Equatorial Guinea has directed all petroleum operators to cancel all contracts with Subsea 7 due to noncompliance of its local content regulations.
The minister of Mines and Hydrocarbons said decision includes, but not limited to, Noble Energy, Exxon Mobil, Kosmos Energy, Trident and Marathon Oil Corporation.
The African country has placed the law in 2014 under which all agreements must have local content clauses and provisions for capacity building, with preference given to local or regional companies in the award of service contracts. The law prescribes that local shareholders must be part of every contract and that the operators have an obligation to ensure compliance of their subcontractors.
“As minister, I have an obligation to ensure the laws of the country governing the hydrocarbon sector are complied with.” said Gabriel Mbaga Obiang Lima , the minister of Mines and Hydrocarbons. “Companies operating in the oil sector have an obligation to work within the confines of our very flexible and pragmatic local content regulations that are market driven and ensure that both investors and our citizen benefit. I commend the leadership of Schlumberger and Technip FMC in taking proactive steps to engage with the oil companies and government to ensure local content concerns are resolved.”
The Ministry said it will continue to work with oil companies operating in Equatorial Guinea to unwind contracts and find new suppliers for companies that have refused to comply with local content regulations.
A compliance review of the entire sector is said to be ongoing led by the director of National Content and outside legal advisors of the Ministry.
According to reports, the notice will be expanded to all service companies who are non-compliant as the review continues and similar measures will be taken.