Ghanaian oil workers 400 percent worst off

Ghanaian local oil workers were the least paid in the world only second to their Sudanese counterparts who take about 11 per cent less on an average in 2013 and 2014, according to a research conducted by Hays, the global oil and gas recruitment experts.

Importantly however, Hays affirms a 222 per cent disparity between what expatriates and locals take in Sudan while it says a 379.5 per cent disparity pertained in Ghana. Ghana according to the report had the highest salary disparity in the world. This salary gap has often triggered a seasonal conflict between employers and employees often characterised by strike actions by Ghanaian oil workers since the nation began commercial oil production in December 2010.

Last month, work came to a standstill at the Jubilee Oil Field in the Western Region after workers operating the FPSO Kwame Nkrumah embarked on a ‘sit down’ strike action. The workers, who were about 40 in number and employees of the Mitsui Ocean Development and Engineering Company Limited (MODEC, a private oil company), said their strike was to protest poor conditions under which they work.

The workers called off the strike action early this month to pave way for negotiations with their employees, however over 20 of them were sacked by MODEC last week for refusing to sign an undertaking note.

Even though the workers have said they would not go back to the negotiation table until their colleagues are reinstated and the Trades Union Congress of Ghana (TUC) also gave a 24-hour ultimatum to MODEC to reinstate the sacked workers, the company has, this week, only threatened to sack more if they continue with the strike action which the company described as illegal claiming they were not given prior notice.

The Petroleum Commission of Ghana (PSG), Ghana’s Oil and Gas upstream industry regulator, had earlier in a statement assured to take concrete steps to deal with issues regarding the salaries of Ghanaians working on offshore vessels to prevent further agitations.

In recent past, some Ghanaian workers on the Jack Ryan rig at Takoradi held a sit-down strike, demanding a 25 per cent salary increase, but got 17 per cent. Another group of offshore workers on FPSO Kwame Nkrumah also joined in the recent Organized Labour nationwide strike.

The statement said the Commission will continue to engage with International Oil Companies (IOCs) to provide Ghanaians with designated jobs, training and commensurate remuneration in line with the local content policy for the industry.

“The Commission would like to assure all categories of personnel in the upstream petroleum industry that efforts are being put in place to ensure best practices in the industry,” the statement said. But it appears that the Petroleum Commission’s efforts couldn’t help prevent the present situation at hand.

The grievance of the striking workers has been that they received a much lower salary than their colleague expatriate workers. They alleged receiving an average of US$780 to US$940 a month while their expatriate counterparts took an average of about US$5000 to US$10,000 - an average salary difference of about 750 per cent.

The issue of striking local oil workers calling for increment of salaries is not a new tune in Ghana ever since the nation began commercial production of oil in December 2010 and it seems difficult to find an end to the issue in the near future. The sector recorded its first major strike in 2011 apparently for the same reasons and it has never stopped since. A similar situation occurred at the end of May this year, when workers of the Africa Oilfield Services Limited, a Nigerian-owned oil services provider in Takoradi embarked on a comparable strike action.

Even though Ghana’s oil production is likely to increase by an additional 10,000 bpd towards the end of the year because production will no longer be constrained by the reinjection of gas back into the reservoir once Ghana’s gas infrastructure is fully in place and gas is consequently evacuated and processed at Atuabo, constant strike actions by workers on the FPSO could counter this positive tendency.

Experts have also warned that if a lasting solution is not found to address what is becoming a seasonal issue, Ghana’s oil production capacity will be affected – a phenomenon that should be considered very critical especially in these times when oil prices are falling on the world market. This situation is affecting the nation’s oil export revenues and a reduction in production strike actions will lead to a further drop in revenue figures.

“The longer it takes to resolve it the more damage it will do to our production capacity,” Dr Steve Manteaw, Chairman of Civil Society Platform on Oil and Gas notes.

“We run a 48-hour shift [back-to-back] so if one particular shift collapses the expectation is that while the local workers are on strike the expatriate staff are working - they have to do the extra hours to keep production going but this cannot be sustained. If it persists for too long the system could collapse and could lead to production and revenue losses,” Dr Manteaw explains.

He says even though there was a need to recognise that globally there was always pay differentials between what nationals take and what expatriates receive, some arbitration had to look into how wide the [salary] disparities are and the gap between what the locals take and what their expatriate counterparts receive.

“If the gaps are too wide, especially compared to international practices then the workers have a case but this obviously falls within the remit of the Petroleum Commission and I anticipate that the Local Content Committee at the Commission will intervene quickly to try to resolve the impasse,” he says.

Global oil prices have also seen a plummeting trend since June this year. Falling from an all-year-high of about US$113 per barrel to about US$78 currently, oil prices have sunk over a 30 per cent within a period of 5 months.

On the country’s export front, Ghana had made US$2.6 billion from crude oil exports for the first eight months of the year while prices hovered around US$105 per barrel during the period under review according to the Bank of Ghana’s Monetary Policy Committee (MPC) report. Instructively, Ghana made an average of about US$325 million per month from oil export revenues and if the status quo had remained the same, the country would have been expecting to make additional US$1.3 billion at the close of the year. However, with the slump in prices of the commodity, Ghana will make between 15 and 20 per cent less of the US$1.3 billion it is expecting.

Importantly, there is the need for both government and stakeholders in the oil and gas sector to work together at resolving the challenges confronting the industry in order to ensure optimum production results.