Atuabo Free Port: A major boost to the Ghanaian economy...
Atuabo Free Port is set to provide a major boost to the economy of Ghana, as the $700 million facility begins construction next year before becoming operational in 2017. Having recently completed a number of preliminary activities onsite, the company and China Harbour Engineering Company have signed a construction agreement establishing the latter as the main contractor of the project to build a dedicated three-quay port. It is also estimated that over 1,000 jobs will be created as a direct result of the project.
In terms of maritime activity, there are three clear areas for the impending facility, which will become Ghana’s third major port. One is an offshore logistics base where goods are received for the offshore Oil and Gas industry, collated and marshalled onshore and then shipped offshore to the rigs and other vessels during the exploration, appraisal and field development and production phases.
The second area is value-added work such as subsea fabrication; this provides the infrastructural platform for companies to do more work in-country which means the company keeps aligned with local content regulations in Ghana. Thirdly, there will be the rig and vessel repair sites where the vessel owners will be able to come in and have their vessels repaired or rigs maintained and repaired by various service companies.
Steven Gray, Director at Atuabo Free Port, said: “We have a number of companies who’ve signed up to MoUs with us and are already present in Ghana supporting the Oil and Gas industry. In addition to the three main areas, there are other elements of the project, such as the logistical movement of personnel. There’s an aerodrome on the site where fixed wing planes can fly in from Accra, and then the rotary wing helicopter operations would operate from there to the offshore platforms.
“Then we will have the technology park area where companies who are just seeking office space other than industrial facilities can locate themselves. Predominantly, it’s an international effort: you have to have international contractors that the financing partners are comfortable with - firms that have the expertise to handle the construction risks while delivering services on time.
“But in addition to that we’ll have a situation where if companies want warehouses or offices built, then that area is being identified as the area where Ghanaian contractors can execute their work.”
In terms of the capital structure, the Ghanaian government has a 10 percent ownership share, held by the Ghana Infrastructure Fund as a freehold; a further 35 percent will be purchased by Ghanaian state enterprises such as Ghana National Petroleum Corporation and Social Security and National Insurance Trust. Then the international shareholders and a number of international partners will make up the remaining equity.
Because Atuabo is set to be a dedicated hub for the Oil and Gas industry and not just a rudimentary container shipping port, Gray believes it can subsequently become much more of a regional player in West Africa than a country player in that respect. He said: “This will be particularly true for the rigs; we will be meeting a high demand that is not currently met in this area. The offshore supplier vessels have greater choices, but there are still capacity issues in West Africa in terms of facilities that can repair and maintain offshore supply vessels.
“Also with the infrastructure deficit on the continent, and Ghana is no different from other African states, this is a project where they’ve opened up the private sector to come forward with a solution: they’ve addressed the infrastructure deficit for this particular sector without using their balance sheets.
“There are no government guarantees and there is no payment for constructing this facility from the Government of Ghana, so it frees up additional government funds that could be used to develop existing port infrastructure and other maritime sectors.
“We see the potential certainly in the Ghanaian offshore context, the port being able to reduce the operational cost of oil by up to 90 cents to 1 dollar a barrel, which is significant.”
During the construction phase, about 70 percent of the workforce will be Ghanaian. During the operational phase, Atuabo Free Port is a platform that allows other companies to execute their work, so although Gray cannot speak for the tenants coming into Atuabo and where they will source their people from, they will be encouraged to employ Ghanaians who have the skills they require. Certainly Atuabo Free Port’s focus is recruiting from the Ghanaian market and Ghanaian labour resources in the first instance.
As part of social engagement with the community area surrounding Atuabo, one of the social intervention programs is the establishment of a community based manpower agency set up by the majority shareholder and international partners. Resources and the profits accruing to the agency will be reinvested back to skills development so there is a sustainable skills development funding for the community who today largely have fish or agricultural based careers.
Gray said: “They don’t necessarily have all the skills needed for the Oil and Gas industry, so this is a way to support skills development through a sustainable business model.
“We anticipate that there will be quite a lot of work opportunities in Ghana for the offshore activities from 2018 onwards. So it certainly is going to be an energetic market in the early years. But I think, you can look at Atuabo Free Port as a regional hub as well.
“Ghana for all the right reasons is seen as a gateway to other countries in West Africa; the English language, the rule of law, a stable democracy – it’s all there. We’re already seeing that with Expro, Halliburton, Schlumberger having their regional offices located in Ghana.
“As the capacity and quality of the indigenous companies improve, they’ll be able then to sell their services to other markets and clearly you see the regional markets as their first entry points to support industries. We’re seeing a lot of that already manifesting, where the Ghanaian companies are exporting their skills to Liberia, Searra Leone and so on.”
Time is clearly money in Oil and Gas: when you have a rig operation, it is costing anywhere from $0.5 million to $1 million per day, so even an hour’s delay costs companies a considerable amount of money. Atuabo Free Port can offer firms the ability to have a sustainable business, not just for the exploration phase but also the development and production phase and so that may well make marginal fields profitable. This is just one of the reasons why Atuabo Free Port will be a welcome addition to the West African offshore Oil and Gas industry from 2017.