Stories By Pita Ochai

The Nigerian Incoming Government Has Been Urged To Reposition The Maritime Sector For The Benefit Of The Economy.  The Urge Was Made By Chief Kunle Folarin, The Chairman Of Nigerian Port Consultative Council (PCC). According To Him, There Is Need To Make The Nigerian Maritime Sector More Competitive Which Will Bring Out The Best In The Industry.

Folarin said that the advice became necessary because a competitive maritime sector could grow the economy. “To grow the economy from the maritime contribution; to re-engineer the whole maritime sector to be competitive in the region. To make sure that all the potentials and the reforms that have been carried out over the years within the maritime sector, in particular the port industry, are optimised. A point in case of the concessioning regime, customs reform and so many other reforms that are taking place in the maritime sector to position the country to be the leader in the region.

“The maritime sector wants to be the apex contributor to the economy; the core of the potential is there. The programmes and the projects that will deliver on this particular expectation are there.

“So we will write the government to give priority attention, the kind that has been given to the oil and gas sector, to the maritime sector,” he said.

He added that a competitive maritime sector would offer job opportunities and create wealth for Nigerians.

Folarin said that the new government could achieve so much if it focused more on the sector.

The 2nd West Africa Oil

London, UK (PRWEB UK) 29 April 2015 — One of the main challenges that newly-elected President Buhari will have to face is the security of the oil sector. Oil production in Nigeria accounts for 70% of the economy but the natural resource is much less profitable than it once was because of widespread corruption and vandalism.  From the $600 billion USD in oil revenue that has flowed into the Government’s account since the country’s independence in 1960, an estimated $400 billion has been diverted, misspent or stolen.

On the other hand, security forces are not being given adequate resources to ensure the safety of oil and as infrastructure.  However, investors expect the recent Nigerian elections to be a turning point for the oil industry.  The 2nd West Africa Oil

By Pita Ochai

For A Country With Over Four Decades’ Experience In Oil And Gas Exploration And Production Activities And Proven Recoverable Reserves Of About 37 Billion Barrels, Her Inability To Use The Resource Wealth As A Means For National Development And Poverty Reduction Has Perhaps Been The Greatest Challenge Facing Successive Administrations. These Challenges Have Their Expression In How Nigeria Can Derive Maximum Benefits From Oil And Gas Operations Through Optimal Use Of Local Competences And Resources As Practiced In Indonesia, Brazil, Norway And Venezuela, For Example. Although These Countries Started Oil Exploration And Production Activities After Nigeria They Have Largely Recorded Remarkable Success In Their Efforts To Grow The Local Content In This Strategic Industry.

The need for resource-rich Nigeria to assume control of the exploration, exploitation and production activities in the oil and gas sector and to harness the potentials of this most strategic industry in order to generate more value-added, seems to be receiving much desired attention from all the stakeholders. This need is equally expressed in Nigeria’s desire to domicile a substantial amount of the average $18 billion per annum exploration and production spending and stem the tide of capital flight which, over the years, has made Nigeria a junior partner in her joint venture arrangements with the International Oil Companies (IOCs).

But the Nigerian Local Content story after 5 years of its operation is a soaring one. According to most industry stakeholders, much has been achieved in the industry. Ernest Nwapa, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), said that over $5 billion worth of investments have been made in Nigerian yards since the signing of the Nigerian Content Bill into law by President Goodluck  Ebele Jonathan in 2010, especially by member companies of the Petroleum Technology Association of Nigeria, (PETAN) and other firms like Aveon Offshore, Cameron, LADOL, Nigerdock, FMC Technologies, Tenaris, EWT etc while about 40,000 technical jobs were being created per annum

One of the areas the huge investment steamed by the local content Act has been very visible are in the development of entrepreneurship, manufacturing of equipment, employment generation, etc. One of the areas that has become noticeable of recent is the ocean business where more Nigerian companies have venture into areas initially believed were impossible.

One of such feat is the recent acquisition of DP2 Saturation Diving Vessel by the Petrolog Group, which is believed to be the largest of its kind in Sub-Saharan Africa. The vessel, christened DSV Vinnice, is valued at $170 million and is equipped for shallow and deep water operations and can be used for construction, repair and maintenance of oilrigs and other offshore naval constructions.

During the unveiling of the vessel, Dr. Ernest Nwapa, the Executive Secretary of the Nigerian Content Development and Monitoring Board, (NCDMB), described the acquisition as another affirmation that indigenous oil servicing companies have developed capacity to acquire and operate hi-tech assets and could participate in every segment of the oil and gas industry notwithstanding the challenges. He said the emergence of a new breed of Nigerian investors and the quanta of investments they are making have erased any doubts that government and the people of Nigeria were resolute with the implementation of the policy.

According to Nwapa, real Nigerian Content accomplishment would only come when vessels such as DSV Vinnice are constructed in Nigeria, expressing hope that any other such vessel to be acquired by a Nigerian investor would be outfitted at the Naval Dockyard Lagos and some of the components manufactured in-country.

Commenting on the giant stride by his company, Dr. Joseph Ebuh, the Chairman of Petrolog Group, described the Nigerian Content Act as the greatest boost to the company’s growth. He stated that “since the Act came into effect, we have been emboldened to take giant steps and risks to meet existing demand.” He commended the NCDMB for its implementation of the Nigerian Content Act, which, according to him, has created opportunities for indigenous companies to thrive.

Another company that has made success of the local content policy in the ocean business is Total which has invested over $1billion in the Egina deep water project. The Egina-Total Exploration and Production’s $15 billion deep water project is the first major oil and gas project to be started under the Nigerian Content Act and it includes an FPSO unit, an oil offloading terminal and subsea production systems such as risers, 52km of oil and water injection flowlines, 12 flexible jumpers, 20km of gas export pipelines, 80km of umbilicals and subsea manifolds.

One of its projects is the Saipem’s new double/quadruple joint plant located in Port Harcourt, Rivers State which was commissioned by Nwapa. According to the Executive Secretary of the Board, the Saipem’s new double/ quadruple joint plant, made towards delivering Saipem’s Nigerian Content scope on the Egina project is an investment worth $60 million. To him, the plant was worthy of celebration as it confirmed that the Board’s strategy to include Capacity Development Initiatives (CDIs) in major projects was working. He said that the CDIs will promote opportunities for training, knowledge and technology acquisition, adding that shop floors were expanding and capacity to execute work in Nigeria had increased substantially.

