Group backs Ghana’s local content regulations for oil industry

The Ghana Oil and Gas Service Providers Association (GOGSPA), on Wednesday welcomed the passage the Petroleum Local Content and Local Participation Regulations, 2013 (L.1.2204).

This GOGSPA said, was achieved despite stiff opposition from foreign upstream oil and gas companies and their governments.

“We at GOGSPA see the passage by the House which followed a report by the Parliamentary Committee on Subsidiary Legislation, which held that the concerns raised by upstream companies were untenable and that the regulations were not in contravention of the supreme law of Ghana’s 1992 Constitution”.

A statement signed by Mr. Nuetey Adzeman, Executive Director GOGSPA and copied to the Ghana News Agency said, the passage of the law was timely and very important, and a great boost for the local service providers in the new oil and gas sector.

It said “In the light of current global trends thus creating an environment for the resource to be a blessing and not a curse. The legislation therefore encourages a win-win situation for both the upstream and downstream companies”.

The GOGSPA said it has been following closely the number of meetings held by the committee   to consider the Legislative Instrument, including concerns raised by the Ghana Exploration and Production Forum, an association of private sector upstream oil and gas companies operating in Ghana.

Fair representation of the local companies in the new oil and gas industry has always been the  core focus of GOGSPA, the statement said.

“GOGSPA is happy that the discretionary powers to determine persons qualified to enter into a petroleum agreement, or receive petroleum license, was given to the Energy Minister and the Petroleum Commission under the regulations.

“The forum in its presentation to the Committee, argued that the local content agenda is protectionist and against World Trade Organization (WTO) agreements.”  But GOGSPA said the argument was untenable, as local content legislations have been passed by governments across the globe.

It criticized regulation 48, which provides that “within three months after the commencement of these regulations, a contractor or subcontractor, licensee, or other allied entity engaged in a petroleum activity shall comply with these regulations”.

According to the statement, the oil companies regard this provision as a unilateral amendment of existing petroleum agreements and a breach of the 1992 Constitution, which frowns on retroactive legislation.

The forum further raised concerns with regulation 46 which provides for offences and penalties, saying that the proposed fines and sentences are a unilateral variation of the companies’ rights under existing petroleum agreements.

It said the Subsidiary Legislation Committee was resolute and contended, however, none of the regulations contravene any existing law – much less the 1992 constitution – and so went ahead and asked Parliament to allow the LI to come into force.

It is important to note that Ghanaian professionals with in-depth knowledge in the oil and gas sector outside Ghana want to return home to lend a helping hand to the new industry but are not sure of the future.

Their unwillingness to return was due to the absence of the local content law that would ensure that their investments would be protected.

Those who returned home had to struggle with Foreign Service providers for the few jobs, which should have been the preserve of the local companies.

“We at GOGSPA are very happy for the final passage of the local content law at the time when the country is preparing to start work on its second developed oil field known as the TEN Project off the coast of the Western Region”.

GOGSPA commends the Chairman of the Parliamentary Select Committee on Mines and Energy, Dr Kwamena Donkor, for his involvement as the then Chief Executive of the Petroleum Commission.

“We also want to thank Parliamentarians who accordingly approved the LI, and the Energy and Petroleum Minister who assured the companies that the discretionary powers given to the Minister will be exercised in consultation with other agencies and not arbitrarily”.

GOGSPA  re-assures all stakeholders in the oil and gas sector that, the local companies or GOGSPA members are more than ready and resourced enough to handle specific services or contract that the legislation reserves for the local companies.

It said “GOGSPA however is delighted to note that the local content legislation encourages capacity building by local companies in partnership with the foreign companies in both the upstream and downstream sectors”

To this end, the statement said, the local companies will stand to benefit from learning from the foreign companies and that the double-sided provision seeks to facilitate a blessing to the local indigenes and the foreign investors alike.

The locals should, therefore, see themselves as being part of the entire oil and gas production cycle, because the power to partake has been given them and that such conflicts that inevitably turn such natural resource blessings into curses will be avoided.

“This is the beauty of Ghana’s local content Legislative Instrument which GOGSPA applauds” it added.

“GOGSPA is happy to welcome The Petroleum Local Content and Local Participation Regulations and will like to assure our Foreign Companies that the LI is to a large extent, meant to ensure the protection of their investments in the Industry, whilst at the same time, ensure the resource becomes the blessing its expected to be and not a curse”.

Source: GNA