Mr. Egbert Faibille, the Chief Executive Officer (CEO) of the National Petroleum Commission, has revealed that, over 98 contracts worth US$ 389 million have been cancelled due to the ongoing COVID-19 pandemic.
Briefing the Western Regional House of Chiefs on the Petroleum Sector, after the commission donated 2,000 branded nose masks, assorted disinfectants and locally made automatic handwashing machine to the house, the commission’s CEO disclosed that, these contracts were awarded by Aker Energy and four other oil companies from the fourth quarter of 2019 to the first quarter of 2020.
Mr. Fabille also said that, the cancellation of these contracts which were meant for local companies, will have a devastating impact on the Ghanaian petroleum support services companies.
“Local businesses have been significantly hit by the pandemic. The pre-COVID-19 outlook of the industry resulted in considerable investment in infrastructure, personnel and technologies in anticipation of participation in major projects. Indeed, over 98 contracts worth over $389m were awarded by Aker Energy, AGM, Eni, GOSCO and Springfield from the fourth quarter in 2019 to the first quarter in 2020. The cancellation of these contracts such as the 5-year Maersk Drilling contract which was terminated in June 2020 together with associated subcontracts would have a devastating toll on local businesses.”
Mr. Faibille further disclosed that, the impact of the COVID-19 induced contract cancellation affected local jobs in the oil and gas sector.
“The consequential effect of the cancellation of contracts amidst the already reduced workforce in the industry resulted in lay-offs of both expatriate and local personnel. Over 500 Ghanaian workers in the industry are expected to lose their jobs as a result of the pandemic.”
The Project Evaluation Manager at the Petroleum Commission, Ebenezer Armah also in a presentation to the Western Regional House of Chiefs said Ghana’s budgeted expectations petroleum revenue $1.57 Billion saw a shortfall of US$1.04B (GHS 5.7B) representing 63 percent in the 2020 benchmark.
The President of the Western Regional House of Chiefs, Tetrete Akuamoh Sekyim II commended the leadership of the Petroleum Commission for its COVID-19 prevention relief items support as well as taking time to brief the house on developments in the Petroleum sector.
Exploration is said to have been the most affected branch of the oil sector as activities were suspended to help curb the spread of the ongoing coronavirus pandemic.
The loss was also attributed to the fall in global demand, the low oil prices and the little or no activity in the upstream sector.