To Mrs. Diezani Alison-Madueke, the Minister of Petroleum Resources, the implementation of the Nigerian Oil and Gas Industry Development Act (NOGICD Act), signed into law in 2010 by President Goodluck Jonathan is yielding the desired results. According to the minister, the signing into law of the NOGICD Act was borne out of the need for Nigeria to be actively engaged in the exploration and production activities of the oil and gas sector in a bid to harness the abundant potentials of this strategic industry towards achieving significant in-country value-addition, employment generation and capital retention.

She said since its inception, the NOGICD Act had enhanced job creation and the development of indigenous human and technical expertise. According to her, this had further stimulated other sectors of the economy and would continue to positively impact Nigeria’s Gross Domestic Product (GDP). She said the government’s efforts towards growing Nigerian content were yielding the desired results. “This is underscored by the growth of Nigerian content from an abysmal three to five per cent before the inception of NOGICD Act to between 12 and 18 per cent. This is indeed a massive improvement,” she said.

According to her, since the implementation of the marine vessel utilisation strategy in 2013, there has been a marked growth in the number of Nigerian owned vessels that are doing business in the oil and gas industry. “For instance, out of 1,000 marine vessels that were captured by the Nigerian Content Development and Monitoring Board (NCDMB) in 2013, 49.5 per cent were in category ‘A’ that is, either built in Nigeria or owned by Nigerians. Also, out of 1,232 vessels captured as at the third quarter of 2014, 89.2 per cent were in category A (and class AAA),” she added.

She disclosed that at least two additional dry-docking facilities would be required within the shortest possible time for vessel maintenance and ship repairs in view of the growing economic and maritime activities in Nigeria and West Africa. “Government is keen on encouraging investments in this area. A new dry dock facility would attract about $1billion dollars into the Nigerian economy and generate over 9,000 direct and ancillary employment opportunities for Nigerians,” she said.

Alison-Madueke also agreed with Nwapa that since the inception of NOGICD Act 2010, over $5 billion have been invested in facility upgrade that was largely driven by oil and gas industry needs. “Fabrication capabilities have subsequently increased by 40 per cent and it is gratifying to know that production platforms, Christmas tree frames, pressure vessels and many other facilities are now fabricated in-country,” the minister added.

The area of human capital development in different fields has also recorded success according to the minister. In her record, the minister stated that the intervention of government on the back of projects have provided over 5,000 training and employment opportunities in the last 5 years.

Sequel to the successes recorded in the Nigerian Local Content Act, stakeholders in Nigerian economy has called for the implementation of Local Content Act in other areas of the economy other than the oil and gas sector. Leading the call is Olufemi Ajayi, the Executive Secretary of the Petroleum Trust Development Funds (PTDF), during the formal handing over of 15 cadet pilots trained by Petroleum Trust Development Funds (PTDF) to Caverton Helicopters. He said that the local content drive is a process that is becoming clearer to Nigerians as it is gradually traversing all segments of the economy. “The Local Content Act as it were is already developing people in the oil and gas sector. But government is also encouraging private sector people to be part of the development drive so that its advantages can radiate beyond few individuals. If the drive is adopted in other areas of the economy, we would have more Nigerians who will be beneficiaries of it,” Ajayi said.

The PTDF Executive Secretary noted that the Nigerian aviation sector in particular must take a cue from Carverton Helicopters that has been leading the way in recruiting and engaging Nigerians in its workforce, saying such acts will provide employment for more youths.

The Nigerian Oil and Gas Development Law 2010 defines local content as “the quantum of composite value added to or created in Nigeria through utilization of Nigerian resources and services in the petroleum industry resulting in the development of indigenous capability without compromising quality, health, safety and environmental standards”. It is framed within the context of growth of Nigerian entrepreneurship and the domestication of assets to fully realize Nigeria’s strategic developmental goals. The scheme, which has the potential to create over 30,000 jobs every year according to experts, is geared to increasing the domestic share of the $18 billion annual spending on oil and gas from 45 percent to 70 percent, in addition to enhancing the multiplier effects on the economy, through refining and petrochemicals.

The local content policy action started in 1971 through the establishment of the Nigerian National Oil Corporation, (NOC). NOC was established as a vehicle for the promotion of Nigeria’s indigenization policy in the petroleum sector. It later became Nigerian National Petroleum Corporation (NNPC) in 1977 through NOC’s merger with the petroleum ministry. NNPC flagged off the actual local content initiative through acquisition of interests in the operations of the IOCs. These interests grew to about 70 percent, with the responsibility of controlling all acreages and other activities. Although conscious efforts were made in the past through Regulation 26 of the 1969 Petroleum Act, enforcement of local content policy, the springboard for sustainable economic transformation of Nigeria, was mere paper work. For an industry that contributes 80 percent of Nigerian government revenues and 95 percent of its foreign exchange this is entirely unacceptable to the Nigerian government hence the clamor for change.

Government’s objectives for the local content policy initiative are quite noble. These objectives include the expansion of the upstream and downstream sectors of the oil and gas industry, the diversification of the sources of investment into the sector such that some of the funds would begin to come from local sources, the promotion of indigenous participation and the fostering of technological transfer. Other objectives are the increase in oil and gas reserves through aggressive exploration; employment generation for all categories of Nigerians; increased production capacity, and perhaps most importantly, the integration of the oil and gas industry into the mainstream economy through local refineries and petrochemicals

Following enormous investments in human capital by the Nigerian National Petroleum Corporation (NNPC) and some of its joint venture partners over the years, a new crop of highly competent and experienced Nigerian engineers, geologists and geophysicists has emerged. Today, some of them have established private oil prospecting and oil services firms, which are classified as indigenous contracting firms. However, their inability to get a share of the action at the upstream may not necessarily be due to incompetence, but rather due to a dearth of funds. Nigerian banks lack the financial base to make any meaningful impact on local content development.

Other obstacles are a thin industrial base, lack of adequate power, water and other infrastructure to support an expanded manufacturing base, lack of small and medium-sized enterprises and an underdeveloped capital market. The BGL study notes the argument of some industry stakeholders that over 70 percent of the contracts awarded to Nigerian companies are executed overseas, thereby defeating the primary objective of Nigerian content development which is to develop in-country capacity by executing contracts in Nigeria using Nigerian local resources. Other problems of local companies revolve around executive capacity and critical mass with technical and financial wherewithal.

