Deputy Minister for Energy unhappy with some oil companies in Ghana

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

According to him some oil companies have specialized in “beating the system”, whilst other rely on local and foreign experts to expose the weaknesses in the laws for their exploitation, yet there are others who cry above the roof about how expensive local content could be to their operations.

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

Dr Adam said this at the opening of the 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 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 the growth of the petroleum industry.

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

He tasked the regulators to be flexible in enforcing local content requirement since there was no standard criteria for measuring and benchmarking of local content in all projects and that the national priorities of every country changes from time to time which he stressed required 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 projects specific for measuring and benchmarking local content”.

Dr Adam further urged the regulators to become problem solving havens for local companies and must adopt regulations that 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 of value of service worth 8.2 billion dollars paid to companies in the oil and gas industry.

He said out of the amount 1.2 billion dollars representing 16 percent and 1.5 billion dollars 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 contacts awarded to indigenous Ghanaian companies and joint ventures by the two major operators Tullow and ENI amounted to 850 million dollars representing an increase of 44 percent , adding that Aker Energy which was still technically at the exploration stage of their campaign and just commenced operations has also awarded contracts worth 40.3 million dollars to joint venture companies in accordance with their local content commitment.

Touching on employment in the oil and gas industry, the Deputy Minister said the industry has seen substantial growth of 4.120 Ghanaian employment in 2013 to about 13,000 representing more than 174 percent as of October this year thereby signifying the rapid growth of the industry.

The Deputy Minister attributed the rapid growth to the 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 localization 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 Ghanaians businesses and Ghanaians were not short changed in the industry.

The Deputy Minister noted with concern that as activities in the offshore basins increased so would be the competition for space among various users of the sea, noting that there has 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 they should respect the zones as such”

He said the government on its part through the Petroleum Commission would intensify community education and ensure the oil activities were 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 Petroleum Commission and it key stakeholders for the good work done in the face of serious challenges in the area of localization of positions for Ghanaians, noting that within a short time two international oil companies have Ghanaians CEOs and other Ghanaians occupying very high position in their management teams.

The more than 500 participants would deliberate on topics such as Update of 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 arrangement among others.