Deloitte Ghana and Petroleum Commission have jointly held a webinar on ‘Understanding the Local Content Regime in the Upstream Oil and Gas Sector Ghana’.

The webinar, which was highly participated, sought to deepen the discourse on the current local issues pertaining to the upstream oil and gas sector from three perspectives - Regulator, Consultant and Industry Players.

Opening the webinar, Deloitte’s Country Managing Partner, Daniel Kwadwo Owusu, said Ghana continues to explore the most efficient and effective ways to derive maximum value from its natural resources to build a more resilient economy and future for the next generation.

“An important theme in this equation is the “Local Content” framework - which is the extent to which the output in the extractive sector generates further benefits to the economy beyond the direct contribution of its value-added, through part local ownership and links to other sectors”, he pointed out.

Mr. Owusu added that the discussions will generate valuable insights for all industry players and shape policy direction in the coming years towards an even stronger industry.

Petroleum Commission to continue to build capacities of local firms

The Chief Executive Officer of the Petroleum Commission, Egbert Faibille Junior, said foreign companies operating in the upstream oil and gas industry in Ghana are required to incorporate Joint Ventures (“JV”) with their Indigenous Ghanaian Company (IGC) counterparts.

"As an alternative to the JV arrangement, the Petroleum (Local Content and Local Participation) (Amendment) Regulations, 2021 (L.I. 2435) has introduced strategic alliances and channel partnerships as new arrangements through which foreign companies can participate in Ghana’s upstream oil and gas industry. This is in line with the Commission’s objective to build local capacity and skills as well as develop internationally competitive businesses", he mentioned.

According to him, his outfit will not discourage foreign participation but will also not allow inefficient and uncompetitive local processes.

He assured that the local participation will be maximised through procurement of local goods and services which will act as a multiplier for national economic development.

“It is therefore important to note that Ghana’s local content law is not about nationalisation of the petroleum sector or a protectionist initiative but a medium for partnering investors to develop local capacities that will bring mutual benefit to the private operators and the citizenry who own the resources”, he added.

He outlined the initiatives undertaken by the Petroleum Commission to develop local capabilities and maximise local participation in the oil and gas sector.

First, he said following the passage of Petroleum (Local Content and Local Participation) Regulations, 2013 (“L.I. 2204”) as amended, the Commission embarked on a comprehensive stakeholder engagement with all international oil companies, major service providers and other key stakeholders on the provision of the legislative instrument and to seek their inputs and cooperation in its implementation.

“I must admit that this exercise has gone very well, and we are able to clarify various provisions or concern to our partners throughout the various areas that we have had”, Mr. Faibille Junior explained.

Secondly, following the passage of L.I. 2204 as amended, he said, the Commission established the local content committee overseeing the implementation of local content programmes, projects, and initiatives. The committee’s membership has since been enhanced to include key stakeholders in the sector.

Mr. Faibille Junior continued that the committee plays a key role in the effective implementation of local content regulations.

New local content LI comes with channel partnerships and strategic alliances

For his part, George Ankomah, Deloitte Ghana’s Lead Tax Partner, highlighted the significance of the introduction of channel partnership and strategic alliance models of investments that allow foreign investors to partner IGCs, without necessarily incorporating a local company.

“This is a very good initiative which will especially allow for specific short-term projects to be executed without the administrative burden of a JV entity. I think that this introduction once implemented would be very great for the industry”, he added.

“We have also seen amendments around the definition of what constitutes an IGC which used to be that the Ghanaian national should own at least 51%. This has now been amended to 100% Ghanaian ownership, which in other words increases the involvement of Ghanaians within the industry. Then we have also seen another introduction which the supplies is reserved for Ghanaians”, he added.

Upstream petroleum sector witnessed immense progress

Sharing insights on the local content regime, Kwaku Boateng, Director, Local Content at Petroleum Commission said the industry has come far since the discovery of oil, adding, a lot has been done in the area of local content with enviable achievement.

Though he admitted that there are some challenges, he pointed out that the Commission continues to review and introduce regulations and guidelines in line with the current development in the industry.

The Deloitte / Petroleum Commission webinar witnessed significant participation across the petroleum ecosystem and other sectors.

The aim of the webinar was to discuss the current local content issues pertaining to the upstream sector from the perspectives of a regulator, investor and business consultant .

Deloitte Ghana, is part of the global firm “Deloitte” and has a long history in the country, dating back to 1947. Its offerings include auditing, assurance, tax and regulatory, consulting, financial advisory and risk advisory.