In 2007, Tullow Oil plc (“Tullow”), Kosmos Energy and their partners discovered the Jubilee oil field offshore of Ghana. The field is located approximately 63 km from the Ghanaian coastline at a water depth of 1,000-1,700 meters, with oil reservoir objectives in the field ranging from 3,150-3,755m in depth. 

The Project supports the first phase of development of the Jubilee field.  It involves the drilling of 17 wells (nine production wells, five water injection wells, and three gas injection wells), subsea production installations, the installation of subsea production facilities and the leasing of a floating production, storage, and offloading (“FPSO”) vessel for processing, storing, and handling crude oil. Estimated gross production capacity is 120,000 barrels of oil per day initially; production will increase as the field is further developed and more reserves are proven. The total cost of the project was estimated at approximately $3.2 billion.  IFC's total investment comprised US$265 million in A loans, a $519m B loan and $60m equity.

All the above investments were assessed under the 2006 IFC Performance Standards. The environmental and social review included Tullow and Kosmos, subsidiaries to Tullow, as well as MODEC Inc., the contractor constructing the FPSO. All three reviews were done under the Category B provisions as defined in IFC’s procedures.

In light of the unprecedented events of April 2010 in the Gulf of Mexico involving deepwater offshore exploration of oil and gas, in which the Macondo well blew out resulting in fatalities onboard the platform and a major oil spill, the CAO Vice President initiated an investigation to assess IFC’s procedures and standards when appraising investments in deepwater off shore oil and gas exploration projects.   As of September 2010, IFC was involved in deepwater offshore oil and gas development of the Jubilee Field in the waters offshore of Ghana.

A CAO compliance appraisal is a preliminary investigation to determine whether the CAO should proceed to a full compliance audit of IFC. Through such appraisals, the CAO ensures that audits of IFC/MIGA are initiated only for those cases that may raise substantial concerns regarding social or environmental outcomes.

The CAO finds nothing that indicates that IFC did not diligently review and assess the issues related to a potential well blowout and its consequences in line with standards, guidelines, and industry practice that were applicable at that time.

The CAO also finds that in light of an international recognition of inadequate good international business practices, the IFC guidelines do not necessarily provide the adequate level of protection. However, it cannot reasonably be expected that IFC’s requirement go beyond international good business practice.

The CAO concludes that this appraisal highlights the need for the IFC to assess the relevance and applicability of the current standards and Environmental, Health, and Safety (EHS) Guidelines when the client is involved in deepwater offshore oil and gas exploration, and to update such standards and guidelines to reflect new developments in good international business practices.