the Ghana Jubilee Field Phase 1 Development project that was obtained during the appraisal and subsequent supervision of
IFC’s investments in these two companies (Project # 27918 and Project # 27550). IFC
Environmental and Social Review Summaries (“ESRS”) for the investments in Kosmos (“Kosmos ESRS”) and Tullow (‘Tullow ESRS”) and supporting documentation were publicly
disclosed on December 22, 2008 and January 16, 2009, respectively and are available at:

http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/ca79f006df948f9
7852576ba000e2e0b?opendocument

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