TOGY talks to
Potential for locals in Ghana’s Voltaian BasinNovember 28, 2018
Nuertey Adzeman, the executive director of Ghana Oil and Gas Service Providers Association (GOGSPA), talks to TOGY about how to ensure IOCs are doing their due diligence to transfer know-how to indigenous companies, why the Voltaian Basin is a game-changer for Ghana and how to build local capacity. GOGSPA is an advocacy, lobbying, consultancy, compliance and monitoring group in Ghana.
• On the Voltaian Basin: “The game-changer is the Voltaian Basin. We are talking about 40-50% of Ghana’s landmass. Because it is onshore, operational costs will be low and there will be a lot of people involved.”
• On upstream outlook: “Now it’s picking up. We have names such as ExxonMobil and Aker [Energy], so the big boys are in town. In the next two to three years, I am positing that we have two or three more rigs sitting in our jurisdiction.”
• On local companies: “They don’t have the expertise, the capital or the technical know-how, but if they show interest they might be given preference to be JV partners with companies that have done this before. That is the only way they can transfer technology and know-how to develop those fields.”
• On onshore work: “It is safer to have both foreigners and indigenous companies to work side by side. It is in the interest of the foreign companies to develop the skills and capacity of indigenous Ghanaians.”
Most TOGY interviews are published exclusively on our business intelligence platform, TOGYiN, but you can find an abridged version of our interview with Nuertey Adzeman below.
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What is GOGSPA’s key focus?
We want to see international companies pass on know-how to local ones, although we have a lot of challenges. We see most of the JVs outright fronting – the indigenous partner has no idea what is happening in the day-to-day activities of the company. How is this knowledge being transferred? The Petroleum Commission [PC] is doing an audit now and some of the relations coming out are mind bothering, and therefore it comes to confirm that the JV system is not working and there is the need for us to take a second look at the JV guidelines.
There are some basic things that these companies can do, and the IOCs need to let them do that as part of the JV agreement to build capacity.
I have confidence in the PC that they are finding these front companies. Some may argue that a few contracts were made before the law was passed. But, moving forward, you need to have a JV partner before you can do anything. The law is clear. We want to maximise in-country spend, and therefore indigenous companies must build capacity to achieve in-country spend.
What feedback do you get from IOCs about domestic companies and capacity in Ghana?
They tell me that domestic companies don’t have the capacity. But it is in their interest to build indigenous capacity. It’s cheaper; security-wise they can go to sleep when local companies are part and parcel of activities. We have built capacity for the past 11 years and have the skills to do certain things, which PC has reserved for indigenous Ghanaian companies.
How has the industry’s performance changed over time?
There was euphoria, and all of a sudden everything stalled with the nosedive in the price of crude. People had some capacity invested in infrastructure. Things have made a hopeful turn, and now it’s picking up. We have names such as ExxonMobil and Aker [Energy], so the big boys are in town. In the next two to three years, I am positing that we have two or three more rigs sitting in our jurisdiction doing exploration and reconnaissance.
For me, the game-changer is the Voltaian Basin. We are talking about 40-50% of Ghana’s landmass. Because it is onshore, operational costs will be low and there will be a lot of people involved. We have started building onshore capacity in anticipation of a find. The information I am getting is that the samples taken look very exciting. It won’t be long; we’re going to find something onshore and it’s going to change the dynamics altogether.
That is the way to grow. We must start collecting data for how to build indigenous capacity because they need to be part of it. Other than that, we have challenges onshore. Since the work is in the communities, you will run into problems if you don’t involve them and let them have a say.
Are local companies better at that than internationals?
You need indigenous people to run this by themselves. Even if you travel to more advanced countries, it’s the same thing. Let them get a feel of it, and you are good to go, because in this case all the installations are within the community. It is safer to have both foreigners and indigenous companies to work side by side. It is in the interest of the foreign companies to develop the skills and capacity of indigenous Ghanaians. We as an association are looking to bring in indigenous companies who have had a feel for offshore. We want them to come together, form a consortium and take a block onshore and run with it. We don’t want someone doing purchasing from China to come in and the next day have a block. He has no track record in oil and gas. That is a pure political game.
Nigeria has done it now in shallow waters. Nigeria has been given to the Nigerians, and they have their own blocks and they are producing their own crude.
Ghanaians should go out there and partner with foreign companies who have the financial wherewithal and technical ability. They will learn and be able to take over. It shouldn’t be the foreign company coming to the block; Ghanaians should show interest. Yes, they don’t have the expertise, the capital or the technical know-how, but if they show interest they might be given preference to be JV partners with companies that have done this before. That is the only way they can transfer technology and know-how to develop those fields.
How do GOGSPA’s members feel about Ghana’s tax regime and the tax breaks given to foreign companies?
Indigenous companies are competing with foreign ones, and the former have to pay taxes the latter do not, which makes them less competitive. There is a need for us to go to Parliament and change those things. We are taking a second look at the LI 2204 and our recommendations will be forwarded to PC onward to the Ministry of Energy.
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