The Ghana Oil and Gas Service Providers Association (GOGSPA) has dragged Tullow Ghana Limited before the Accra High Court, Commercial Division, over alleged violation of local content laws.
The plaintiff is praying the court to halt the defendant from re-awarding any petroleum contract being executed by indigenous companies to foreign joint venture firms, contrary to provisions of the Petroleum (Local Content and Local Participation Regulations) LI 2204 (as amended) by Petroleum (Local Content and Local Participation) (Amendment) Regulations 2021 (LI 2435).
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 between Ghana Oil and Gas Service Providers Association (GOGSPA) versus Tullow Ghana Limited.
In the application, the complainant prayed for an 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 determination of the suit.
The plaintiff said the decision to sue followed many complaints that services reserved for indigenous companies by laws in the upstream oil and gas sector were being taken away and awarded to foreign venture firms.
Before seeking the action, the plaintiff said it raised concerns of the indigenous companies with Tullow in a petition in June 2022 – highlighting that any award of contract reserved for indigenous Ghanaian company to foreign joint venture companies after February 17, 2022 would be in violation of existing laws regulating the award of petroleum contracts reserved for local businesses.
However, in response to the petition, it said the defendant vowed to continue with awarding contracts exclusively reserved for local companies to foreign joint ventures.
The plaintiff said the defendant’s action, if not restrained by the court, will lead to mass unemployment of skilled Ghanaians in the upstream petroleum industry.
GOGSPA therefore prayed for a declaration that the award of petroleum contracts for the provision of goods and services, exclusively reserved for indigenous 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.
It is also seeking a declaration that the award of any petroleum contract for provision of goods and services reserved exclusively for indigenous firms under the aforementioned laws to joint venture companies in Ghana by the defendant is null and void.
Among others, GOGSPA is seeking an injunction from the court directing the defendant to cancel every contract awarded for provision of goods and services in contravention of the same legal provisions.
The plaintiff further asked the court for a perpetual injunction restraining the defendant – whether personally or through their agents, servants or privies or any person acting under their express or implied instruction – from awarding any petroleum contract in contravention of the same laws and others regulating the award of petroleum contracts in the country.
At a hearing of the suit on September 8, 2022, the legal representative of Tullow Ghana requested more time to respond to the application filed by the plaintiff.
The court upheld the defendant’s plea and adjourned the hearing of the motion on notice for an interlocutory injunction to restrain Tullow Ghana Limited to 10th of October, 2022 for hearing of the motion. The court also advised parties to seek an amicable resolution of the matter.
In a statement, Tullow said it has been consistent in steadily increasing contracts awarded to indigenous companies and has no desire to replace indigenous Ghanaian companies with foreign companies. “On the contrary, between 2014 to 2021 when LI 2204 was passed, Tullow Ghana tripled its indigenous contract award spend to up to US$1.47Bn compared to US$500m in 2014,” the statement read.
It added Tullow remains committed to developing the capacity of local businesses to participate in the oil and gas industry, consistent with its contractual obligations and applicable law. “Tullow Ghana does not intend to prejudice the ongoing legal proceedings and therefore no further statements will be issued at this time,” the statement noted.