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90 Percent Local Content Target in Oil And Gas Unattainable

Kwame Jantuah, an oil and gas expert and civil society activist has cast doubts over Ghana’s aim to have local firms controlling at least 90% of activities in the country’s oil and gas industry by 2020.

"It is not possible." He affirmed. "You think by 2020 we will be able to build enough capacity?"

Jantuah, a member of the Steering Committee of the Ghana Civil Society Platform on Oil and Gas, which is supported by the Ghana Research and Advocacy Programme (G-RAP) was speaking with Public Agenda in an interview last Wednesday in Accra where he and other civil society activists participated in a roundtable discussion on the draft Ghana Petroleum Regulatory Authority Bill. The meeting was organized by the Publish What You Pay-Ghana (PWYP).

A "Local Content and Local Participation in Petroleum Activities – Policy Framework", which is still being finalized, indicates that it is the desire of government that the control, as well as, the benefits in the oil and gas discovery and production will remain with Ghanaians.

According to the document, the vision of government is to achieve "full local participation in all aspects of the oil and gas value chain of at least 90% by 2020." An objective of the policy is to increase capabilities and international competitiveness of domestic business and industrial sectors.

A couple of weeks ago, Nana Owusu Afari, President of the Association of Ghana Industries (AGI), commended government for the development of the policy, noting that it will maximize the use of local expertise, goods and services, job creation for people, businesses and financing in all aspects of the oil and gas industry value chain.

Already, the Ghana National Petroleum Corporation (GNPC) is reported to have registered 120 local companies in its quest to promote local content and participation.

But Mr Jantuah would have none of that. "At the moment when you take local content, there are individuals who have registered with GNPC for local content, what is happening? Absolutely nothing!" he stressed.

He was worried that the local content policy was not even in place. "The whole framework that is going to govern the oil and gas industry is not in place," he pointed out. At best, Mr Jantuah believes ancillary jobs and the jobs in the services sector alone would be up for grabs by local companies.

Even so, he regrets that almost every single local company is targeting services like catering and supply of computers and "nobody seems to be looking at manufacturing."

Jantuah recommends, "Seriously, we need to build capacity in our local content companies. That is so important. And to build capacity, we need direction, we need bold leadership."

There are fears in some quarters that a lot of the companies that have registered as local content companies could be agents for foreign companies. The expectation is that even if the companies that have registered are not entirely owned by locals, authorities would help to foster partnerships between these foreign companies and their local counterparts.

In the view of Jantuah, the partnerships are important to ensure that "if it is a contract that needs to be done by XXXX Company, it is the local content companies that go and bid and then sub-contract to the foreign companies."

Perhaps, the answers for Jantuah may come at the first domestic content and matchmaking exhibition/conference in the oil and gas industry, which kicks off today Monday May 17 and closes on Thursday May 20.

The Association of Ghana Industries is organizing the exhibition/conference in collaboration with the Ghana National Petroleum Corporation (GNPC), Tullow Oil Ltd, Ministry of Energy, and the Ministry of Trade & Industry (MOTI). The event will bring together players in the industry including oil producing companies and their sub-contractors, as well as, local companies who can offer various products and services to operators in the industry.

The principal objective of the event is to promote businesses between local companies and the international oil and gas companies. It is expected that presentations at the conference will mainly be done by international oil companies operating in Ghana.

Meanwhile, Tullow Ghana has indicated it will always champion and promote local content in its business but will conduct its business in strict adherence to the standards of the oil industry.

Gayheart Mensah, Communications Manager of Tullow Ghana Limited, said the oil firm is on track to achieve its nationalization policy of ensuring that its staff profile has a 90% Ghanaian component by the end of its third year of operations in Ghana.
Expected annual oil revenue from phase one of the Jubilee Field project is estimated to be between US$200 million and US$1.6 billion. The GNPC has forecast annual oil revenue to be between US$836 million and US$1.6 billion.

The revenues, resulting from royalties and taxes, have been described as significant but insufficient for meeting expected development targets. Thus, it is anticipated that effective development of downstream activities, with active involvement of Ghanaians, through local content and participation would contribute in meeting development targets.

Additional benefits in terms of revenue and job creation are expected to accrue through ancillary activities such as catering services, transportation and fabrication of metals, for which local firms are expected to be largely engaged.
http://allafrica.com/stories/201005171383.html

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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