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07.10.2008 Business & Finance

Oil to shore up services industry by US$5bn


The value of services to be demanded by the oil industry when pumping begins in 2010 has been estimated at US$5 billion annually, a Ghana Investment Promotion Centre (GIPC) assessment has shown.

The value, which roughly represents a third of Ghana's annual Gross Domestic Product (GDP), includes services ranging from demand catering, accommodation, material and equipment, different modes of transportation, storage and distribution, consultancy and other rig-related services.

Mr. Ahomka-Lindsay, the CEO of GIPC, is hopeful that Ghanaians will prepare to participate in the expected services industry boom, which promises to be fiercely competitive among locals and foreigners.

"I know some have begun positioning themselves and it is right to say that those investors who want to be part of the oil industry must begin putting their acts in order now. The businesses involved are enormous and the values large; guess what, God has put all of it there for Ghanaians.

"I'm adding that our doors at GIPC are always open to offer assistance in any way we can," he said.

During the early part of the second quarter this year, the Ghana National Petroleum Corporation (GNPC) ordered that all companies establishing to provide oil production services obtain permits from the Corporation to regularise their operations.

Companies that fall into this category are those that supply materials and equipment, consulting and resources, environmental, and property services. Those providing catering services are to be exempted.

Kosmos Energy, the company that announced the major find - expected to be about 1.3 billion barrels of recoverable oil, some 14 kilometres off the westernmost shores of the country - has indicated its readiness to work with local companies.

The companies must first have been registered legally, be tax compliant and properly insured, and have transparency in business conduct. They are also expected to be conversant with the US Foreign Corruption Practices Act (FCPA).

According to Kosmos, it costs over US$1 million daily to operate an oil-rig and therefore delays and sub-standard services that add to increasing cost cannot be entertained. It said rig operations such as drill bits and drilling fluids, as well as cementing and pumping, anchor handling, mud logging are all open to Ghanaian companies.

Other categories are heavy equipment rental, such as boat supplies, helicopters, fixed wing services, trucking tank rentals and cranes, metal works, chemicals and business services such as ICT support travel, insurance and banking.

Currently, the GNPC and the Association of Ghana Industries (AGI) are fleshing out a policy that aims at ensuring about 30 percent local content in the oil industry.