Generally, most local companies are small, fragmented and incapable of packaging or attracting loans. Few of them can deliver turnkey projects without resorting to some form of partner- ship agreement for equipment, expertise or technical support. There exists the so-called “Knowing-Doing gap” in Nigeria, that is the disconnect that exists between policy formulation and policy implementation. This term describes the absence of a critical link between strategy and action. Public policy initiatives and actions in Nigeria have persistently been incapacitated by this gap, with many government programmes and projects ending in downright failure. Inadequate think through, weak institutional capacity, lack of political will to carry through change, inconsistency in government policies, lack of support from relevant stakeholders and corruption are some of the causes of this gap. The implication of this is that the future of the Nigerian people is currently being controlled by foreigners whose main objective could be to post better returns on investment.

The Nigerian local content initiative did not take off until five years ago. The Obasanjo administration’s renewed efforts at making a difference in the appalling state of Nigerian content in the country’s oil and gas sector were evident in the privatization of the Nigerdock and the repositioning of the Nigerian Petroleum Development Company (NPDC), an arm of NNPC.

Already the privatization of Nigerdock has proved the company’s capability as a serious player in emerging deepwater offshore activities with its success story in constructing the Bonga Buoy (the world’s largest). Another milestone recorded in the effort at growing the nation’s local content level is the Globestar yard’s fabrication of the jacket for the Amenam platform, Saipem yard’s Okpoho platform and ChevronTexaco’s Meren-X well jacket and helipad fabricated by Transcoastal Nigeria.

These developments have helped to create jobs, build capacity and stimulate the nation’s economy. Fabrication is probably the most developed manufacturing area in the Nigerian petroleum industry. For several years, many structures and parts have been fabricated in yards located mainly in Warri, Lagos and Port Harcourt. This has come to stay, but it suffers a number of limitations. Limited capacity installation and technological innovation could continue to plague the industry even as it is striving to mature into relatively more demanding deepwater fabrication.

By Gilbert Boyefio

The Just Concluded Ghana Extractive Industry Safety Conference (GEISC), First Of Its Kind In The History Of The Oil And Gas Industry In Ghana, Has Strongly Advocated For The Need To Protect The Ghanaian Worker And Make His Working Environment Safe.

The conference, tagged, “Driving Industry Excellence through Health and Safety,” was organized by the Sekondi-Takoradi Chamber of Commerce and Industry to provide the platform for addressing policy, regulation and compliance issues that will lead to institutional reforms at both the public and the private sector levels on Occupational Health and Safety (OHS) standards.

The conference came at a time when conformity to Health, Safety, Environment and Quality (HSE and Q) standards has become an entry barrier to local Ghanaian businesses into the extractive industry’s supply chain.

The Challenge

The reality on ground is that Ghana as a country has no safety culture. As such, local businesses especially the micro, small and medium scale enterprises (SMEs) do not have safety systems in place.

However, the global oil and gas and mining industries thrive on very high (HSE and Q) standards. Therefore evidence of HSE policies and systems within a company is mandatory or a pre‐requisite for doing business in the extractive industry.

As a result, most local Ghanaian businesses are unable to secure contracts in the Oil, Gas and Mining Industries.

At best, most local businesses are only able to access peripheral jobs or contracts with very low monetary values from sub-contractors. The situation on the ground obviously makes the achievement of provisions in the Oil, Gas and mining Local Content Laws very difficult.

It is very usual for institutions to break health and safety rules and expose their employees to lots of hazards, thereby breaching their “duty of care” to the employees. Individual employees also compromise their own safety at workplace by acting ‘unsafely’.

Ghana currently has no comprehensive national occupational health, safety and environment policy, which would provide standards or guide for adherence by industry. What exist today, are pieces of scattered legislations and regulations such as the Environmental Protection Agency (EPA) Act (Act 490) and Factories, Offices and Shops Act, LI 328.

Apart from EPA and Minerals Commission, much has not been heard or seen of the rest of the agencies mandated to enforce the Acts mentioned above. This may be as a result of lack of resources and logistics as is always the excuse of most enforcement agencies in the country and more importantly ‘non-‐applicability’ of some of these laws.

The inability of these agencies to perform their oversight responsibilities and strictly enforce compliance at their respective sectors coupled with the absence of a comprehensive regime (public and private) have brought untold hardships, pain, suffering and in some cases death to some employees. The private sector in Ghana is increasingly growing.

For Ghanaian companies wanting to work with the major multi‐national operating companies in the extractive sector, implementation of HSE management systems is a pre‐requisite for doing business. Again, if the country developmental agenda is to be realised, then we need to build a safety culture paradigm that is proactive and holistic in nature.

This could be achieved through; advocacy to ensure appropriate policies for occupational health and safety; enforcement with the whip; education, that is, safety orientation and awareness creation; encouragement by motivating employers and employees to pursue safety, re‐engineering of processes and modifying them to suit peoples’ culture and also meet the local content laws.

According to Kwamina Amoasi-Andoh, National Programme Manager, ILO SCORE (Sustaining Competitive and Responsible Enterprises) program, “A worker is killed in an industrial accident every 3 minutes. And there are 250 million work-related accidents every year.  Social and economic costs of workplace accidents and diseases amount to approximately 4% of what is produced. In Ghana, bad OSHE practices cost 9% of cost of output.”

The ILO SCORE project ensures that Enterprises are aware of increasing global and local competition and the need to demonstrate sound OSHE performance. To achieve these SMEs need to control the risks associated with their operations, activities, products and services in line with their OSHE policy objectives.

Mr. Amoasi-Andoh pointed out that SMEs are facing increasingly stringent OSHE legislation, the development of dynamic economic policies, increased concern expressed by interested parties, and commitment to Corporate Social Responsibility (CSR).

The objective of the ILO at the workplace is to train on basic OSHE Management System including OSHE Policy formulation; identify hazards, assess risks, develop and implement controls; identify relevant legal and other requirements, i.e. industry standards, rules and regulations, ILO Conventions and ensure compliance; report, investigate incidents/accidents, identify the causes and implement corrective/preventive actions; regularly evaluate overall performance of the OSHE MS through regular site inspections, internal audits and management reviews.

By Gilbert Boyefio

Though Ghana’s Local Content And Local Participation Regulations, 2013 (LI2204), Which Was Passed Into Law In November 2013, Is Still Young, There Are Those That Holds The View That For The Country To Effectively Maximized It Full Potential It Has To Look Beyond This Law.

According to them, given the size of Ghana’s oil and gas industry presently and its prospect for the future it would be better if focus is placed on regional content as against local content.

For one of the proponent of the regional content, Mr. Steven Gray, Director of the Atuabo Free Port Project, this will open the markets of neighbouring countries to each other to add and gain value.

To him, “The real value of local content development is for companies to build their capacities in individuals or companies to export their services to other market.”

