Local movement in GhanaSeptember 5, 2018
Claude Perrier, the managing director of SRI EMAS, talks to TOGY about the opening of opportunities in Ghana with, among other things, the arrival of ExxonMobil and the progress in development regarding local content. SRI EMAS is an offshore contractor that provides subsea services for the oil and gas industry.
• On outlook: “No doubt that events like ExxonMobil’s arrival will open the door to a change of magnitude in Ghana offshore operations as they tend to do things on a larger scale.”
• On local content: “The most common challenge is credibility in the capacity of local companies at delivering the scope with both expected local content and expected international standards.”
• On training: “We still need outside help and expats to deliver some tricky parts, but there are also a lot of Ghanaians who have been trained and learned from our projects and are ready to go on other projects and even abroad for other challenges.”
• On localisation: “Fronting for a foreign company is gone. Now it is real work by real Ghanaian employees in a real Ghanaian company.”
Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Claude Perrier below.
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Will the large-scale discoveries in Ghana begin to see greater production?
No doubt that events like ExxonMobil’s arrival will open the door to a change of magnitude in Ghana offshore operations as they tend to do things on a larger scale. However even before they start their operations, Ghana has seen a lot of offshore discoveries to date, and many such as these on Deepwater Tano Cape Three Points block – now to be operated by Aker Energy – are yet to be produced, which is a good prospect for companies like us supporting the development of oil and gas infrastructure. To be mentioned as well are Tullow’s plans for Greater Jubilee Full Field development as well as TEN full development, now made possible by the resolution of the border dispute. In addition there will soon be more blocks to be licensed: six blocks this year  and three blocks next year, as far as has been made public. This is a very positive development, and you can be confident that this will eventually turn Ghana into a good size oil producing country in the coming few years.
What is the most common challenge local companies face in winning jobs with international companies?
The most common challenge is credibility in the capacity of local companies at delivering the scope with both expected local content and expected international standards. Although the local content law was only enacted in 2013, SRI EMAS was already a 51-49 company as early as 2012, with the Ghanaian shareholder holding 51%. This proved to be a decisive advantage in the evaluation of tenders in which SRI EMAS was participating: being 51% Ghanaian-owned, automatically gave us a 10% price advantage over other companies that were mostly 10%-90%.
However, having won projects we had to demonstrate to the operator, the regulator and the industry that we were able to deliver technically as well as being able to meet the ambitious local content targets which had been integrated in our contract (for the first time, as far as we know). Having wanted to badly win these projects, we had self-imposed challenging targets for project local management, project local spending and project local offshore crews.
How is the need to generate local content changing the market?
You propose local content in order to win the job, then you organise your project to deliver this local content; that means involving lots of local companies or being ready to pay a fine. I have known this in Brazil where, if you commit to local content and don’t deliver, you get a multa, a fine. Now in Ghana, committing to substantial local content and failing to deliver it on a large contract like ours may lead you to incur liquidated damages running into millions of dollars.
People must be as committed to deliver local content as they are to delivering the project, a bit like a project within the project. We at Sri Emas have demonstrated that local companies can deliver on both fronts under the new LI2204. Okay, we still need outside help and expats to deliver some tricky parts, but there are also a lot of Ghanaians who have been trained and learned from our projects and are ready to go on other projects and even abroad for other challenges.
Fronting for a foreign company is gone. Now it is real work by real Ghanaian employees in a real Ghanaian company. That is the message.
What were SRI EMAS’ recent tenders?
We won two tenders with Eni. One was for the SURF installation and the second was for the gas export line installation bringing gas from the Sankofa non-associated gas reservoir – meaning it’s pure gas, which is important since it’s a much bigger reserve. This first Eni development is targeting gas before anything else. Oil is an early cashflow item, but the real target is gas because it’s needed in this country to generate power. Up till now, Ghana has been buying gas from neighboring Nigeria, but nothing beats having your own local production. We already installed this 26-inch gas line as well, and it will be commissioned by July 2018.
Oil, on the other hand, has been in production since May 2017. We installed the loop that allowed first oil three months ahead of schedule. It was a good achievement and showed that we were delivering even better than expected. Currently, we are finalising the installation of the SURF project. We completed the offshore operations at the end of March 2018, six months ahead of schedule.
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