Petroleum Services Agreement (Ghana)

A Petroleum Services Agreement in Ghana defines the scope of work, fees and deliverables governing the provider's services to the client.

Ghana's upstream petroleum sector is regulated by the Petroleum Commission, established under the Petroleum Commission Act 2011 (Act 821), which is responsible for licensing service companies and monitoring compliance with local content requirements applicable to petroleum service contracts. Section 1 of the Petroleum (Exploration and Production) Act 2016 (Act 919) provides the foundational statutory vesting of petroleum rights in the Republic of Ghana, and all petroleum service activities must be conducted in accordance with the terms of the operator's petroleum agreement and the applicable Petroleum Commission regulations.

The Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204) impose mandatory requirements on operators and service companies alike. Under LI 2204, operators must give preference to Ghanaian service companies when procuring petroleum services, and service companies seeking to participate in the Ghanaian petroleum supply chain must register with the Petroleum Commission's Local Content Database and demonstrate prescribed levels of Ghanaian equity, management, and workforce participation. Failure to comply with LI 2204 exposes both operators and service providers to regulatory sanctions administered by the Petroleum Commission.

The Contract Act 1960 (Act 25) governs the formation, validity, and enforcement of service agreements in Ghana, establishing the requirements of offer, acceptance, consideration, capacity, and lawful purpose. A Petroleum Services Agreement executed in Ghana must satisfy these foundational requirements. The Electronic Transactions Act 2008 (Act 772) recognises electronic signatures and electronic records as legally valid in Ghana, enabling parties to execute Petroleum Services Agreements through compliant digital platforms.

The Ghana National Petroleum Corporation (GNPC), established under the Ghana National Petroleum Corporation Law 1983 (PNDCL 64), participates in upstream operations alongside private operators and frequently acts as an operator or co-operator in its own right, entering into Petroleum Services Agreements with domestic and international service companies for activities within blocks where GNPC holds an interest.

Environmental obligations under a Petroleum Services Agreement in Ghana are governed by the Environmental Protection Agency Act 1994 (Act 490). Service companies performing activities that carry environmental risk — including offshore drilling, geophysical surveying, chemical handling, and waste management — must comply with the EPA's regulations and the Petroleum Commission's health, safety, and environmental guidelines. The Ghana Revenue Authority (GRA) administers income tax, VAT under the Value Added Tax Act 2013 (Act 870), and withholding tax obligations applicable to payments under Petroleum Services Agreements, particularly where the service provider is a non-resident company.

The Alternative Dispute Resolution Act 2010 (Act 798) and the Ghana Arbitration Centre (GAC) provide the institutional framework for resolving commercial disputes arising under Petroleum Services Agreements. International petroleum service companies frequently include arbitration clauses referring disputes to the ICC or UNCITRAL Rules, with Accra or a neutral seat as the venue.

A Petroleum Services Agreement in Ghana is required whenever an upstream petroleum operator engages a specialised service company to provide goods or services in connection with petroleum activities within a licensed contract area under the Petroleum (Exploration and Production) Act 2016 (Act 919).

A Petroleum Services Agreement is needed when an operator engages a drilling contractor to drill exploration, appraisal, or development wells within a block licensed by the Petroleum Commission. The agreement must define the scope of drilling services, the day-rate or lump-sum pricing structure, the responsibilities of the operator and contractor for well design, materials, and equipment, and the safety and environmental standards applicable to drilling operations.

A Petroleum Services Agreement is required when an operator engages a geophysical survey company to acquire two-dimensional (2D) or three-dimensional (3D) seismic data over an offshore or onshore block in Ghana. The agreement must address data ownership, data licensing, regulatory approvals from the Petroleum Commission and the National Communications Authority (NCA), and the confidentiality obligations applicable to geophysical data acquired within the contract area.

A Petroleum Services Agreement is needed when an operator engages a well services company — including providers of wireline logging, mud logging, cementing, stimulation, or completion services — for work associated with the drilling, completion, or workover of petroleum wells within a Ghanaian petroleum block.