He maintains that building the capacity of local people for the local market is a short term deliverables of local content, and this is where the Atuabo Free Port comes in to build a platform from which Ghanaian companies can build their capacities; and once they have that capacity have a competitive environment platform from which to serve operations not just in Ghana but the wider Gulf of Guinea area.

The next issue is how to get countries within the region to look strategically at developing regional content when potentially the market dynamics in some neighbouring countries may not be as conducive to allow larger offshore investments because of the size of the field or other factors, and being able to get the value added creation to West Africa with Ghana as the gateway.

So the question then is whether Africa and for that Ghana is ready for a regional approach to local content?

In answering this question, Mr. Gray likened the tasked of regional content to climbing the Himalayans Mountain, pointing out that, “If you are going to climb the Himalayans, you have to know the equipment you need to get there and you should know that the first point is walking through the foothills. It will be wrong not to look at what the ultimate value is; the ultimate call of local content is for companies to export their skills and services from Ghana to the regional market. And ensuring that what you put in place in climbing the foothills allows you to progress to climb the mountain.”

For Dr. Thackwray Driver, President and CEO, The Energy Chamber, Trinidad and Tobago, regional content makes sense as is evident in the Caribbeans.

“In the Caribbean setting we sort of have a similar thing; where we have the Caribbean Economic Community. So you have free trade relationship within the region and have free movement of skilled personnel, although there is no official policy surrounding this practice.

There is a general preference for Caribbean companies in other Caribbean nations because it is easy for them to move their labour force from one country to the other just like in the European Union.

So in the Caribbean example, we have Trinidad oil and gas companies that have been quiet successful in operating in Suriname, another Caribbean country,” he indicated.

He however pointed out that “In the West African setting you obviously have big countries with powerful private sector such as in Nigeria. And there might be concerned in Ghana that Nigerians many dominate if you adopt and start implementing regional content instead of local content”.

However for Ken McGhee, Chief Party, Ghana Supply Chain Development, focusing on regional content as against local content is a simple question that does not have a simple answer.

“I think one of the things that Ghana has working in its favor and would serve it well is the country’s local content law. It is one of the most forward looking, aggressive, and sensible law that is well supported by all the key players in the industry. I don’t think Ghana should look away from promoting local content,” he pointed out.

He said the idea is to approach the industry gradually and not to go so fast.

“So for me I look at it from the perspective of developing the local content first, look for the local market and support the local SMEs and soon after expand regionally,” he added.

The local market is not as challenging as going regional so quickly. A lot of the countries on the Gulf of Guinea have similar market, similar needs and similar supply chain and interest. And therefore after few years of developing the local market, the logical step is to expand regionally.

He insisted that it will be very hard for local SMEs to just go from developing product for the local market to the regional market, adding that, “I think it will take time”.

He acknowledged the argument that the industry is not big enough in the country, but insisted that if you can develop the local sector it will survive the commodity if it runs out.

“So what I am trying to say is that if you have SMEs that are trained, experience and successful in marketing some product across the supply chain, first locally and then regionally and internationally, they would survive dips in the oil prices, they will survive if the oil becomes less, because they would .have developed a business model”.

“The challenge or risk is still not to go too fast. It is easy to find some real cases of lost in companies that have lost everything because they tried to go to the regional or international market too early, and loans become due and investments become risky. It is a balancing approach; it is going to require patience on all sides. What Ghanaians should not forget is that they are still very young in the industry,” he concluded.

Lack of Regulations

According to Dr. Thackwray Driver the major challenge of the regional content approach has to do with regulations, indicating that, “If you do not have stronger regional bodies and institutions which can regulate regional content then it comes down to a bilateral relationship between countries. And you may not have the framework in this bilateral relationship to regulate local content.

He observed that one may have a greater ability to create that platform if you have programs which are industry led, particularly if you have people operating in more than one country. The operating company might be able to put in place some sort of programs not driven by regulation but driven by practice when they are trying to build capacities across the whole region.

By Gilbert Boyefio

Local Content Has Currently Taken Center Stage In Many African Countries Well-endowed With Natural Resources And With A Desire To Improve Upon The Management Of These Resources To Contribute To Their Socio-economic Development.

In Ghana, the country’s Petroleum Local Content and Local Participation regulation, which was passed in November 2013 but became operational in February 2014, is highly considered as the catalyst to the country’s economic development.

The law stipulates among other things that Ghanaians should be prioritized in terms of employment in the petroleum industry, and should benefit from the country’s resources. The law is expected to ensure that Ghana’s natural resources benefit Ghanaians, while also allowing foreign oil companies to reap fair returns on their investment.

The purpose of these regulations is to promote the maximization of value-addition and job creation through the use of local expertise, goods and services, businesses and financing in the petroleum industry value chain and their retention in the country; develop local capacities in the petroleum industry value chain through education, skills transfer and expertise development, transfer of technology and know-how and active research and development programmes; achieve the minimum local employment level and in-country spend for the provision of the goods and services in the petroleum industry value chain.

It is also to increase the capability and international competitiveness of domestic businesses; create petroleum and related supportive industries that will sustain economic development; achieve and maintain a degree of control for Ghanaians over development initiatives for local stakeholders; provide for a robust and transparent monitoring and reporting system to ensure delivery of local content policy objectives; provide for the submission of the local content plan and related sub-plans by contractors, subcontractors, licensees and any other allied entity involved in the petroleum industry including the provision of goods and services; the transfer to the Corporation or the Commission and Ghanaians of advanced technology and skills related to petroleum activities; a recruitment and training programme and supervision, coordination, implementation and monitoring of local content.

However, for local content to be successful and achieve its goals largely depends on addressing the financial, human-resource, and technological challenges faced by local businesses in the oil and gas sector.

The Games

Though most of the International Oil Companies (IOCs) for instance profess support for the local content law, they are undoubtedly reluctant to give contracts to many of the local SMEs sadly due to their lack of capacity and skills. The locals therefore find themselves constantly competing with the dominance of international suppliers.

To address this lack of capacity issue, the Government of Ghana with the Jubilee partners established the Enterprise Development Centre to train and build the managerial capacity of SMEs with interest in operating in the oil and gas industry. This move was intended to enable more Ghanaian businesses to play active roles in the country’s oil and gas industry thereby reducing the dominance of foreigners.

Also, a part of that picture is PYXERA GLOBAL, operators of Ghana Supply Chain Development. This is a five year $4.8million dollars grant program funded by USAID with a very simple objective of increasing the competitiveness of Ghanaian SMEs basically in the oil and gas sector.

