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Oil companies have no friends, just personal interests – CEO Africa Energy Consortium
… “Be mindful of the big word – corruption”
By Kemol King
Kwame Jantuah, a Ghanaian businessman, has been at the helm of the Africa Energy Consortium for over a decade, and his advice to Guyana is clear: “Drive home your demands” through “equitable partnerships” with International Oil Companies (IOCs).
CEO, Africa Energy Consortium, Kwame Jantuah
Have “specialised oil and gas lawyers” and “professional negotiators” to lead the discussions, every step of the way.
This is necessary, he said, because IOCs have no personal friends, just personal interests; and the only people they have to answer to are their shareholders.
He also said “Be mindful of the big word – corruption”.
Jantuah made these statements during his address on the evolution of Ghana’s local content framework, at the recently concluded Guyana International Petroleum Business Summit and Exhibition (GIPEX) 2019 at the Marriott Hotel last Friday.
While the satisfaction of their shareholders is essentially the only concern for IOCs, the businessman said “Don’t blame them” because the magnitude of the investments shareholders are making, and the risks associated with the business, are enormous.
His urgency is that, like the oil companies, Governments have to follow suit and advocate staunchly for the interests of their shareholders, the people.
In Ghana’s case, Jantuah explained, “One of the major difficulties was the definition of local content because we realised that foreign service companies and other related foreign companies who were integral to the functioning of the industry were heeding to the law of registering their companies with the registrar general’s department where every company in the country had to be registered by law.”
He explained that foreign oil companies had all sorts of strategies to manoeuvre their way through calls for local content, like using loopholes in Ghanaian statutes to parade themselves around as locals.
The IOCs, he said, even brought in their own professional negotiators to argue about the local content definition, and had claimed that it was their right to be considered local companies based on how they had registered.
Jantuah, who served on the committee that dealt with local content developments, said, “We as a committee had a tough time with the IOCs and service companies.”
This was because they were not prepared to train Ghanaians, and brought their own foreign labour force in to participate, and to do even the work that Ghanaians were qualified to do.
Eventually, the Ghanaians settled on a definition to distinguish between foreign “local companies” and Ghanaian local companies, calling the latter “indigenous”.
In Guyana’s case, the Georgetown Chamber of Commerce and Industry (GCCI) has advised the Government of a mechanism to ensure local companies are properly distinguished.
Former President of the Chamber, Deodat Indar, told Kaieteur Radio in October that the Chamber, in its comments on the third local content policy draft, insisted on four criteria: that the body’s head office should be in Guyana; that 70 percent of its workers should be Guyanese; that its board meetings should be kept in Guyana; and that 51 percent of its ordinary share capital should be held in Guyana.
The final policy document is not out yet, but it is hoped that it will be completed just before First Oil.
One thing Ghana realised, Jantuah said, is that “oil companies weren’t waiting for us to get our laws in place, because they had shareholders to satisfy and therefore the onus was on us to chase and catch up with them.”
Like Guyana now, a lot of pressure was placed on the Ghanaian Government to produce local content legislation with haste.
What’s clear for Guyana is that its policy will not become legislation in time for First Oil, as the Government is in a Caretaker status. The General Election will be held in March, months after oil is slated to start pumping.
Jantuah said that it is important to think long term for the oil sector.
“The oil and gas industry is big enough to take care of everyone if local content is practised in favour of the people and there is trust, transparency and accountability, and above all, a long term national development plan that will help invest the revenue equitably.”
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