Equatorial Guinea expelled supplier from oil sector for disobeying local content rules

Jan 14, 2021 News

Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima.

Kaieteur News – Equatorial Guinea has shown a firm hand when it comes to ensuring the participation of locals in the value chain of its petroleum sector. This is evidenced by the way it dealt with one company, which it found was not adhering to its rules for local content. When the country determined this infraction was being committed, it expelled the company from its oil industry.
Equatorial Guinea had established the ‘National Content Regulation of the Hydrocarbons Law’ in 2014, which mandated preference for locals in contract awards, local content clauses in all contracts with multinationals, and capacity building provisions.
A company named CHC Helicopters came into conflict with the law. CHC is a large helicopter services company from Canada that supplies services to the oil industry. By 2018, it had been providing services to Equatorial Guinea for nearly two decades.
Equatorial Guinea, a member of the Organization of Petroleum Exporting Countries (OPEC), found that CHC failed to implement the local content laws particularly as it relates to employment of locals.
So the Ministry of Mines and Hydrocarbons of Equatorial Guinea ordered all operators, including ExxonMobil, to cancel all contracts with the Canadian helicopter services company.
The oil companies operating there were given 60 days to rid themselves of their contractual relations with CHC and find only suppliers, which were found to be adhering to the country’s local content law.
In a statement, the Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima said: “We expect all companies operating in here to follow the laws of the Republic of Equatorial Guinea.”
“It is the responsibility of the Ministry of Mines and Hydrocarbons to ensure strict compliance to our country’s National Content Regulation of the Hydrocarbons Law. These laws are in place to protect and promote local industry, create jobs for citizens, promote the sustainable development of our country and we are aggressively monitoring and enforcing the compliance of these requirements.”
At the time, the country’s Director of National Content and legal advisors of the Ministry were conducting a compliance review of the entire sector. Their duty was to expand the notice to other companies that similar measures would be taken against them if they were found to be non-compliant.
Even the operators would be placed under the microscope to determine whether they were keeping up with their obligation to ensure compliance of all of their sub-contractors.
The Minister said, “We are eager to work with international companies who partner with Equatorial Guinea in the development of our industry. But we expect all companies operating in Equatorial Guinea to follow the laws of the Republic of Equatorial Guinea. As Minister, I will not hesitate to enforce the law to ensure compliance.”

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