Though both the EDC and the Ghana Supply Chain Development programs have recorded some modest successes, it is obvious that the most prudent thing for government to do through the petroleum commission, is to look at ways to bring the two organizations together to collaborate since they have common objectives of building the capacity of the local SMEs to make them competitive.

Unfortunately the opposite is true.

Currently the two programs are duplicating each other’s effort thereby denying more SMEs the opportunity to be trained and build their capacity.

“The way I see it our program and that of the EDC and any other similar program out there to develop SMEs in the sector is to achieve the same goal but with a slight different approaches. But even more importantly, we are all serving the same group of SMEs. So what you find is that an SME takes our program, that of the EDC and any other program and benefits; whereas a better way would be for all the programs to sit down together, share work plan, share our visions for the coming period and divide the work plan so there would be no duplication and nobody would be left out. And I think with that, what we would have done is to take our money and hopefully that of the EDC and put it into a pool to be used together more effectively for the program to go further and also benefit more SMEs,” Ken McGhee, Chief Party of Ghana Supply Chain Development, admitted.

However, a source close to the EDC indicates that they are not interested in any collaboration with Ghana Supply Chain Development. Our source explained that their stand was informed by the fact that Ghana Supply Chain Development has been duplicating their efforts deliberately, adding that “The moment we organize a particular event with a particular group of SMEs they also invite them for a similar program. They spy on us. When they open bidding for the EDC contract we competed with them for the work and won, and since then they have been eyeing our work.”

But McGhees insisted that “On our part, we are ever ready to collaborate with the EDC to share resources, ideas and even services. We gain nothing by working alone and in the dark and that has never been our way. We look for ways to work more transparently and in a more collaborative effort.”

Access to funding

Unfortunately, access to capital by SMEs is a huge issue neither the Ghana Supply Chain Development program nor that of the EDC addresses.

According to Dr. Juliet Twumasi-Anokye, the Coordinator of Local Content at the Petroleum Commission during a stakeholder’s interaction program organized by the Commission at the EDC training centre at Takoradi recently, “I can assure you that if you talk to hundred SMEs, ninety nine of them will tell you that lack of funding is their major problem. I am sure if we go round this room the theme on everyone’s mind is how to get funding.”

For McGhee, “In fact, there are not too many donor programs that are willing to put monies directly in the hands of the SME, for reasons best known to them. That is not an effective way to run a program.”

However, the Petroleum Commission is currently embarking on a series of engagement with the financial sector to address the numerous funding issues affecting SMEs in Ghana. This is an effort which is highly supported by players in the industry.

In contributing their widow’s might to the funding issue, both the EDC and the Ghana Supply Chain Development have programs that bring banks and SMEs together in an effort to do business.

The intrigues

Though the Petroleum Local Content and Local Participation Law frowns at fronting, there are those who believe the law is defeatist in itself.

A requirement in the law provides that “A non-indigenous Ghanaian company which intends to provide goods or services to a contractor, a subcontractor, licensee, the Corporation or other allied entity within the country shall incorporate a joint venture company with an indigenous Ghanaian company and afford that indigenous Ghanaian company an equity participation of at least ten percent”.

The law goes further to stipulate the following offences and penalties for offenders; a citizen who acts as a front or connives with a foreign citizen or company to deceive the Commission as representing an indigenous Ghanaian company to achieve the local content requirement under these Regulations, commits an offence and is liable on summary conviction to a fine of not less than one hundred thousand penalty units and not more than two hundred and fifty thousand penalty units or to a term of imprisonment of not less than one year and not more than two years or to both.

A person who connives with a citizen or an indigenous Ghanaian company to deceive the Commission as representing an indigenous Ghanaian company to achieve the local content requirement under these Regulations commits an offence and is liable on summary conviction to a fine of not less than one hundred thousand penalty units and not more than two hundred and fifty thousand penalty units or to a term of imprisonment of not less than one year and not more than two years or to both.

A penalty unit is GHS12.00, which is approximately $4.00. Meaning in monetary term an offender is liable to a summary conviction to a fine of not less than four hundred thousand dollars and not more than one million dollars.

However, for J. J. Osei Tutu Amofa, HANISA Group, this provision in the law will rather go to promote the same thing it is rather trying to prevent.

“How many of our local companies really have the capital to gainfully partner the international oil companies, or any of the multinationals as is being demanded by the law? This is where you have faceless entities who are foreigners hiding behind Ghanaians and registering companies in their names and doing business with it. This provision will rather encourage fronting in the industry,” he added.

He argued that so far as government is not ready to give sovereign guarantee to the people of Ghana, the International Oil Companies will continue to have a strangle hold on the industry and the local businesses will continue to feed from the scraps that falls from their table.

“Yes I think government support is certainly needed. If you think of it, it is in government interest to deal with this problem because how can you really make local content effective if SMEs cannot get funding to go after contracts,” he queried.

By Gods Power Ike

The Intrigues, Controversies, Gains, Pains, Successes And Challenges Recorded In The Nigerian Content Journey, Five Years After The Enactment Of The Nigerian Oil And Gas Industry Content Development (NOGICD) Act, Have Thrown Up A Number Of Lessons That Have Far-reaching Implications For The Nigerian Economy.

The intrigues, controversies, gains, pains, successes and challenges recorded in the Nigerian content journey, five years after the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, have thrown up a number of lessons that have far-reaching implications for the Nigerian economy.

Key among the lessons to be learnt from the Nigerian Content initiative, according to stakeholders, includes the fact that with persistence, willingness and proper planning, a lot can be achieved in a short while.

Another lesson is that the Act, in spite of its enormous potential for economic growth and development has only been able to achieve just a little, due to a number of factors militating against its success.

Over the years, Nigeria’s Local Content law has received numerous accolades the world over and has become a model for a number of countries. The main thrust of the NOGICD Act was to ensure that indigenous skills and resources are deployed in local projects, creating jobs and deepening the local supply chain.

The Local Content Act was designed to enhance local content in the oil and gas industry and it has in the last couple of years been helping to develop indigenous skills across the value chain, promote indigenous ownership of assets and use of indigenous assets, promoting the establishment of support industries and creating customised training and sustainable employment opportunities currently.

Mrs. Diezani Alison-Madueke, Minister of Petroleum Resources, had a couple of months ago, announced that the Local Content Act had enhanced job creation and indigenous expertise, and had grown local content generally from between three to five per cent to a significant 12 to 18 per cent.

