Indigenous companies still operating at periphery of oil and gas industry - GNPC

Although some progress has been made in promoting local content in the oil and gas industry, much more is needed to indigenise the sector, General Manager-Engineering at state-owned Ghana National Petroleum Corporation (GNPC), Victor Kofi Sunu-Attah, has said.

After 15 years since discovery of hydrocarbons in commercial volumes and more than 10 years of production, he said, the country still lacks core competencies and not many local companies are capable of executing fabrication and engineering jobs.

For instance, he said local companies are performing fairly well, especially in the ongoing decommissioning of the Saltpond Rig; but added that fabrication remains the biggest challenge.

As a result, Mr. Sunu-Attah said indigenous firms continue to lose out in these areas where they could otherwise have added real value to the economy in line with local content laws.

“We have tried all that we could to build capacity; we have upped it a bit, but a huge amount of it stays outside the country.

“In the area of service, we need to up our game – although we are doing better in engineering than fabrication,” Mr. Sunu-Attah said.

He spoke on the topic 15 years of Ghana’s oil discovery, lessons learnt and future outlook, at an event organised by SPE International in Accra, and said more must be done to ensure the bulk of the industry’s wealth stays within the country.

“Apart from engineering and fabrication, many areas in the services subsector need improvement. By this, I mean legal, financial, insurance and hospitality services, and many others. We don’t have many; we have only a few indigenous companies which are actually doing well, and we need more and more in order to be able to add real value to the economy.”

For Ato Aidoo, SPE International Ghana Section Director, the country has gone from not having enough capacity in terms of human resource skillset to reasonable capacity, 15 years on.

“A lot has happened after Jubilee Field through to the discovery of TEN and Sankofa OCTP in terms of local content. Sometimes when you look at it you are tempted to think that it is not a significant impact, but it is.

“Going forward, what may be most important is how to increase equity participation by local companies. In terms of manpower, we have done a lot; but in terms of equity participation, the local companies have to bring themselves to a position where they are able to have more investment in whatever partnership they are into. By so doing, they will have the ability to build more capacity; not only for the manpower input but also technological input,” Mr. Aidoo added.

He however said more funding support is needed to help local companies participate actively in the petroleum upstream sector, while steps should be taken toward producing most of the raw materials and technology required by the industry.

Collaborative and deliberate approach

Going forward, Mr. Sunu-Attah said a deliberate and collaborative plan is required to position local companies to play at the heart of the oil and gas industry.

Explaining further, he said: “To actually get more value from the oil and gas industry and convert non-renewable resources to sustainable ones, there must be a deliberate effort from all of us – GNPC, Petroleum Commission, Ministry of Energy – to ensure that fabrication which requires cutting edge technology, international codes and standards and regulations and certification will be transferred into the country’s industrialisation drive.”

Additionally, he said, in the country’s bid to indigenise the sector, the Petroleum Commission and Ministry of Energy should incentivise or support GNPC and Ghana National Gas Company in a more deliberate manner to participate actively in oil and gas activities; because it is when these two companies get contracts that they will be able to give business to indigenous companies.

“We can also decide that we are not where we should be 15 years after discovery, and so we want to bring together a few local companies and incentivise them to get an oil-rig; so that when it comes to drilling in deep or ultra-deep water, the job will come to Ghanaians: but it must be deliberate.

“Let’s say an oil field is developed for US$4billion and services alone are about US$2billion; if you are able to do 40 percent, that’s US$800million staying in the hands of Ghanaian businesses. There are areas where we obviously might not be able to play in, but when it comes to something like a rig, we should be able to play a role there,” he said.