South Sudan: Minister Orders Termination of Contracts With U.S. Based Oil Service Company

21 November 2018

At the South Sudan Oil and Power Conference in Juba, the Minister of Mines and Hydrocarbons announced the decision to mandate all petroleum operators including but not limited to Noble Energy, Exxon Mobil, Kosmos Energy, Trident, Marathon Oil Corporation and other operators to cancel all contracts with US based oil service company Subsea 7, due to noncompliance of Equatorial Guinea's local content regulations.

"As Minister, I have an obligation to ensure the laws of the country governing the hydrocarbon sector are complied with." said H.E. 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 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 ongoing led by the Director of National Content and outside legal advisors of the Ministry. The notice will be expanded to all service companies who are non-compliant as the review continues. Similar measures will be taken.

Under the National Content Regulation of 2014, 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. Local shareholders must be part of every contract as prescribed by law. The operators have an obligation to ensure compliance of their subcontractors.

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