GNPC urged to lead efforts to improve active local participation

Adnan Adams
Mohammed
As Ghanaians yearn
for more stake and benefits in revenue from its oil and gas, an energy expert
is calling for a broad stakeholder consensus to give authority to the national
oil company, Ghana National Petroleum Corporation (GNPC), to be a catalyst for
deepening local content in the upstream
and midstream oil and gas production.
Catalyzing local
content development is one of the key pillars of GNPC’s strategy. But as it is
now, GNPC is only a non-operating partner in all the oil gas and fields in
Ghana, Mr Alexander Mensah Mould, former CEO of GNPC has said.
According to
industry experts, participation in oil and gas requires large and long-term
capital and technical knowledge. None of these is easily available to Ghanaian
entrepreneurs. Besides its rich technical expertise, GNPC has the balance sheet
to raise the needed capital for long term exploration and development.
“As the NOC,
Government and the public should support GNPC to take increasing stake in oil
blocks. This must be done strategically. GNPC must not take higher stake just
for the sake of it.” MrMould stressed when speaking at the Oil and Gas
Conference held at the University of East London in the United Kingdom, last week.
He added that “The
Corporation has a unique reservoir of knowledge on all the basins; more than
any other entity in Ghana. What the Corporation needs is clear support to
enable it grow and develop in the manner some of the most successful ones did
it, like Petronas of Malaysia.”
Currently, GNPC is
the anchor, but non-operating partner in all the oil gas and fields in Ghana.
Not being the field operator limits GNPC’s ability to drive the local
participation agenda.
However, many
experts like Dr Steve Manteaw, Chairman of Public Interest and Accountability
Committee (PIAC) wants GNPC to use its leverage in the governing structure
under the various Petroleum Agreements to ensure that contracts that local
companies can execute are given to local companies.
More important is
how GNPC uses its local dominance in the industry. GNPC’s strategy must be to pave the way for
increased local private participation. This could be achieved through listing
of subsidiaries on the Ghana stock exchange, so that ordinary Ghanaians can buy
the shares.
In the Voltaian
basin where GNPC is the sole operator, the Corporation must build an eco-system
of local companies to support its activities from these early stages, and grow
with them. This will require a number of things: developing a pool of potential
local partners, being fair and transparent in the selection of local
contractors for any specific contracts, and nurturing them for the long haul.
MrMould while
speaking on the theme: “Ghana’s Oil and Gas Resources For Socio-Economic
Development” noted that, GNPC has been playing an enabling role in the energy
sector as well as the wider economy.
“Like any state
enterprise, it has a dual mandate: to pursue commercial as well as
developmental objectives. During my time as CEO of GNPC, we provided the
financial guarantees that enabled the deployment of the Karpowership barge from
Turkey to provide electricity. The rationale for GNPC’s support in this
transaction was two-fold: the power barge was necessary to mitigate an urgent
power generation deficit in the country. But more importantly, the barge was
meant to convert from using Heavy Fuel Oil (HFO) to natural gas. This was meant
to avert incurring take or pay liabilities on the Sankofa gas.
“In this
transaction also, we did something quite smart: we took up the role to supply
the HFO to the barge, at a margin. We also negotiated to use mainly existing
placements with banks as the guarantee. GNPC was therefore earning interest
income on the guarantee.
“GNPC similarly
intervened in other areas, including pre-financing the construction of access
roads to enable the evacuation of Liquefied Petroleum Gas (LPG). Not doing this
would have created a bottleneck in gas processing and gas offtake.”
Also, GNPC can
play a significant role in attracting and adapting the right technology to
further indigenize the development of the oil and gas sector in Ghana. The
sector is technology-driven. Through its partnerships, GNPC must be conscious
to partner with companies that are willing to share their technology, including
proprietary ones. Then GNPC must invest in its people and processes in order to
be able to adapt those technologies to suit the Ghanaian environment.
In addition to
that, GNPC must invest in research and technology to solve the peculiar
problems of the oil and gas sector, within the Ghanaian context. A good example
is Petrobras of Brazil, which invested heavily in understanding its oil-rich
offshore reserves trapped below a 2,000m-thick layer of salt, which itself is
located below 2,000m-thick post-salt sediments. Now, Petrobras has become a
world leader in pre-salt and deepwater exploration and development.
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