Deputy Minister for Energy unhappy with some oil firms

Dr. Mohammed Amin Adam, Deputy-Minister for Energy, has expressed concern about the behaviour of some oil companies which fail to comply with the policies and regulations of local content.

According to him, some oil companies have specialised in ‘beating the system’, while others rely on local and foreign experts to expose weaknesses in the laws for their exploitation – yet there are others who cry from the roof-tops about how expensive local content can be to their operations.

He said government will therefore strengthen the Petroleum Commission to pursue bad companies in the industry – noting that it is also important for operators to stop viewing local content requirements as just obligations, but rather consider them as strategic drivers in project delivery which enhance strategic partnership with host governments and legitimises their long-term commercial objectives.

Dr. Adam said this at the opening of a three-day 2018 Local Content and exhibition Conference in Takoradi, under the theme ‘Five years of Local Content: Achievements and Challenges’.

The conference – organised by the Petroleum Commission, is being attended by local oil companies and regulators from Nigeria, Uganda and The Gambia – is to among others enhance stock-taking, networking, peer-learning and sharing of ideas and experience relevant to the enhancement of local participation and growth of the petroleum industry.

The Deputy-Minister pointed out that companies in some cases have become inward-looking by deriving their economic decisions internally to achieve their commercial interest; rather than considering how such interest could be best served by aligning with the industrial and development policies of governments in host countries: “We must all change course; policymakers, regulators and investors must navigate toward a system that works for all of us”.

He tasked the regulators to be flexible in enforcing local content requirements, since there are no standard criteria for measuring and benchmarking local content in all projects and the national priorities of every country changes from time to time – which, he stressed, requires them to be forward-looking in their implementation of local standards.

“It is therefore important for regulators to relate future projects to future development priorities, and design plans specifically for measuring and benchmarking local content.”

Dr., Adam further urged the regulators to become problem-solving havens for local companies; and they must adopt regulations which constantly identify the difficulties companies face, and facilitate platforms for the resolution of those difficulties – stressing that they must also design compliance strategies based on compliance-risk assessment of operators.

According to him, a strong foundation has already been built for greater value addition to the economy through the supply of goods and services by contractors and sub-contractors, adding that 2013 and 2017 witnessed a total value of service worth US$8.2billion paid to companies in the oil and gas industry.

He said out of the amount US$1.2billion representing 16 percent and US$1.5billion representing 18 percent worth of contracts were awarded to indigenous Ghanaian companies and Joint Venture companies respectively.

Dr. Adams hinted that, as of October this year, the total value of contracts awarded to indigenous Ghanaian companies and joint ventures by the two major operators – Tullow and ENI – amounted to US$850million, representing an increase of 44 percent.

He added that Aker Energy, which is still technically at the exploration stage of its campaign and just commenced operations, has also awarded contracts worth US$40.3million to joint venture companies in accordance with its local content commitment.

Touching on employment in the oil and gas industry, the Deputy-Minister said the industry has seen substantial growth – from 4,120 Ghanaians in employment in 2013 to about 13,000; representing more than 174 percent as of October this year, and thereby signifying the industry’s rapid growth.

The Deputy-Minister attributed the rapid growth to rigorous implementation of the work permit facilitation process by Ghana’s upstream regulator, the Petroleum Commission, in collaboration with the Ghana Immigration Service, which has enabled them to achieve a localisation level of about 75 percent.

“We in government are not oblivious of the need to come up with prudent remediation of the situation; it is in this regard the President’s policy intervention is thoroughly being pursued to ensure that the participation of indigenous Ghanaian businesses and Ghanaians are not short-changed in the industry.”

The Deputy-Minister noted with concern that as activities in the offshore basins increases so will the competition for space among various users of the sea, noting that there have been numerous incursions into the safety zones around the offshore installations. “Let me take this opportunity to appeal to chiefs and DCEs in the coastal districts and our hardworking fishing communities, that these zones are earmarked to also protect them and their activities; and so, they should respect the zones as such.”

He said government on its part, through the Petroleum Commission, will intensify community education and ensure oil activities are not carried out at the expense of fishing and other lawful economic activities: “The sea is big enough to accommodate all of us”.

The Deputy-Minister commended the Petroleum Commission and its key stakeholders for their good work done in the face of serious challenges in the area of localising positions for Ghanaians – noting that within a short time, two international oil companies have Ghanaian CEOs and other Ghanaians occupying very high position in their management teams.

The more than 500 participants will deliberate on topics such as Updating deep water Tano/Cape Three Points; Development and prospects for indigenous Ghanaian companies; Five years of Local content learning from the past; preparing for the future; Challenges and prospects of joint venture arrangements, among others.