Discovery of oil In 2007 Ghana made a discovery of oil and gas in commercial quantities in the West Cape Three Points block at what is now known as the Jubilee Field, located about 60 km offshore the Western Region. At the time, there were many who linked the discovery to divine providence because it happened in the year when the country was celebrating its independence golden jubilee anniversary. This was against the background that the country’s prospect for oil which started in the 1970s through to the 1990s yielded negligible discoveries. The interpretation in some quarters, at the time of the discoveries, was that Ghana’s economic woes were drawing to a close. Many were those who were too quick to make comparisons with other oil producing countries both within and outside Africa and imagined Ghana’s prosperity forgetting that Rome was not built in a day. Maybe, the reminder to such people could be found in our own backyard, a country formerly known as Gold Coast. As a world producer of gold for over a century, and Africa’s second largest producer, no streets in Ghana and for that matter the town of Obuasi, the primary location of Ghana’s rich mineral, are paved with gold. Active players With Kosmos Energy, an American Oil company making the initial discovery, and subsequent discoveries made by Kosmos and Tullow Oil of the United Kingdom, there was the strongest belief that the initial discoveries of these two Jubilee Partners would lead the country’s oil prospects and production to a major world producer status. This is more especially when appraisals conducted indicated that the Jubilee Field and nearby discoveries contained expected recoverable reserves of about 800 million barrels of light crude oil with an upside potential of about three billion barrels as well as significant quantities of associated natural gas. In December 2010, production at the Jubilee Field commenced. Currently, the daily production stands at 110,000 barrels a day, with the expectation that this will rise to 120,000 barrels a day by the close of the year. This is as compared to our West African neighbour, Nigeria, which features on the list of top oil producing countries and which, in 2012, had an average crude oil production of 2.2 million barrels per day. They are said to have an industry well grounded in successful exploration. Today, Nigeria is Africa’s largest producer of oil and the sixth largest in the world. In fact, the daily oil pilferage in Nigeria, estimated at over 150,000 barrels, is higher than Ghana’s daily production. Ghana has some mileage to go. Compared to other countries that are big in oil, Ghana is still young with only one major producing field to its credit even though 23 or so new discoveries are said to have been made. So, as the country progresses with oil production which currently is said to have hit 76 million barrels since production started nearly three years ago, a new Petroleum Local Content and Local Participation Regulations Legislative Instrument (LI) has been laid before Parliament for approval. Petroleum local content and local participation Regulations At a recent forum with members of the Institute of Financial and Economic Journalists, the Director of Finance and Administration at the Ministry of Energy and Petroleum, Solomon Asoalla, spelled out the need for a petroleum law saying, “At the time our current energy and petroleum law was passed, we did not have oil. But now, we have oil and we are even producing”. He continued, “So there is the need to get a new law that will take some things into consideration such that when an investor comes in, he doesn’t take advantage of the obsolete law, PNDC Law 84 to outwit the country.” So how is the new Petroleum Local Content and Local Participation Regulations LI going to work and work effectively so that the Ghanaian gets the best out of the industry and the investor gets incentivized to risk their resources in our country? Perhaps a balancing act that would not leave Ghanaians cheated on their own soil while at the same time leaving active players and future investors encouraged to remain our development partners? What is Local Content and Local Participation? Local content regulations are not new to the oil and gas industry. They are put in place to ensure the active participation of the local people and businesses in the industry. For us in Ghana, parts of our constitution even encourage participation and benefits for the people, as found in some of the general principles of public conduct that impact on allocation and regulation of resource rights. One such is Article 1 which requires the powers of government to be exercised in the name of and for the welfare of the people. By interpretation, government is therefore left with the task of defining welfare through the exercise of its policy and law making powers. Indeed, speaking to Mr. O. B. Amoah, the Chairman of the Parliamentary Select Committee on Subsidiary Legislation, amongst the things the Committee looks for in its work and as per the Parliamentary Standing Orders is whether a Legislative Instrument being considered by Parliament is in accordance with the general objects of the constitution or that Act pursuant to which it is made. Somehow, Article 11 Clause 7 of the constitution places a limitation on the powers of the Subsidiary Legislation Committee since they cannot modify but only annul a pending LI based on certain conditions including violation of the constitution or any international treaties of which Ghana is signatory to. Local content and local participation regulations therefore will provide for the development of local capability in the energy and petroleum sector by providing a legal and regulatory framework for monitoring and implementation. The purpose of the regulations among others is to: Promote the maximization of value addition and job creation through the use of local expertise, goods and services, business and financing Achieve minimum local employment levels in the sector Increase the capability and international competitiveness of domestic businesses Achieve and maintain a degree of control for Ghanaians The regulations seek to achieve 90 percent participation by locals in all aspects of the industry’s value chain within one decade. Specific targets for direct employment and the roadmaps to achieving that include 30 percent of Ghanaians to be employed in management staff positions which will gradually increase to 50-60 percent within five years. It also seeks 20 percent of the technical core staff to be Ghanaians and within five years increase to 50-60 percent while all other staff remains one hundred percent Ghanaian within 10 years. Varied views on local content Views on local content and local participation vary. However, there is no doubt that there is a general consensus between both Industry and Government on the need to get locals fully involved in the oil industry and also ensure that the discovery remains a blessing and never a curse. The Government recognizes the efforts of the industry in the area of local content, but would like to see an acceleration of the pace at which it is being implemented. It believes that the introduction of the local content LI will help in this regard. The American Chamber of Commerce in Ghana with some of its members in the oil business believes that the objectives of the local content regulations are very clear and focused on one key area - the development of Ghanaians to quickly fill highly skilled jobs and to provide services in the energy sector. The Local Content and Local Participation Regulations seek to accelerate the development of Ghanaians to fill the industry’s job opportunities. But not only that. If done properly, a local content regulation would create a win-win for the industry and the people of Ghana by providing skilled labour and services at competitive rates that lower industry operating costs by reducing the reliance on expatriates. The oil and service companies support the principles of local content and are already working to address local content ahead of implementation of the local content regulations, through employment of Ghanaians and use of available local goods and services. In view of the specialized nature of the industry, there is a great deal of expertise that needs to be developed. For this reason, they bring in external advisers to help in the training of personnel while coaching and mentoring continues to be a daily management affair. In addition, personnel are assigned to operations outside Ghana so they can experience best practices available elsewhere in the industry and investments are made in sponsoring Ghanaians in technical and degree level studies and supporting the development of educational facilities for individuals and businesses. On the question of expatriates, these services are used in the deep water operating environment and other specialized jobs where the skills are currently lacking locally. But even then, these specialized contractors only come in for short periods to do specific jobs and Ghanaians are being developed to assume these responsibilities in a planned and systematic manner over a period of time. A major strength in the local content regulations is the central co-ordination by the Petroleum Commission, thus creating one central point to deal with all regulatory issues.