Ghana's oil giant slashes planned loan due to falling crude prices

State-run Ghana National Petroleum Corporation (GNPC) has reduced its planned loan sum to between 350 million U.S. dollars and 400 million dollars from 700 million dollars, Chief Executive Officer (CEO) Alex Mould said Tuesday.

He said due to the drop in global crude prices, the transaction advisers had counseled the company to go for half of the amount if it wanted to get investors putting in their resources for the same period at the same rate.

Mould disclosed this during an interaction with the media to throw light on the activities of the state oil explorer.

The company, which is the country's lead exploratory entity and also manages government's stakes in all oil agreements, had planned to raise 700 million dollars from the international capital markets at an interest rate of up to four percent.

Currently, government of Ghana borrows at above 8 percent interest rate from the Eurobond market.

"There are credible projects, and it has credible repayment sources that the market looks to," Mould stated.

Major portion of the resources was meant to be used for its share contribution to the development of the West Cape Three Points gas field by ENI and Vitol while portions would also be used for its development of the Ghana Gas infrastructure into a world class facility for future gas processing, storage and distribution.

Mould said the decision to slash the target amount was based on calculations that they could still get half of the targeted amount of 700 million dollars at the same rate.

"Our debt seismic analysis tells us that we can borrow from about 350 million dollars to about 400 million dollars at this time because of the falling crude prices," the CEO stated.

The re-payment would be done through an escrow account, with current earnings of GNP as security.

Oil prices which were about 115 dollars per barrel started falling from September, last year, to about 40 dollars per barrel in January, 54 dollars in February, and the current 60 dollars per barrel.

There are still fears however that the seeming recovery might not last, with the United States entering into a deal with Iran over nuclear power developments.

Analysts fear that, with Iran returning into global oil export, there could be a glut which would lead to lowering prices again. Endi