A Petroleum Services Agreement is required when an operator engages a marine or logistics service provider to supply offshore support vessels (OSVs), helicopter transport, base management, supply boat services, or other logistics support for offshore petroleum operations in the Gulf of Guinea, in compliance with the Ghana Maritime Authority Act 2002 (Act 630) and applicable maritime regulations.

A Petroleum Services Agreement is needed when an operator engages an engineering, procurement, and construction (EPC) contractor or a project management consultant for the design, procurement, and construction of petroleum production facilities, pipelines, or associated infrastructure within or onshore of a Ghanaian petroleum block.

Operators and service companies in Ghana should prepare a Petroleum Services Agreement that reflects the specific technical scope of work, the relevant regulatory requirements under Act 919 and LI 2204, and the applicable tax treatment under the Income Tax Act 2015 (Act 896) and the Value Added Tax Act 2013 (Act 870), with input from Ghanaian petroleum lawyers and technical advisers.

A binding Petroleum Services Agreement in Ghana under the Petroleum (Exploration and Production) Act 2016 (Act 919) and the Contract Act 1960 (Act 25) must contain the following essential elements.

Parties: Full legal names, registration numbers issued by the Registrar General's Department (RGD) under the Companies Act 2019 (Act 992), and registered addresses of the operator and the service provider. Foreign service companies must be registered in Ghana before executing a Petroleum Services Agreement under the Companies Act 2019 (Act 992) and must hold a valid Petroleum Commission service company licence.

Scope of Work: A precise description of the petroleum services to be provided, including technical specifications, equipment to be used, personnel to be deployed, and the geographic area (block or field name and Petroleum Commission licence number) within which the services will be performed. The scope of work is typically attached as a schedule to the agreement.

Contract Price and Payment: The pricing structure for the services (day-rate, lump-sum, or unit-rate), the currency of payment (Ghana Cedis or US Dollars, as applicable), invoicing and payment terms, and any mobilisation or demobilisation fees payable by the operator. The agreement should address the treatment of taxes including withholding tax under the Income Tax Act 2015 (Act 896) and VAT under the Value Added Tax Act 2013 (Act 870).

Local Content Compliance: The service provider's obligations under the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204), including prescribed levels of Ghanaian equity, management, and workforce participation, preference for Ghanaian sub-contractors and suppliers, and submission of local content plans and reports to the Petroleum Commission as required under LI 2204.

Health, Safety, and Environment: The safety management system, incident reporting procedures, environmental compliance obligations under the Environmental Protection Agency Act 1994 (Act 490), and applicable Petroleum Commission HSE guidelines applicable to the service provider's operations within the contract area.

Liability and Indemnity: The allocation of liability between the operator and service provider for personal injury, death, and property damage (including the wellbore and subsurface equipment), consequential and indirect losses, and pollution — typically structured through a knock-for-knock liability matrix that aligns risk with the party in control of the relevant asset.

Insurance: Minimum insurance requirements applicable to the service provider, including employer's liability (as required under the Workmen's Compensation Act 1987 (PNDCL 187)), third-party liability, marine liability (if applicable), and any additional coverage required by the Petroleum Commission.

Intellectual Property and Data: Ownership of data, reports, samples, and other materials generated in the course of the services, which typically vest in the operator subject to the service provider's right to use data for internal technical purposes.

Dispute Resolution and Governing Law: Specification of Ghana law as the governing law and the dispute resolution mechanism — typically a tiered process of negotiation, expert determination for technical disputes, and arbitration under the Alternative Dispute Resolution Act 2010 (Act 798) or international arbitration rules for commercial disputes.

Forms-legal.com provides this Petroleum Services Agreement template as a starting point for operators and service companies in Ghana's upstream petroleum sector. Parties should engage Ghanaian petroleum lawyers familiar with Act 919, Act 821, LI 2204, and the Petroleum Commission's standard contract requirements before executing a binding Petroleum Services Agreement.

Termination: The circumstances in which either party may terminate the agreement (including for cause and for convenience), the notice period for termination, and the financial consequences of termination including demobilisation costs, payment for work completed to the termination date, and repatriation of personnel and equipment.