Ghana remains destination of choice – In upstream oil and gas sector- Egbert Faibille

BY: Moses Dotsey Aklorbortu

The Chief Executive Officer of the Petroleum Commission (PC), Mr. Egbert Faibille has touted Ghana’s stable political environment as one of the key factors making it a destination of choice in the upstream petroleum industry in Africa.

The CEO indicated that the stable political and democratic environment and robust regulatory framework of the oil and gas sector pass as factors to encourage investors to its upstream space with its rich hydrocarbon potentials.

Speaking as a panel member on investing in Africa at the ongoing Africa Assembly in Paris, while responding to factors that would encourage investment and attract new investors to the country’s oil sector, he said the country as a new player in the upstream petroleum industry continues to attract established players in the industry due to its unique attributions.

Principles of good governance
“The recent passage of the Petroleum Exploration and Production Act, (2016) Act 919, also provides principles of good governance, competition, fairness and transparency in the conduct of upstream petroleum operations.

These principles, he said, are incentives for international oil companies (IOCs) to partake in upstream petroleum exploration as Article 12 of the petroleum agreement provides tax reliefs to petroleum contractors.

“For instance, contractors are not liable for any export tax on petroleum exported from the country and no duty or other charge is levied on such exports,” he said.

The session is themed Building Regulatory Foundation for Developing a Sustainable and Efficient Energy Industry. The CEO said vessels or other means of transport used in the export of contractors’ petroleum from Ghana are not liable for any tax, duty or other charges by reason of their use for that purpose.

“Subject to local purchase obligations, contractors and subcontractors may import into Ghana all plant, equipment and materials to be used solely and exclusively for the conduct of petroleum operations without payment of customs and other duties and taxes on imports except administrative fees and charges,“ he said.

Ghana’s energy mix
On the importance of the oil and gas industry to the energy mix of the country and for those that are shifting to renewables, Mr. Faibille Jr. said the discovery of hydrocarbons in the country has gradually dominated Ghana’s energy mix.

“As we speak, gas from associated and natural of the three independent fields is gaining prominence. The country has substituted crude oil for electric power generation in Ghana with gas constituting 57 per cent thermal generation,” he said.

Hydro accounts for 42 per cent, while renewable accounts for 1 per cent of the country’s Installed electricity generation capacity as of the end of 2016.

Regulatory changes
The CEO was on the panel with Executive Director of the Ugandan Petroleum Authority; Head of Legal, Petrosen; RAK Petroleum Authority; ENH Mozambique and CEO of Petroci. They interrogated what regulatory changes have occurred in their respective jurisdictions and also the priorities and challenges in the short to medium term.

For his part Mr. Faibille Jr. recalled that “prior to the discovery of oil in commercial quantities in 2007, there were some laws on Exploration and Production, PNDC Law 84 and PNDC Law 64 which set up the Ghana National Petroleum Corporation.

He explained that following the discovery and the commendable interest shown by Ghanaians, government in its quest to promote participation of Ghanaian individual and businesses in the petroleum sector passed the Petroleum Commission Act, 821, 2011 and then Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204).


Value-addition & Job Creation
“The purpose of this regulation is to promote the maximization of value-addition and job creation through the use of local expertise, goods and services, develop local capacities in the petroleum industry value chain to achieve and maintain a degree of control for Ghanaians over development initiatives for local stakeholders,” he said.

He told the large gathering of global oil giants in the session moderated by Nina Bowyer, Partner – Solicitor/Co-Head: Global Africa Group, Herbert Smith Freehills that some of the recent regulations include Petroleum Exploration and Production Act, 2016, Act 919, which has replaced the previous exploration and production law, PNDC Law 84.

The new regulation, he said, is more robust and contains provisions that encourage transparency and synchronizes with current industry trends.

Regulations, 2017 (L.I. 2258) & (L.I. 2257)
He mentioned the petroleum Exploration and Production Data Management Regulations, 2017 (L.I. 2257) and said its purpose is to specify the format, contents and standards required for the preparation and submission of geophysical, geological and production data related to petroleum activities to support the efficient exploitation of petroleum resources in Ghana.

He also mentioned the Petroleum (Exploration and Production) (Health, Safety, and Environment) Regulations, 2017 (L.I. 2258) which also aims to prevent the adverse effects of petroleum activities on health, safety and the environment, promote high standards for health, safety and environment in carrying out petroleum activity.

The move is to ensure systematic implementation of measures to comply with requirements and achieve set goals in applicable working environment and safety standards.

Other panel members also gave accounts of what transpires in their respective jurisdictions and how those issues were being managed.