The ‘upstream’ petroleum regulator
In 2007, Ghana made commercial discoveries of oil and gas which are currently being operated as the unitised ‘Jubilee Field.’ The potential impact of these discoveries on the Ghanaian economy has led to phenomenal interest in Ghana’s petroleum sector both locally and on the international scene.
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Amid the excitement, the key development objective of Government of Ghana remains growth of the economy to accelerate development and industrialisation.
Clearly, this poses a number of challenges that must be addressed. Key of which is the need to establish a robust regulatory framework and institutional capacity in key areas of governance for effective management and oversight of the sector.
The Petroleum Commission, Ghana (“the Commission”), was established in response to these challenges and in accordance with Article 269 of the 1992 Constitution of Ghana, which provides for the establishment of Commissions that will be responsible for the regulation and management of the utilisation of the natural resources of Ghana and the coordination of policies in relation to them.
The Commission
Established in 2011 by the Petroleum Commission Act, Act 821, the Commission is the regulator for petroleum activities in Ghana. Essentially, this makes the Commission the regulator of the upstream sector of the Ghanaian petroleum industry.
The Commission took over regulation of the sector from the Minister of Energy, who hitherto regulated the sector with the assistance of Ghana National Petroleum Corporation (GNPC).
Functions
The Commission has a wide remit with diverse powers which stem from its tripartite role: in addition to being a regulator in the technical sense, the Commission is also the manager of Ghana’s petroleum resources, and as coordinator of policies in relation to them, the Commission acts as the interface between government and industry.
Government agencies and departments are required to cooperate with the Commission. Specifically, its functions include promotion of sustainable and cost efficient petroleum activities, recommendation to the minister of national policies related to petroleum activities and monitoring and ensuring compliance with relevant legislation, regulations, policies and agreements related to petroleum activities.
Local Content
The Commission has a specific mandate to promote local content and is responsible for overseeing the implementation, monitoring and enforcement of local content legislation.
Legislative support for government’s vision in relation to local content and local participation in the oil and gas sector is primarily found in PNDCL 84, which is the legal basis for Petroleum Agreements in Ghana, and the Petroleum Commission Act, Act 821. However, recognising the importance of local content and participation to the sustainable development and the rapid acceleration of the development of the national economy as a whole, government considered it crucial to enact specific subsidiary legislation to address local content and participation.
Accordingly, on 19 November 2013, a specific Legislative Instrument for the sector: Petroleum (Local Content and Local Participations) Regulations, 2013 LI 2204 (“the Local Content LI”) was passed by Parliament. The purpose of the Local Content LI was to inter alia promote maximisation of value-addition and job creation through the use of local Ghanaian expertise, goods and services, businesses and financing in the petroleum industry value chain and their retention in Ghana. Accordingly, it provides for supervision, coordination, implementation and monitoring of local content and requires submission of a Ghanaian content plan and related sub-plans to the Commission by companies operating in the sector.
Operations
Since the Commission took over regulation of the sector, it has been working assiduously to ensure it has the requisite staff in place to take up its mandate. Nevertheless, the Commission is already making an impact in the sector and clearly flexing its considerable statutory muscles in the sector. As the interface between government and industry, the Commission has streamlined the application process for Work Permits for the upstream petroleum sector.
All Work Permit applications must now be routed through the Commission, which conducts an initial screening process to ensure applications comply with all immigration requirements. Additionally, clearance must be obtained from the Commission for drilling rigs, vessels for seismic activity and supply vessels operating in Ghanaian territorial waters before commencement of operations. Helicopters operating in the upstream petroleum sector must also be cleared by the Commission before entry into Ghanaian airspace.
As regulator of the sector, on 1 May, 2012, the Commission took over registration of companies providing services in the upstream petroleum sector as one of the means by which it would promote local content and participation. The Commission has now introduced a more streamlined regime based on company classification on the basis of business turnover, with different fee levels, which recognise whether a company is a Ghanaian or foreign company registering for the first time or renewing its registration.
Companies operating in the sector are also required to submit their local content and procurement plans to the Commission for scrutiny. As technical adviser to the minister, the Commission has also provided technical advice on the Plan of Development for the TEN discoveries and has approved a number of Appraisal Plans.
In relation to stakeholder engagement, in its relatively short period of existence, the Commission has had meetings with industry, organised a local content workshop, health and safety forum, security workshop, a tour of companies operating in the sector based in Takoradi and a meeting with the Western Regional House of Chiefs.
Overcoming Challenges
Expectations about the potential impact of the oil and gas find in Ghana are very high. Consequently, one of the major tasks ahead of the Commission will be to ensure consistency and coherence of its compliance regime, while managing the expectations of industry, government and citizens of Ghana - a difficult, complex, conflicting and occasionally contradictory task. Crucially, therefore, the Commission is in “listening-mode,” ensuring effective communication with local communities, civil society and other non-governmental stakeholders.
The writer is Consultant, Local Content, Petroleum Commission, Ghana
Writer's email: jtwumasi-anokye@petrocom.gov.gh