On the other hand, the Nigerian Content Development Monitoring Board, NCDMB, disclosed that more than $5 billion (about N1 trillion) new investments have been made by indigenous oil servicing companies in Nigeria in the last four years, while over 10,000 jobs have been created within the period.

Following successes recorded with the Local Content Act, the Federal Government is considering expanding the initiative into sectors of the economy, such as in the power sector, building and construction industry and the lubricants sector, among others.

In addition, the Nigerian Content Development Fund (NCDF) was set up to guarantee lending to Nigerian service companies and for infrastructure and training investment led by the NCDMB.

The NCDF reached $350 million at the end of 2014 and is projected to hit $700 million over the next five years.

The fund is to be used as interventions in the area of project finance, asset acquisition finance and as security for under-financed indigenous companies.

Some key lessons to be learnt from all these are the fact that despite the many achievements of the Local Content Act, a number of factors still serve as hindrances to the deepening of local content in the country, ranging from lack of financial capacity to undertake big ticket transactions and inadequate infrastructure and lack of technical capacity among others.

In his presentation titled, ‘Nigeria’s Local Content Marathon – Key Strides, Forward Steps and Challenges,’ Mr. Igo Weli, General Manager, Nigerian Content Development, Shell Petroleum Development Company of Nigeria Limited, explained that building domestic capacity in a technical industry like the Nigerian oil and gas sector takes time to mature.

According to him, Nigerian companies need to build their skills and expertise progressively, adding that from time to time, operators will need waivers, until the domestic capacity is in place.

He said, “The alternative is to delay projects, erode value and lose revenue.  And building that capacity requires developments on many fronts, in lock step with each other – not an easy task.

“Key challenges there include the dearth of research and development institutions in Nigeria, limited access to technology, state of supporting infrastructure and industries and import duty regimes among others.”

Also speaking, Jean Balouga, a Research Assistant in the Economics Department of the University of Lagos, stated that over 70 per cent of the contracts awarded to Nigerian companies are executed overseas, thereby defeating the primary objective of Nigerian content development which is to develop in-country capacity by executing contracts in Nigeria using Nigerian local resources.

Balouga, in his article, titled, Nigerian Local Content: Challenges and Prospects,’ published in the journal of the International Association for Energy Economics, blamed this partially on the fact that a number of Nigerian banks lack the financial base to make any meaningful impact on local content development.

According to him, the biggest Nigerian banks are tiny banks when it comes to energy financing, adding that most Nigerian banks operate in dilemma-laden territory as most indigenous contractors have no proper business structure. “Others are not really in the business because more often than not the person who gets the contract is not the one looking for finance,” he explained.

Other hindrances identified to local content development are a thin industrial base, lack of adequate power, water and other infrastructure to support an expanded manufacturing base, lack of small and medium-sized enterprises and an underdeveloped capital market.

Balouga further stated that other problems of local companies revolve around executive capacity and critical mass with technical and financial wherewithal, stating that most local companies are small, fragmented and incapable of packaging or attracting loans.

He said, “Few of them can deliver turnkey projects without resorting to some form of partnership agreement for equipment, expertise or technical support.

There exists the so-called ‘Knowing-Doing gap’ in Nigeria, that is the disconnect that exists between policy formulation and policy implementation. This term describes the absence of a critical link between strategy and action. Public policy initiatives and actions in Nigeria have persistently been incapacitated by this gap, with many government programmes and projects ending in downright failure.

“Inadequate think through, weak institutional capacity, lack of political will to carry through change, inconsistency in government policies, lack of support from relevant stakeholders and corruption are some of the causes of this gap. The implication of this is that the future of the Nigerian people is currently being controlled by foreigners whose main objective could be to post better returns on investment.”

However, Balouga advocated the adoption of sustainable local content development practices by both policy makers and upstream oil and gas operators, stating that this will help in guaranteeing a better future for the industry.

According to him, technological development does not occur just by chance; rather it is a product of a nation’s sound economic management, policy re-engineering, good governance and a social value system that rewards hard work and creativity.

“Having a few companies committed to Nigerian content and pursuing local content programmes is not enough. Support for local content policies must be nation-wide. It must be accepted by all and should become embedded in every operator’s business philosophy,” he said.

Ernest Nwapa, Executive Secretary, NCDMB, however, identified key lessons to be learned from the implementation of the NOGICD Act to include the fact that local content, despite its benefits of transforming a country from importer to producer, will certainly be resisted globally and locally.

Nwapa, in a presentation at a World Bank forum, titled, “Nigerian Content Development,” further stated that the NCDMB was able to achieve the much it could over the years due to the fact that the programme was championed from the top and tied to the country’s transformation agenda.

Nwapa also noted that the NCDMB was able to adopt a structured consistent approach, adding that it was aware that showing results of some of the actions taken helped in reducing resistance to the initiative.

Other lessons, according to him are the fact the NCDMB, “Focused more on development and less on regulations, as it was aware that collaboration with stakeholders will help achieve the desired results; created enabling data management systems to handle information and analysis and creates linkages to the other sector.”

In addition to the above lessons, Julian Nichol and Nicholas Kendrick, in an article titled, ‘Nigeria: Local Content Update for the Oil

The saturation diving vessel, christened DSV Vinnice is valued at $170 million and is equipped for shallow and deep water operations and can be used for construction, repair and maintenance of oil-rigs and other offshore naval constructions.

Speaking at the unveiling ceremony in Lagos, the Executive Secretary of the Nigerian Content Development and Monitoring Board, (NCDMB) Dr. Ernest Nwapa described the acquisition as another affirmation that indigenous oil servicing companies have developed capacity to acquire and operate hi-tech assets and could participate in every segment of the oil and gas industry notwithstanding the challenges.

According to him, the emergence of a new breed of Nigerian investors and the quantum of investments they are making have erased any doubts that government and the people of Nigeria were resolute with the implementation of the policy.

Restating that Nigerian Content was a national agenda, Nwapa added that the Federal Government has started to extend the implementation of the policy to the power and information technology sectors following the huge success recorded in the oil and gas industry.

He credited President Goodluck Ebele Jonathan and the Honourable Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke for providing a conducive environment for the successes recording in the implementation process, noting that signing the Nigerian Content Bill into law unleashed the potentials of Nigerians entrepreneurs. “When President Jonathan signed the Act in 2010, he set Nigerian entrepreneurs free,” he added.

Speaking further, the Executive Secretary stated that real Nigerian Content accomplishment would only come when vessels such as DSV Vinnice are constructed in Nigeria, expressing hope that any other such vessel to be acquired by a Nigerian investor will be outfitted at the Naval Dockyard Lagos and some of the components manufactured in-country.

