Petroleum Commission has not stopped Tullow’s tender process – Management

The Petroleum Commission has dismissed reports that it has instructed Tullow Ghana Limited (TGL) to cease its tender process concerning the award of any rig contract.

According to the Commission, it has not overtly or covertly directed or forced TGL to sole source any drilling contract and did not raise any objection to TGL’s proposal to prequalify 31 companies for the impending drilling tender. Rather, it encouraged TGL to prequalify more companies to ensure keen competition and possible lower pricing.

The Daily Statesman Newspaper in its April 27 2017 edition published a story captioned “Corruption at Petroleum Commission” that made unfounded allegations against the Commission and its Chief Executive.

The publication made allegations against the Chief Executive Officer, Mr. Theophilus Ahwireng and management that it had written a letter to the Managing Director of Tullow Ghana Limited ordering it to cease its tender process concerning the ward of any rig contract.

But the Petroleum Commission has refuted the claims asking the public to disregard the assertions by the Newspaper as they are unfounded.

Read below the full statement

RESPONSE TO PUBLICATION DATED APRIL 27, 2017 BY THE NEWSTATESMAN NEWSPAPER TITLED: CORRUPTION AT PETROLEUM COMMISSION

The April 27 2017 edition of The New Statesman Newspaper published a story captioned “Corruption at Petroleum Commission” that made unfounded allegations against the Commission and its Chief Executive. The Commission categorically rejects the allegations and responds as follows:

1. The Petroleum Commission has not written any such letter to the Managing Director of Tullow Ghana Limited (TGL) ordering TGL to cease its tender process concerning the award of any rig contract.

Contrary to the impression that the article seems to create that the Commission is often criticized, it has rather been praised for its tremendous efforts in the promotion of Local Content and significant cost savings to the state.

The Commission has not overtly or covertly directed or forced TGL to sole source any drilling contract and did not raise any objection to TGL’s proposal to prequalify 31 companies for the impending drilling tender. Rather, it encouraged TGL to prequalify more companies to ensure keen competition and possible lower pricing.

TGL and other International Oil Companies (IOCs) comply stringently with procurement rules and standards and are subject to Ghanaian Laws, US Foreign Corrupt Practices Act, and UK Bribery Act.

2. The Commission does not award contracts. Its role in the contracting process as stipulated in LI 2204 is to maximize local content participation through:

3. Approval of vendor lists to ensure that only registered companies participate in the tender process;

4. Review of contracting strategy to ensure maximization of local content;

5. Ensuring that contracts are awarded in accordance with the law.

The Commission has not ever stated anywhere that a drilling contract must be awarded to Rigworld, its partners or related companies.

3. The Commission has never pushed or insisted that “big oil companies” award subcontracts to some “special companies” as alleged. IOCs comply with strict procurement rules as earlier mentioned and the Commission has not received any complaints in that regard from any IOC

4. The Commission is not aware of any of its officers having aninterest in Rigworld. The Commission encourages participation of all registered and valid indigenous Ghanaian companies and treats them fairly and on equal grounds. The Commission is neither involved nor influence tendering processes, as stated in paragraph 2 above.

5. The Commission has not received any submission from TGL’s Management regarding delay in processing of Registration Permits and has not recently received applicationsfrom drilling companies related to TGL’s rig tender. During contracting strategy meetings with the Commission, out of the 31 companies that TGL submitted to prequalify for the rig tender, only 4 companies possessed valid Petroleum Commission Registration Permits.

6. All JV arrangements are required by law to specify the roles and responsibilities of the partners. Rigworld as a partner to the Maersk-Rigworld JV has the role and the responsibility to supply crew members for the Maersk rigoperations.

7. The application for a permit for the Maersk Rigworld Ghana JVfrom the PC was not fast-tracked. The average time taken for applications to be reviewed and permits issued is 15 working days. The Maersk-Rigworld application was submitted on April 27, 2015 and the permit was issued on May 21, 2015.

In relation to the upcoming TGL rig tender, the Commission has not given TGL any time constraints to procure a rig. The Commission’s emphasis has been that all companies invited to participate in the tender be either an indigenous Ghanaian company or a JV with valid permit.

8. The statement that the “Petroleum Commission and its CEO, Theophilus Ahwireng have come under heavy criticism” is ironical. The popularly held view is that the regulatory regime of the sector has been transformed under the leadership of the CEO of the Commission.

For example, within the last three years he spearheaded the enactment of significant legislations – the Petroleum (Exploration and Production) Act 2016, Act 919, Petroleum Commission(Feesand Charges)Regulations,2015(L.I. 2221), Petroleum (Exploration and Production) Measurement Regulations, 2016 (L.I. 2246),and also overseen the successful implementation of Petroleum (Local Content and Local Participation) Regulations 2013 (L.I.2204),

In the area of local content development, presently, about seventy five percent (75%) of the total workforce of about six thousand eight hundred (6800) are Ghanaians, over 400 Ghanaian SMEs have registered with the Commission and about USD2.0 Billion worth of contracts have been awarded to indigenous Ghanaian companies.

9. Eni commenced contracting a rig for the Sankofa field, as a long lead item before the effective date of the Local Content LI 2204. Notwithstanding this, the contract was not sole-sourced. The ITT was issued to 16 companies, 6 declined to tender and 10 submitted bids for the contract. After the evaluation, Maersk emerged as the least priced company among the technically qualified bidders and won the contract.

The FPSO contract was also part of the long lead items which Eni launched before the effective date of the Local Content LI2204. Yinson was awarded the FPSO contract after participating in a competitive bid with two other major international companies.

Three separate operators – Eni, TGL and Springfield conducted separate tender processes for seismic vessels. PGS/OMA participated in these separate tender processes with other companies and won the separate contracts. To the best of the Commission’s knowledge, the tenders that PGS/OMA participated and won were fair and transparent.

The Commission wishes to assure all that it will continue to regulate, develop and deepen Local Content in our fledging upstream petroleum industry for the overall benefit and welfare of Ghanaian citizens.