New opportunities abound in GhanaMarch 12, 2020
M.C. Vasnani and Linda Vasnani, CEO and COO of Consolidated Shipping Agencies (Conship), talk to The Energy Year about the relationship between the private sector and regulators and the impact of the African Continental Free Trade Agreement (AfCFTA). Conship is an independent Ghanaian logistics and freight-forwarding company.
A diplomat quoted by the Financial Times stated that Ghana is trying to become more of a Norway than a Nigeria when it comes to the oil and gas industry. What is your view on this statement?
M.C. VASNANI: It would be great if we could achieve that, but that is not what we see on the ground. It’s become a politicised playing field, and something needs to be done. We are not saying politicians should not get into the space, but decisions should be taken on merit. It would be good if a system is established to reward genuine businesses who have invested in systems, trained personnel and have a solid track record.
We have seen what they’ve done in Norway, as well as all that we have been able to put in place here. I think it’s a good initiative, but it’s the implementation that really matters.
How fluent is the dialogue between the private sector and the regulators?
MCV: We have a good relationship with the regulators, but we still have some issues, such as the regulator trying to become an advocate to promote business as well as trying to regulate. However, the PC [Petroleum Commission] has a great setup which enforces compliance in the upstream.
How have international standards evolved over the years in Ghana?
MCV: Standards did go up very well at one time, but I think they are a little bit on the decline now. Following through with the regulations that have been put in place is very important. It is disheartening when businesses are awarded contracts without merit or due diligence. The government must do more on compliance.
Linda VASNANI: Our regulator has succeeded in enforcing the local content law; they’ve done that very well. Another thing that they have done well is training in various aspects of the oil and gas industry. This gives private companies a better understanding of how things operate in the oil and gas space. I’m very pleased with that and I encourage them to continue to do that.
How feasible is it for Ghana to become a regional petroleum hub?
MCV: Ghana has the potential. We are strategically positioned to be able to achieve this. As a company, we’ve supported a couple of campaigns since 2012 from Ghana to Liberia, to Sierra Leone and to Namibia. The sub-region is now beginning to grow. Apart from Nigeria and maybe Côte d’Ivoire, other countries are looking up to Ghana and how we are implementing our policies.
However, port expansion in Takoradi needs to be looked at very critically; it’s not conducive for oil and gas activities now. It’s been 10 years since first oil, and expansion is now a priority to take things to another level.
Established multinational companies who are considered key players in the oil and gas industry have set up in Ghana, and this is good for the country because services and business activities increase as a result. This will create jobs and improve the economy. Once the systems and infrastructure are in place, it will impact all aspects of business growth in the country.
What is your view on the AfCFTA?
MCV: It’s a very good initiative for us as Africans, given that we have very limited movement of goods and people. If you look at Europe, the US or South America, they’ve all come together as a continent, and we need to follow in those footsteps. If our leaders can implement this concept for the private sector to spearhead, it will be a game changer.
The most important element in any economy is the private sector, and it must have the government’s support. However, there must be consistency. As businesspeople we want to see continuity. It doesn’t matter who is in power, we should all come together and embrace the decisions that have been taken and then push them through. President [John] Kufuor said Ghana is a gateway to West Africa, but how far have we developed that gateway?
Now we are seeing things happen. We see the new development in the port of Tema with its infrastructure and the roads leading to it, and that is fantastic. This is what builds a country. Private businesses should be encouraged. There should be tax breaks and some dispensation to encourage private businesses to do more and invest in the country rather than repatriating their capital.
LV: Ghana is well placed to do this. We have the competence and we have policies in place that can help this country grow. We are excited about these new developments. Another factor that will open the region is transfer of knowledge and best practices. This is already happening with companies such as Tullow and MODEC. Ghanaians are being empowered to do more in the oil and gas space, and that’s important for us as a country.
As Ghana aims to produce 500,000 bpd by 2024, are you seeing an increase in E&P activities?