He assured that the Board was working with the National Petroleum Investment Management Services (NAPIMS) to ensure that any major asset acquired by a Nigerian investor gets deployed in the industry as doing otherwise will negatively affect the banks that funded the acquisition as well as make it difficult for other companies to get similar credit from Nigerian banks.

Nwapa recalled that the Board made ownership of assets a key plank of implementation because it provided the opportunity for exposing the technology to other Nigerians.

He also announced that the Board will henceforth make it a requirement for all contracting entities in the Nigerian oil and gas industry to adopt a faculty or department in any Nigerian university and develop a programme that allow the students to learn on the company’s assets as a means of bridging the gap between universities and the oil and gas industry.

Giving his welcome address, the Chairman of Petrolog Group, Dr. Joseph Ebuh described the Nigerian Content Act as the greatest boost to the company’s growth. He stated that “since the Act came into effect, we have been emboldened to take giant steps and risks to meet existing demand.”

He commended the NCDMB for its implementation of the Nigerian Content Act, which according to him has created opportunities for indigenous companies to thrive.

In his comments, the Managing Director of First Bank Nigeria, Mr. Bisi Onasanya confirmed that the bank supported Petrolog in the acquisition of the DSV Vinnice, affirming the bank’s readiness to support infrastructural development and local content.

Delivering a goodwill message, the Group General Manager, NAPIMS, Engineer Jonathan Okeys described the vessel as a welcome addition to the contracting pool, especially at a time industry operations were becoming more complex and moving into the deep offshore.

He assured that NAPIMS would develop a special contracting scheme to support any Nigerian contractor that invests on the back of the Nigerian Content Act.

Also speaking, the President of the Petroleum Technology Association of Nigeria (PETAN), Engineer Emeka Ene commended NCDMB for being instrumental to most of the investments made by local companies since the Nigerian Content Act came into being.

The victims of the spill that occurred 16 years ago between January 12 and 17, 1998, threw caution to the wind and barricaded the Mbiama end of the East-West Road for hours. The protesters who began their agitation early in the morning were there up to 10am – about five hours.

The development caused heavy traffic jam on the busy road that links all the states in the South-South. Drivers and travellers were held hostage for over five hours by the protesters who called for the intervention of President Goodluck Jonathan. Some of the placards read, “Chief James Jephta, we want our money”, “Exxon Mobil, you are playing games with us”, “Niger Delta people want 1998 oil spill compensation”, “Barrister Wills, Niger Delta youths want their money.”

The protest, which was peaceful, was coordinated by clan heads of the Ijaw Youth Council, Ijaw National Congress, Movement for the Survival of Ijaw Ethnic Nationalities and the Ijaw Survival Movement of the Niger Delta. Elderly men, women, youths and chiefs from various communities of Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Ondo and Rivers states participated in the protest.

In a statement signed by leaders of the protesting communities and groups, the victims wondered why their situation was different, saying that coastal communities in Lagos State which suffered the same 1998 spill had since been paid their compensation.

Reading the statement on behalf of the victims, Mr. Jonathan Robert, said despite being the main victims of the spill, they had been left to languish in pains and penury 12 years after the incident. He said in pursuit of their compensation, the affected communities instituted various cases in different Federal High Courts against the oil company.

He, however, said after about eight years of litigation, the communities agreed an out-of-court settlement at the instance of ExxonMobil. Robert noted that the victims later employed the services of Octopus Clan Nigeria Limited owned by Mr. James Jephta as their principal attorneys to handle matters of the compensation on their behalf. He said after waiting in vain for over six years to get the compensation promised them by the company, they decided to confront the company to know the reason for the delay.

He said, “The mission yielded a great surprise. At a meeting of all stakeholders held with Mobil authorities at the office of the Director of Department of State Security in Uyo, Akwa Ibom State, Mobil said all due payments concerning the spillage of January 1998 had been duly settled and payment made to Octopus, the officially recognized principal attorneys of the claimants.

“Mobil also insisted that no information other than what they have told us could be released to us as pertained evidence of payment.” He, however, said all efforts by the victims to reach the legal firm and Jephta had been unsuccessful.

“Most of our commitments are in dollars whereas we charge in naira but due to the devaluation of the naira, you’ll see that what we charge today is effectively 42% per cent of its value in 2006 when you convert to the USD. This is significant for us because we now need more naira to fulfill our dollar commitments. It might be recalled that in 2006, one USD exchanged for about N130 but today it is more than N220 to the dollar which implies a significant decline of about 65 per cent in the value of the national currency since port concession,” she said.

Princess Haastrup said the situation has been compounded by a drop in cargo volume at the port since the beginning of the year. “Vessel call dropped by half in the first month of this year. Volume also dropped significantly by an average of 27 per cent across the various terminals. Some terminals suffered more drop in volume than this,” she said.

The STOAN Chairman said that only 29 vessels were declared for the Lagos Pilotage District (LPD) between the last week of February and the first week of March 2015. “This number includes tankers, container vessels, general cargo vessels and all. It is very unusual. Ordinarily, about 60 vessels would be declared within the same period,” she said.

The STOAN Chairman also said that some policies of government on importation are affecting volume of cargo handled at the port. She said, “For instance due to the automotive policy, the number of cars/vans discharged in Lagos dropped from 27,000 units in January 2014 to 8,000 units in January 2015.

“It must be noted though that in the first half of 2014, the volume of vehicles imported was extremely high in anticipation of the introduction of the new duty regime on vehicles. Average number of cars/vans for previous years was in the range of 20,000 units per month. We are talking of more than 60 per cent drop in volume here. “For trucks, the volume dropped from 2,700 units in January 2014 to 1,700 units in 2015. The number of trucks discharged in 2014 was in line with the figures of previous years. But in Cotonou port, the total number of cars/vans discharged in January 2015 was 30,000 units against 20,000 units discharged in January 2014. This represents a 50 per cent growth. Similar trends have been registered also for trucks. This means Cotonou is gaining from Nigeria’s loss due to the auto policy as more importers are discharging there to avoid paying the 70 per cent duty and levy in Nigeria. These vehicles will eventually find their way into the Nigerian market,” she said.

Haastrup said the same fate has befallen general cargo terminal operators especially those handling rice and fish.

“Terminal operators generally are facing a tough time here. This certainly is not the best of time for our operations. Notwithstanding these challenges though, our members remain committed to deepening reforms at the ports. We have achieved tremendous success in the ports and at our various terminals with well over USD1billion invested collectively by terminal operators and this has resulted in a more efficient port operation. We will continue with the success story. The congestion and vessel queue which we successfully eliminated upon takeover in 2006; upgrading of port facilities and the continuous transformation of our ports in line with the vision of President Goodluck Jonathan are major milestones in the history of the seaports,” she said.

