Ghana’s regional ambitions

Ghana

Kofi Oduro Mensah, co-CEO for joint ventures and strategic alliances at Harlequin Oil & Gas, and Frederick Hesse-Tetteh, the company’s co-CEO for projects, commercial and corporate strategy, talk to The Energy Year about the push for indigenisation and how regulators can ensure that JVs add value locally. Harlequin Oil & Gas provides hydrocarbons engineering, fabrication and project management in West Africa.

What trends are you noticing in Ghana’s oil and gas industry?
Kofi ODURO MENSAH: There is a general drive towards indigenisation. The enforcement of the local content law from 2013, LI 2204, focused on the low-hanging fruits, which were the areas reserved for fully indigenous companies such as catering and general manpower supply.
However, local players are starting to take on more significant roles up and down the value chain, from the E&P side to the services side, even in the downstream. The Petroleum Commission [PC] has created an environment in which indigenous businesses are able to gain a stronger foothold in the industry, and the focus should now be on building more local capacity over time.

The PC has announced that it will introduce amendments to LI 2204 in 2020. What would you like to see included among those proposed changes?
KOM: For joint ventures, the minimum participation from indigenous companies is 5% on the production side and 10% on the services side. We would like to see the minimum on the services side go up to 20%. This would be a step in the right direction.
Many of the JVs are not true JVs. Indigenous companies will process permits for offshore contracting companies, but their time, energy and money could be spent developing their own capacity. With a higher equity stake, they could ensure that these JVs are adding value, as opposed to just existing as JVs on paper.

Frederick HESSE-TETTEH: It’s also important to note that the PC itself must play its role in evaluating and approving JVs. These partnerships need to be more meaningful. It is imperative that there is knowledge and skills transfer to the local JV partner during the operation of a JV. Foreign companies should partner with local companies who have the skillsets and the vision to build technical capacity, which aids the JV company in not only meeting its local content requirements, but also its operational requirements.
It’s easy to tick a box and have an indigenous partner, but by finding the right partner, foreign companies add more value to their host country through local partner training and development and local taxation of the fully indigenous partner.

How would you assess the state of Ghana’s upstream sector and are you optimistic about its future?
FHT: We’re definitely feeling the lack of upstream project continuity. We have our core service offering such as specialised welding and fabrication, which mainly occurs during full-field development, but we have not seen any major demand for any of that work for the last three years. We have a large permanent workforce that needs to be continually active in their roles. If we’re looking for an economic transformation in Ghana, we all need to think outside the box for business continuity.
With that said, we are excited about the future. With the <a href='https://staging.theenergyyear.com/companies-institutions/springfield/’>Springfield and Aker Energy findings, there seems to be a lot of new activity. We’ve heard Nigerian block operator Amni will be drilling next year as well, and ExxonMobil is doing seismic studies. In the next two or three years, we will see a huge boom in field development and oil production, with additional assets offshore including FPSOs and rigs providing more opportunities for local businesses.

As an indigenous company, how did Harlequin Oil & Gas break into the upstream services sector?
KOM: Harlequin International was formed 21 years ago and was primarily a mining services company. In 2015, Harlequin International entered into a JV with a local company called Tarkus to form Harlequin Oil & Gas and to service the upstream oil and gas sector.
We were then able to acquire Harlequin Group, which was an international company operating in Ghana whose shareholders were not Ghanaian. Through this acquisition, we were able to indigenise a huge player in the upstream service business. That was a huge milestone for us and something we think other companies should be able to emulate to make the upstream sector more vibrant and dynamic.

How important are ISO and TRACE certifications for winning oil and gas contracts?
FHT: Having these certifications is extremely important for us and for our clients as well. We pride ourselves on delivering projects on time with no defects, and to the highest quality standards. We have had ISO/TS 29001, ISO 9001, 14001 and OHSAS 18001 certifications for the last few years. We operate in an industry that poses severe risks to the environment and to our community, and it is important that we operate to international quality management standards.

What are your most in-demand services?
FHT: With major fabrication projects not available, we have been providing plate heat exchanger maintenance services to MODEC. This maintenance service entails the cleaning, inspection and replacement of gaskets of the heat exchanger stainless steel plates and supply of OEM equipment for heat exchangers.
We’ve also done a lot of work for Maersk Drilling on the Maersk Voyager drillship risers. The risers require 5 and 10 yearly inspections, which we did in conjunction with the client and OEM. We also did general marine riser repairs on the auxiliary lines and mainlines, as well as buoyancy repairs.
Our work has been mainly maintenance and support services in recent times and a lot less of heavy fabrication. Nonetheless, our major services and flagship projects are the turnkey fabrication of subsea equipment, including manifolds, suction piles, steel bend restrictors, holdback anchors and mud mats.

What challenges do you face in expanding your work outside of Ghana?
KOM: Most countries in the West African region where there have been new oil discoveries are pushing for local content. We have a good value proposition from a knowledge standpoint and from an experience standpoint, so we will enter and compete in some of these newer markets such as Senegal. However, their local content requirements will also hold us at bay and prevent us from doing as much as we could for those countries.

FHT: Last year [in 2018], I visited Dakar to identify suitable locations for Harlequin to set up a facility there. I also attended the MSGBC [Mauritania, Senegal, The Gambia, Guinea Bissau and Guinea Conakry] Basin Summit and Exhibition where I met many of our existing clients who were very excited about the prospect of having us in-country.
However, development in Senegal has not moved as quickly as we expected. We continue to talk to clients with whom we have relationships within Ghana to gauge the best time to invest and set up shop in Senegal.
We are yet to visit Guyana, but there is a keen interest to do that at the right time too. Their findings are large and already have three FPSOs on order, so there are a host of services we can provide in a competitive environment.

Where do you expect to see the company in a decade’s time?
FHT: In a decade, we hope to have developed our 50-acre [202,343-square-metre] facility into an oil services hub providing a host of engineering services to the upstream value chain. We plan to reduce the cost of manufacturing, operations and maintenance for international service providers in the West African Region by providing them with cost-effective and efficient in-country services. We endeavour to be actively involved in exploration and production in the Voltaian Basin in Ghana and hope to enrich our communities through capacity development and job creation.
We want to be a regional player. We are very keen on operating outside of Ghana, not only in the oil and gas industry but also in mining services, which was the original bread and butter of Harlequin. We hope we can have a positive impact on the industry by providing an outstanding quality of service, and by continuously evolving our service offering to meet client demands. In a decade, we want to have proven that local African industry players have what it takes to get the job done too.

Read our latest insights on:

• Ghana
• Guyana