CHC Responds to Equatorial Guinea ministers statement demanding cancellation of contracts

EG Story CHC

The small African country of Equatorial Guinea issued a press release today alleging infractions made by CHC on national policy compliance

Early on July 17, 2018 Equatorial Guinea’s Ministry of Mines and Hydrocarbons released a statement mandating all petroleum operators to cancel all contracts with CHC Helicopters, due to noncompliance of Equatorial Guinea’s national content regulations.

The statement did not list any specifics to the alleged infractions against CHC, stating in part:

“It is the responsibility of the Ministry of Mines and Hydrocarbons to ensure strict compliance to our country’s National Content Regulation of the Hydrocarbons Law,” said H.E. Gabriel Mbaga Obiang Lima, the Minister of Mines and Hydrocarbons. “These laws are in place to protect and promote local industry, create jobs for citizens, promote the sustainable development of our country, and we are aggressively monitoring and enforcing the compliance of these requirements.”

The statement went on to direct oil companies operating in Equatorial Guinea to find new suppliers within 60 days, with only those companies in compliance with the national content regulations being the only contractors allowed to bid for contracts.

H.E. Gabriel Mbaga Obiang Lima, the Minister of Mines and Hydrocarbons is said to have directed the release of the statement to the press that gives no specific details as to what infractions CHC is alleged to have breached.

Equatorial Guinea instituted National Content Regulations in 2014, that ensures all agreements made between private industry and the government must have local content clauses and provisions for capacity building, with preference given to local companies in the award of service contracts. The regulations also stipulate that local shareholders must be part of every contract as prescribed by law.

The Ministry of Mines and Hydrocarbons detailed the move against CHC as part of a large compliance review of the entire sector led by the Director of National Content and outside legal advisors of the Ministry. Although the Ministry gave no explanation why the move against CHC was the only one to date, but announced that the review will be expanded to all service companies who are non-compliant and that similar measures will be taken.

Representatives from CHC’s head office when contacted for comment on the issue stated that the company was confident they were in compliance with Equatorial Guinea’s National Content Policies and were working with the governing bodies in Equatorial Guinea to resolve the issue without service interruption. CHC released a statement that read:

“CHC is confident we are in compliance with Equatorial Guinea’s National Content Regulations. We have operated in Equatorial Guinea for nearly 20 years and have built one of the most comprehensive training programs of any oil and gas contractor in country. We have provided successful training for pilots, engineers, and administrative staff, and implemented a cadet training program. We are also invested in local social projects with our teams dedicated to providing physical and financial support to local charities and causes.  

Our operations have been regularly audited and any minor findings have been addressed in our ongoing dialogue with the Minister of Mines and Hydrocarbons. We look forward to continuing the conversation with local authorities beginning with already planned discussions for this week and look forward to continuing to support our customers and the greater Equatorial Guinean community.”

CHC operates helicopters in the oil an gas sector in dozens of countries worldwide, with a long history of negotiating complex local regulations and rules before commencing operations in each region. In larger operations, such as their work in outback Australia, CHC works with local indigenous populations to ensure cultural compliance with their operations, while also providing a pipeline of employment for indigenous workers while returning a portion of earnings to supporting local non profits in each area.

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