Tullow Oil has come under fire in Ghana over alleged failure to abide by local content regulations – charges the company denies.
The Ghana Oil and Gas Service Providers Association (GOGSPA) has filed a case seeking to stop Tullow Ghana from awarding contracts. GOGSPA, according to local reports, said any awards by Tullow to foreign owned joined ventures after February 17 this year would violate the law, which seeks to secure work for local businesses.
Tullow Ghana confirmed the summons from GOGSPA. The High Court in Accra will hear the application for an interlocutory injunction on October 10.
Since 2010, the company said, it had awarded more than 4,000 contracts to local companies, with almost 3,000 contracts going to joint ventures. The total contract awarded comes to $16.83 billion, of which $11.24bn went to companies with Ghanaian participation.
Tullow Ghana “has been consistent in steadily increasing contracts awarded to indigenous companies and has no desire to replace indigenous Ghanaian companies with foreign companies”. Tullow spent $500 million on local contracts in 2014 and by 2021 this had increased to $1.47bn.
The company said it would provide no further comments on the matter in order not to prejudice proceedings. Tullow has won awards in the past for its local content dealings, in addition to hosting events with the Petroleum Commission on supporting this work.
Changing the rules
Ghana changed local content requirements in 2021, amending an earlier version from 2013, tightening terms.
A note from Accra-based WTS Nobisfields noted that previously a joint venture would require at least 10% local ownership. This may no longer be sufficient, the law firm said.
It also noted that for a company to be qualified as indigenous it must have 100% Ghanaian ownership. Previously it had been 51%.
Furthermore, the new regulations stipulate that a number of areas are now reserved for Ghanaian companies alone. These range from the provision of chase boats, to offshore fire fighting equipment to high voltage cables. There is also a reserved list of chemicals that can only be supplied by local companies.
Tullow is due to present its half year results on September 14.