Indigenous oil & gas coys get US$3.6bn contracts in 3yrs

The upstream petroleum industry awarded contracts worth US$3.6billion to indigenous companies over the last three years, thereby deepening the local content policy.

The contracts were awarded between 2018 and 2021 by upstream petroleum exploration and production firms as part of efforts to increase local participation, says the Ghana Upstream Petroleum Chamber.

Last year, contracts valued at US$754million were awarded to local companies operating along the value chain – up from US$300million in 2020 and US$670million the previous year. In 2018, the value was US$370million, the Chamber’s maiden report said.

The National Petroleum Commission, the upstream industry regulator, requires that production and exploration companies award contracts to Ghanaian companies where local knowledge, skills and capacity exist.

Under the Local Content and Local Participation Law – LI2204, the Commission defines local content to include the quantum/percentage of locally produced materials, personnel, financing, goods and services rendered to the oil industry which can be measured in monetary terms.

A total of 1,571 indigenous firms had registered with Petroleum Commission as at end of 2021. These companies provide a wide range of services and products including fabrication, food and raw material supply, among others.

Similarly, efforts to increase locals’ employment in the upstream industry has yielded dividends, with 90 percent of the industry’s total 5,280 workforce being Ghanaians in 2021 – from 87 percent and 85 percent in 2020 and 2019 respectively.

This represents a marked change, given that less than 10 years ago close to 40 percent of the industry’s workers were expatriates

“Local companies, like all businesses, do well when the industry is thriving. We have some serious companies in fabrication, logistics and environmental management and training,” David Ampofo, Chief Executive Officer of the Chamber, told the B&FT.

He however said that local content suffers when the industry is not growing as it should. “The more business they get, the more successful we will be at ensuring the benefits of oil and gas are transformative.”

After discovering hydrocarbon resources in commercial volumes during the early 2000s, Ghana has sought to not only use oil for accelerating socioeconomic development but also provide avenues for indigenes to actively participate in the sector.

Subsequently, in November 2013 LI2204 was promulgated to, among others, promote maximisation of value-addition and job creation through the use of local expertise, goods and services business; and financing in the petroleum industry value chain with profit retention in Ghana.