On Monday, February 19, 2018 when this column will be published, the Petroleum Commission (PC), the regulator of the upstream industry and Ghana’s lucrative petroleum resources will host a meeting in Accra themed ‘Local Content Procurement Conference.’
There are more than 500 companies including joint ventures registered with the PC, along with International Oil Marketing Companies (IOCs) and supply/service providers.
There are billions at stake, literally, in barrels of oil and cubic feet of gas. The objectives of this conference, the first of its kind since Ghana announced the discovery of oil in commercial quantities, is to: provide information on contract and procurement opportunities in the upstream industry; share the procurement needs of each IOC for 2018 and coach local companies on how to bid for and win contracts. Why was this not done before?
There are currently 3 active production sources of oil and gas offshore Ghana. The Jubilee field, discovered in 2007 with first oil achieved in December 2010, produces an average of 90,000 barrels a day. The PC estimates that recoverable oil estimates to pump up are 640mmbbls.
The TEN field came on stream on schedule in August 2016, current daily production is some 58,000 barrels a day, with recoverable reserves of some 245 mmbbls.
Further offshore, in what is designated as deepwater integrated oil and natural gas development, 9 development wells have been completed and hooked up, first oil achieved in May 2017. With production of 45,000 bbls/day and 170mmscfd and 18 development wells drilled but yet to be completed, the OCTP is a viable concern.
What the local companies in the upstream petroleum industry will want to seek to do, is to hold the PC and other players – inevitably large better resourced and experienced multinationals – accountable for every guarantee in the Petroleum (Local Content and Local Participations) Regulations Act of 2013. The first 9 general provisions, with 9 specific points provide sufficient purpose of the regulations.
L.I. 2204 sets its local content stall out clearly. It begins with ‘promote the maximization of value-addition and job creation through the use of local expertise, goods, and services, businesses and financing in the petroleum industry value chain and their retention in the country’.
The section on developing local capacity in the industry value chain through education, skills and technology transfer as well as research and development programs is followed directly by the aim of achieving ‘minimum local employment level and in-country spend for the provisions of goods and services in the petroleum industry value chain.’
The regulation also calls for the creation of sustainable petroleum and related industries and the increase of the capacity and international competitiveness of homegrown companies.
Further, to cement the local content regulations, L.I.2204 demands ‘for a robust and transparent monitoring system’ including a submission of plans by all in the industry of how they propose to provide goods and services by delivering fully on the first purpose of the local content.
In the pipeline
On the back of the landmark decision in 2017 demarcating the maritime boundaries between Ghana and Cote d’Ivoire, the PC is promoting the opportunities this de-risking offers investors. The announcement of the entry of ExxonMobil into Ghana, subject to Parliamentary ratification, has signaled a flavor of things to come.
Offshore, the PC will be looking to bring on stream, the Greater Jubilee Project. It consists of integrating all reservoirs in the Deepwater Tano and West Cape Three Points Licenses. Estimated total reserves are 650 mmbbl of light crude, 360 bcf associated gas and 90 bcf of natural gas.
Pre-development work in the Deepwater Tano Cape Three Points includes 7 deepwater discoveries for which appraisals have been completed and the commencement of development drilling is expected to be announced in 2018.
Onshore, briefly mentioned in President Akufo-Addo’s second State of the Nation Address is the prospect of the Voltaian Basin. Covering almost 40% of the land mass in Ghana, the PC is looking for investors into Ghana’s largest unexplored inland basin.
Local companies who supply the upstream petroleum industry and others will be asking hard questions and seeking straight answers to the opportunities in the value chain including investments in transmitting and expanding our current capacity to process gas. Across the economy, there should be consolidated data to track the impact of our petroleum industry A-Z. From Banking/financial and insurance through construction, communication, sanitation, haulage, freight clearing and forwarding through hospitality services and the provision of IT/Communication services.
Beyond the headlines, we must see actually, where and how much the value-added change of the upstream petroleum industry has impacted on jobs, skills, research, development of the local experience as L.I. 2204 requires.
Ghana’s foray into the petroleum industry dates back to 1896 when the first 5 wells were drilled by ‘West African Oil and Fuel’. 8 further wells were drilled between 1909 and 1925 by ‘Societe Francaise de Petrole’ and ‘African and Eastern Trade Corporation’. Between 1950, before independence and up to 1979, in spite of military interventions and the economic and social upheaval they brought, 38 further wells were drilled by a number of adventurous companies. A further 40 wells were drilled by 2005. The major activity, 70 wells with 25 discoveries has been made between 2007 to date.
The PC has launched an online portal www.ghanapetroleumregister.com it says to provide information on developments in the sector. On Monday, the organisation, an agency of the Ministry of Energy, will lead in summing up developments the last year and provide details, much required of their non negotiable procurement guidelines. 11 IOCs will present their plans for 2018.
Bottom line is, the local content requirements are required, they must be known, adhered to and tracked. For all our sakes, local companies must be ready to participate.