This quantum of power will require at least two Billion cubic feet of gas per day which, with the country’s current gas reserves status, will have to be imported.

“Given the high cost of diesel“, the president told the country’s Parliament, “Eskom has been directed to switch from diesel to gas as a source of energy for the utility’s generators”. Later in the state of the nation address,

Zuma declared that the “procurement process for 2,400 megawatts of new gas-fired generation will commence in the first quarter of the new financial year that starts April 1, 2015”.s

The February 13 speech officially ended the tone of anxiety in the public discussion about gas imports to South Africa. The country has little proven gas resource, but until now had dithered about gas imports; preferring to spend billions of dollars on diesel to fuel  four of Eskom’s 27 operating power plants: Acacia, Ankerlig, Gourikwa (in the Western Cape Province) and Port Rex (Eastern Cape), all of which were designed to utilize natural gas.

At a gas conference after Zuma’s address, the Independent Power Producer (IPP) Office announced it would release a request for information (RFI) in March 2015 for domestic gas to power projects, to preface a possible 3,000 MW tender that should arise before end of 2015.

Between the four Eskom operated 2,426MW combined capacity OCGT plants, the 2,400MW proposed gas fired plant announced by President Zuma and the 3,000MW capacity that will be added by the planned IPP tender, South Africa should be running 7,826MW of gas-fired plant capacity by 2019. This will require at least two Billion cubic feet of gas per day.

South Africa is potentially Africa’s largest domestic gas market. The government’s hope is that gas imports will help to kickstart the gas market, (including Gas to Liquid, Gas Transportation, Gas to households, Gas to Industry, etc) of which Gas to Power sector will be the anchor industry.

In the global oil and gas industry, subsea is used to describe the exploration, drilling and development of oil and gas fields in underwater locations.

The advancement in technology and high price of crude oil have encouraged oil and gas producers to search for and develop  hydrocarbons deep inside the high seas, thus encouraging subsea projects.

In the past, project economics had made the developing prospects in the high seas quite challenging. Infield Systems’ new Interim Subsea Market Report to 2019 sees potential for growth in the subsea market over the next five years.

The report predicts that if oil prices recover, subsea capex could grow at a compound annual growth rate of 11.1 per cent from 2015 to 2019.

The report noted that subsea demand is likely to continue to be dominated by developments in Africa, Latin America and North America, as a result of their continued focus on deepwater activity.

Infield Systems’ subsea market forecast expects these three regions combined to account for 75 per cent of global subsea capex demand and 59 per cent of subsea tree installations over the next five years.

The current global energy dynamics, which has created uncertainties in global oil prices could put some subsea projects at risk, particularly those associated with field developments with high costs and high risks. But the report said despite the challenges, Africa’s subsea demand will continue to largely come from projects in West Africa, with Angola, Nigeria and Ghana playing dominant role.

According to the report, the French oil major, Total will continue to maintain a significant presence in the West African subsea market, with Infield Systems projecting the company to hold a 40 per cent share of the region’s subsea capex demand, focused on developments in Angola, Nigeria, Congo (Brazzaville), and the Ivory Coast.

The report identified Nigeria’s Egina deepwater project, Kaombo and Moho Nord marine developments as some of the noteworthy projects to be developed by the company over the next five years.

In Latin America, Infields said the subsea market would continue to be predominantly driven by developments in Brazil, while the US Gulf of Mexico is likely to continue to drive subsea activity in North America, accounting for 97 per cent of the region’s subsea capex demand and 87 per cent of subsea tree installations.

According to the report, Chevron, Shell, ExxonMobil, and BP could still hold the largest share of capex demand.

The report further highlighted that while the subsea market has the potential for growth during the next five years, low global oil prices will affect subsea developments.

Watson said the company was on track to increase production from 2.57 million barrels of oil equivalent per day in 2014 to 3.1 million in 2017. Major projects ramping up include Texas shale ventures and natural gas developments in Australia and Angola. ‘We are well-positioned to manage through the recent drop in commodity prices and are taking several responsive actions, including curtailing capital spending and lowering costs,’ Watson said.

Shares in Dow member Chevron plummeted 3.1 percent to $48.46 in late-afternoon trade.

The move follows Chevron’s January announcement of a 2015 capital budget of $35 billion, down 13 percent from last year. The company also halted its share buyback program, citing the big drop in oil prices. In recent months, Chevron has also withdrawn from exploration ventures in Poland, Romania, Lithuania and Ukraine.

large oil companies, including ExxonMobil and Royal Dutch Shell, have also trimmed spending in response to about a 50 percent drop in oil prices since June. Leading oil services companies, including Halliburton and Schlumberger, have announced deep job cuts.

MTA refers to a cluster of fields, including Mahogany, Teak and Akasa (MTA), discovered in the West Cape Three Points Block offshore Ghana.

If approved, it will be the Ghanaian Government’s fourth sanction for deep-water field development since 2009. The country’s flagship field, Jubilee, was sanctioned for development in July 2009; the TEN development was sanctioned in 2013 and is on course for first oil in mid-2016; the Sankofa development was approved in 2014 and expected to deliver in 2017.

Kosmos says that the appraisal for Mahogany, Teak and Akasa discoveries, which are located within the Greater Jubilee area, was completed in December 2014 as scheduled. “The results of the appraisal will be combined with the partnership’s views on additional phases of development at Jubilee”.

This possibility has come about due to a $700 million decline in government’s revenue from the slump in crude oil prices in the international market.

The review of the budget estimates will result in significant cuts in government expenditure. Government will have to spend less than the GH¢44 billion it was hoping to do.

Some analysts say there are likely to be aggressive cuts in subsidies, which means for the most part of 2015 consumers of petroleum products, for instance, would be required to pay for the full cost of the commodity.

Also, initial budgets for some projects will be slashed to make up for the new figures in the revised budget.

However, the Finance Minister would have to deal with a legal hurdle before seeking approval of the legislators in Parliament House.

This is because the laws of Ghana permits the minister to present a Supplementary Budget to Parliament for consideration  when new revenues come in, but not a ‘Revised Budget’ – or one that cuts spending.

Government last year prepared the 2015 budget when crude oil prices stood at $99 a barrel.

Government was hoping to make about $1.2 billion by the end of the year to enable it to meet a revenue target of GH¢34 billion.