MCV: Indeed, and the 2018 licensing round is one of the best things to happen in the industry. It has opened the market. When you look at how deep companies are drilling, it tells you we have something. Unfortunately, it’s so deep that only bigger companies with deeper pockets can get to those depths. We need to work on it now to reap the benefits as fast as possible, as renewables are starting to take over.
We also have Eni’s gas discovery, which is cleaner. We shouldn’t be flaring it; we should take advantage of it. The by-products of gas are so enormous and can be used in so many ways that we need to investigate that.
We should also encourage BOTs [build-operate-transfer], which is how a country develops. We don’t have the resources or the expertise, so when the BOT finishes and is transferred, we should be able to take it on, maintain it and sustain it. This will grow the economy more. There’s a strong push there. If we can hit the 500,000 bpd, it’s a drop in the ocean. For Ghana, however, it will be excellent.
What have been some of Conship’s major milestones?
MCV: We started working in the oil and gas space as far back as 1999, before Ghana discovered oil. As a matter of fact, we did our first FCPA [Foreign Corrupt Practices Act] due diligence in 1999. We worked with Global Offshore, and since they were listed on the Nasdaq, we had to go through compliance procedures.
We also did some work in Nigeria supporting the pipeline operations with Global Offshore. Between 2003 and 2007, we were actively involved in the West African Gas Pipeline [WAGP] project. We worked with WAGP and Chevron in the pipe coating plant, handling the barges and giving offshore support.
For Conship, getting into the oil and gas business has helped us to develop our human resource and IT infrastructure and invest in equipment. We call ourselves a company of many firsts, as we’ve been the pacesetters in every single aspect of logistics in the oil and gas industry.
Another milestone we are proud of was when the first FPSO, Kwame Nkrumah, came to Ghana. We handled the inward clearance, and we were one of the first companies that had to work with the offtakers offshore. During the gas project, for instance, we also had a lot of PSVs [platform supply vessels] we were working with.
Conship was awarded a contract by Tullow for domestic freight forwarding in 2010 – the first indigenous company to be awarded such a project. We were also actively involved from end to end in the second FPSO from Tullow and MODEC. We were awarded the contract to bring the FPSO from Singapore, and we took stakeholders to Singapore to ensure compliance and certifications. Clearance was achieved within three hours because it was a seamless, well-planned process.
LV: We are also one of the first companies to set up an onshore logistics base to support the Liberia drilling campaign back in 2012. We were awarded a contract to handle moving materials and equipment to Liberia from Takoradi. We are proudly the first indigenous company to achieve this. After the Liberia campaign, we replicated the same module for campaigns in Sierra Leone and Walvis Bay, Namibia.
What is your medium-term strategy moving ahead?
MCV: When it comes to upstream oil and gas services, the space is already small and there are too many service providers. We must be creative and innovative by looking for opportunities in the midstream and downstream sectors. The more the government talks about the petroleum hub in Takoradi, the more we feel we should get into that space. Maybe not as an operator but as a service provider because that is where our strength is.
We also established a company called Ecoalpha Services, which is registered with the PC. It is a company that delivers services that are not part of Conship’s mandate, such as those within the aviation sector. Ecoalpha has a joint venture with an aviation company that promises to change the face of the aviation industry in Ghana.
As a private business owner and investor, you don’t put all your eggs in one basket. Who knows, someone might walk in tomorrow and want an M&A with one of these companies, which will bring in good returns on our investment. The idea is for Ecoalpha to offer support services to Conship and other clients in the oil and gas industry.
We are looking at diversifying into other areas as well. If another company comes to us and wants to develop a certain area, for instance security, and we believe it’s a good opportunity, we can establish a company to do that. When you take the upstream arena, there are so many areas that come around it – by-products, service providers, maintenance, inspections – so many things. The mandate of Conship is completely different. Ecoalpha will be doing other services, and that is why we created it.
What is the future you anticipate for Ghana’s oil and gas industry?
MCV: The more discoveries we make, the better. We have a very good plan. Indigenous companies have grown, and we are excited to see local companies having blocks. When most investors come, they have indigenous companies in the shareholding structure, but we should be able to encourage more Ghanaians to have majority shares.