Not all contracts in the oil and gas sector require millions of dollars Theophilus Ahwireng, CEO of the Petroleum Commission, has said while asking local financial institutions to venture out and support oil service providers.

“I was humbled to realise some of the misconceptions that very big institutions in this country have,” Mr. Ahwireng said at a joint end of year get-together by the Commission and the Ghana Oil and Gas Service Providers Association (GOGSPA).

“Some say ‘we think oil and gas is too risky and the profile is too big for what we can take’. Others also say ‘we are told you have to have several hundred million dollars to be in the industry’. And I was pleased with my team to let them understand that some of the small businesses require less than a hundred thousand dollars.”

The Commission, he indicated, has had “some very interesting preliminary engagements” to understand why the local banks have had issues in participating in the industry, “and that the initial discussions have been very fruitful.

“We are going to have a big bash with them in the early part of 2015, during which we will bring the financial institutions and the local companies together for them to provide support.”

Local banks, he said, need to take advantage of incentives provided in the Local Content Legislative Instrument, which gives them preference.

The Petroleum Local Content and Local Participation Regulations, 2013, L.I 2204, demands that “A contractor, sub-contractor, licencee or other allied entity that requires financial services with respect to a petroleum activity shall retain only the services of a Ghanaian financial institution or organisation”.

It is only with the approval of the Commission that an entity can engage the services of a foreign financial institution.

The L.I. further states that “A contractor, sub-contractor, licencee or other allied entity shall maintain a bank account with an indigenous Ghanaian bank and transact business through banks in the country”.

For the purpose of this regulation, "an indigenous Ghanaian bank" means a bank that has one hundred percent Ghanaian or a majority Ghanaian shareholding.

According to the Energy and Petroleum Ministry, between 2008 and the first quarter of 2014, contracts worth a total of US$584,221,448.17 have been awarded to Ghanaian companies in the Oil and Gas industry.

The ministry further indicates that there are about 152 Ghanaian companies, out of the 232 companies registered with the Petroleum Commission, providing direct and indirect services to the upstream petroleum sector.

Services they provide range from catering/hospitality services, logistics supplies and freight forwarding, to fabrication and waste-management services.

According to government, the burgeoning oil and gas industry will attract investments in excess of US$20billion in five years from 22013, with a number of projects coming onboard after Jubilee.

While the TEN project (capital expenditure cost on which is pegged at round US$5billion) is said to be on course for first-oil in 2016, government recently signed a US$6billion deal with ENI on the Sankofa project.