Sep 20, 2022 News
Cautionary Tale for Guyana…
Kaieteur News – As Guyana pursues efforts to ensure oil companies respect its Local Content Legislation, there are lessons from around the world which underscore just how challenging this exercise is likely to be.
In Ghana for example, citizens within a major advocacy and monitoring group have been forced to take to the courts due to an oil company’s non-compliance with the African state’s robust oil policies, guidelines, regulations and legislation.
Specifically, the Ghana Oil and Gas Service Providers Association took Tullow Oil’s subsidiary before the court for awarding contracts reserved for locals to foreigners. Importantly, Tullow is one of the major companies operating offshore Guyana in its Orinduik and Kanuku Blocks.
Kaieteur News understands that an Accra High Court (Commercial Division) on September 8, 2022, had adjourned the hearing for an interlocutory injunction to restrain Tullow Ghana Limited from re-awarding any petroleum contract being executed by indigenous Ghanaian companies to foreign joint venture companies.
The motion was brought by the plaintiff pursuant to a writ of summons issued against Tullow Ghana Limited in suit number CM/BDC/0692/22. The Ghana Oil and Gas Service Providers Association, that filed the suit against Tullow Ghana Limited, said it was seeking the order of the court to restrain Tullow Ghana Limited, its agents, assigns and any person acting under their instructions from violating the Local Content and Local Participation, (Amendment) Regulations 2021 (LI 2435) in the award of petroleum contracts in Ghana pending the determination of the suit.
The Plaintiff said the decision to sue followed many complaints that services reserved for indigenous Ghanaian companies under the laws in the upstream oil and gas sector were being taken away and awarded to foreign venture companies.
The Plaintiff said it had raised the concerns of the indigenous companies with Tullow in a petition in June 2022, highlighting that any award of contract reserved for indigenous Ghanaian companies to foreign joint venture companies after February 17, 2022, would be in violation of the existing laws regulating the award of petroleum contracts reserved for local businesses.
However, in its response to the petition, the Defendant vowed to continue with the award of contracts exclusively reserved for indigenous companies to foreign joint venture companies.
The Plaintiff said the action of the defendant if not restrained by the court would lead to the mass unemployment of skilled Ghanaians in the upstream oil industry.
The Defendant, therefore, prayed for a declaration that the award of petroleum contracts for the provision of goods and services exclusively reserved for indigenous Ghanaian companies under Petroleum (Local Content and Local Participation Regulations) LI 2204 (as amended) by Petroleum (Local Content and Local Participation) (Amendment) Regulations 2021 (LI 2435) to Joint Venture Companies in Ghana by the Defendant is illegal.
They also want a declaration that the award of any petroleum contracts for provision of goods and services reserved exclusively for indigenous Ghanaian companies under Petroleum (Local Content and Local Participation Regulations) LI 2204 as amended by the Petroleum (Local Content and Local Participation) (Amendment) Regulations 2021 (LI 2435) to joint venture companies in Ghana by the defendant is null and void.
The Plaintiff is also seeking an order from the court directing the Defendant to cancel every contract awarded for the provision of goods and services in contravention of the provisions of the country’s local content and petroleum laws and regulations.
They are also seeking a perpetual injunction restraining the Defendant, whether personally, through their agents, servants or privies or any person acting under their express or implied instruction from awarding any Petroleum contract in contravention with the nations laws and other rules regulating the awards of petroleum contracts in Ghana.
At the hearing of the suit, the legal representative of Tullow Ghana, requested more time to respond to the application filed by the plaintiff.
The court also advised parties to seek an amicable resolution of the matter; the case was thereafter adjourned to October 10, 2022 for hearing of the motion.
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