Oil and gas companies operating in Ghana will soon be mandated to use only local products and services in the execution of their operations.

The new requirement follows the approval, on June 6th, by the Ghanaian cabinet of the Legislative Instrument (LI) for the Local Content Policy for the oil and gas sector, which takes immediate effect when approved by the country’s parliament.

The LI is expected to enhance the country’s local content policy in the oil and gas industry.

Local Content refers to the involvement of Ghanaians and Ghanaian businesses in all sectors of the hydrocarbon industry. These could refer to employing a certain percentage of Ghanaian citizens to work directly in the sector, to involving local businesses in areas such as oil block allocation, drilling, aviation, transportation, catering, oil distribution amongst others.

The country’s Minister of Information and Media Relations, Mahama Ayariga, outlined some of the highlights of the LI.

“Cabinet did approve proposals to send a LI to parliament for passage to enforce as law the Local Content Policy in the petroleum industry.”

“The key highlights of the policy include; that priority should be given to Ghanaians in the granting of licensing and agreements in the petroleum sector in all operations, where foreigners want to be involved they must partner with Ghanaians who should carry at least a five percent equity interest and that is reviewable at the pleasure of the Minister given certain circumstances.”

“Also there is an elaborate reporting procedure which requires that the companies use local services and products manufactured by Ghanaian companies and they must also make investments in research and carry out programs aimed at technology transfer to Ghanaians,” he stated.

One of the problems analysts have highlighted about the country’s nascent petroleum industry is that of commercial oil production taking off when the necessary laws have not been passed. Ghana discovered oil in 2007 and commercial oil production began in 2010.