Fast tracking of Ghana’s oil production makes local content policy unworkable – Energy Minister

Ghana achieved an industry record when it pumped first oil from the Jubilee fields December 15, 2010, 3.5 years (40 months) after discovery instead of the normal five years.

But this feet achieved by Ghana is making the country’s local content policy unworkable and not feasible as capacity building for Ghanaians is inadequate to do the real ‘oil job’ at the Jubilee fields and other discovered wells, the Energy Minister has said.

Prior to the first oil production, the necessary legislations for the industry were not in place to the extent that Ghana started receiving revenues from first oil sale before the Petroleum Revenue Management Bill which is to guide transparent and accountable management of revenues from the upstream petroleum sector was passed into an Act by Parliament March 2011.

As at now the Petroleum Exploration and Production Bill and the Local Content Policy are yet to be passed into laws.

Speaking to journalists in Accra, Dr. Oteng Adjei said the local content policy outlines the strategies on how to develop the oil and gas industry with optimal local content and participation; enhance national development; create jobs; and also effectively manage the potential revenue from oil and gas production and processing; as well as ensuring security for the oil and gas installations and the industry as a whole.

But the country is losing out in this policy as it has no legal backing to bind oil companies such as Tullow, Kosmos Energy and others to have certain percentage of mainstream activities as well as services left for local citizens. This is a result of the quick start of oil production without putting the law in place first, he indicated.

According to Dr Oteng Adjei, there are advantages and disadvantages when there is a fast-track of projects especially when some legislations and legal framework were not in place.

“Normally, people take about five years to move from appraisal to production. We chose 40 months. A lot of the institutional and legal frameworks were not in place. Meanwhile we’re getting the revenue from the oil quicker. So lets face it, one of the problems we will face at the early stage, some of the people who will be able to work in the oil sector are not necessarily Ghanaians because of the fact that we did not train ourselves to take advantage,” he said.

“If we could have gone for five years, we could have had a year or two to prepare ourselves,” he added.

The Minister however indicated that the local content policy will soon be translated into law.

“We would be translating the local content policy to legal so that we don’t go and tell them you must employ these SMEs but you should have legal basis for that.”

In April this year, a lecturer at the Kwame Nkrumah University of Science and Technology (KNUST) said Ghanaian universities have been left out of the country’s emerging oil and gas industry.

Dr. Stephen Kudom Donyinah, who is a lecturer at the Department of Chemical Engineering, lamented the neglect of Ghanaian universities in matters of policies that guide the oil and gas industry.

Dr. Donyinah said these during a presentation at a Local Content Workshop dubbed “Developments, Policies and Challenges for Ghana” at the Ghana Oil Summit in Accra.

“The universities are not aware of government policies to help tailor the training of students,” he said in an interview.

Dr. Donyinah bemoaned the fact that universities, particularly the KNUST have been made to train students without an adequate knowledge of the direction at which the oil industry was going.

In his presentation titled: “How Tertiary Education in Ghana is contributing towards the Local Content Capacity Building in the Emerging Oil and Gas Industry,” he said, “the industry-university relationship in the country is not the best,” adding that “there is the urgent need for the government and industry players to establish a direct link with the universities that are training students for the oil industry.”

But Dr Adjei said “In the medium term, government is in partnership with KNUST to train students for the petroleum sector. Government and the World Bank have provided some funding to acquire some equipment for the school to build it to a capacity that can match with one of the best petroleum schools in the world – when they come out they can go straight into the sector. Students of Takoradi Polytechnic and The Ghana Maritime Academy will also be included in the programme.”

He noted that already some Ghanaians are going to study in Russia with the scholarship from LukOil and will have training with them (LukOil). He mentioned that some officials at the Ghana National Petroleum Corporation are also acquiring some skills at Hess Corporation in the US. Tullow has also offered some scholarship to Ghanaian students to get some training in the United Kingdom, he indicated.

With high expectations of employment in the emerging oil and gas sector, the Ministry of Energy and the Ministry of Trade and Industry are collaborating to set up small and medium enterprises (SMEs) for Ghanaians to meet the stringent requirements, including management and financial controls, health and safety standards and quality control needed to do business with the international oil and gas companies, according to the Energy Minister.

“An SME Office will be established in the Western Region as the focal point for coordination between the oil and gas companies and SMEs and also provide support to SMEs so that they can position themselves to take advantage of business opportunities that are available in the oil and gas sector. The SME Office will also undertake capacity building of SME’s and will assist market their capabilities, liaise with international Oil and Gas Companies and Service Providers by being a focal point for procurement opportunities, as well as establish a single pre-qualification process acceptable to all IOCs and Service Providers, among other things,” he said.

By Ekow Quandzie