The Nation Newspaper

Tag: Local Content Act

  •  Eight years of Local Content Act 

    It’s been eight years since the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, arguably the most successful economic policy of the federal government in the last two decades. It’s heartening that the implementation has remained on the front burner of four successive federal administrations, giving the lie to the narrative that governments in Africa are too eager to jettison policies initiated by their predecessors. In fact, the remit of the Nigerian content implementation is being broadened beyond oil and gas as part of diversification of the economy.

    Two out of the five presidential Executive Orders issued by the administration of President Muhammadu Buhari are specifically in support of local content – Presidential Executive Order 003 which mandates support for local content in public procurement by Ministries, Departments and Agencies of the federal government and Executive Order 005, for the ”Planning and Execution of Projects, Promotion of Nigerian Content in Contracts and Sciences, Engineering and Technology.”  These instruments have reaffirmed the Buhari administration’s unequivocal support for local content and deep conviction of its importance to the attainment of the Economic Growth Recovery Plan (EGRP) and wider socio-economic goals of the nation.

    The Senate and the House of Representatives are also working to amend the Nigerian Content Act, so it would extend to the Power, Information Communication Technology and Construction sectors.

    Weeks ago, the Chief Justice of Nigeria, Justice Walter Onnoghen and other justices of the Supreme Court gave huge endorsement to the Nigerian Content Act. The occasion was the first national seminar organised for justices and judges on the role of the judiciary in the development of the Nigerian Local Content Law and Policy.

    Today, Nigeria is widely regarded as a model in local content implementation in Africa and the Nigerian Content Development and Monitoring Board (NCDMB) has been mentoring several countries on the development of their own policies.

    The local content journey started formally from the report of a Presidential Committee inaugurated in 2001 to suggest reforms in the Oil and Gas industry. Prior to the NOGICD Act, the Department of Petroleum Resources (DPR) used oil block bid rounds to enforce some level of local content policies enshrined in extant petroleum statues. The Nigerian National Petroleum Corporation (NNPC) would later set up the Nigerian Content Division within its system and issue Nigerian content directives to the industry. The absence of a regulatory framework limited the best efforts of the DPR and NNPC, especially as operators and service companies complied only on best endeavour basis.

    The enactment of the NOGICD Act 2010 and subsequent establishment of the NCDMB ushered a paradigm shift. Before then, nearly all fabrication, engineering, and procurement for the oil and gas industry were executed abroad. It is estimated that the national economy suffered capital flight of about $380billion dollars in the first 50 years of oil production in Nigeria and lost opportunities to create over two millions jobs. The level of Nigerian content was less than five percent, partly because preceding administrations and most citizenry focused on revenue derivation from the oil and gas sector.

    In the past eight years, we have focused the thrust of local content implementation on promoting indigenous ownership of equipment used in industry operations; promoting oil and gas components manufacturing; giving first consideration to Nigerian indigenous companies; ensuring that Nigerian content targets are met for projects and operations; creating and utilizing training and employment opportunities for indigenes; deploying the Nigerian Content Development Fund for targeted  capacity building; ensuring that local capacity investors have work to amortize investments and involving oil producing communities in the activities of the sector.

    The board’s strategic implementation of the NOGICD Act has been very impactful in the oil and gas Industry and the wider economy – several Nigerians service companies have invested in sophisticated vessels and rigs – assets that used to be the exclusive preserve of foreign companies. Local firms now enjoy patronage and even exclusivity in certain areas, retaining huge industry spend in the economy, employing Nigerians and building skills. Many hi-tech fabrications, manufacturing and engineering facilities have also been developed and upgraded, domiciling most industry work that used to be exported. Nigerian Content has also grown remarkably on the production side. Indigenous and marginal field producers now account for about 15 percent of Nigeria’s crude oil production. They also contribute about 53 percent of domestic gas supply requirements.

    Even though the oil and gas industry is not a high employer of labour like agriculture and construction, our bullish implementation of Nigerian content has helped create over 30,000 jobs and funneled about 5,800 young persons in various projects based trainings. The total value of contracts awarded to Nigerian companies in the industry has risen to 83 percent while average Nigerian content retention in-country has shot up to 28 percent. Although many stakeholders are pushing for increased performance, it is imperative to note that the implementation is a marathon and not a sprint.

    On January 24, the biggest Nigerian Content milestone to date was attained when the Total E&P’s Egina Floating Production Storage and Offloading (FPSO) vessel arrived the SHI-MCI Yard, LADOL Free Zone, Lagos for the integration of six modules that were fabricated in Nigeria. The arrival of the FPSO is a huge testament to the giant strides Nigerian content development has made, particularly in the development of infrastructural and human capacities.

    Going forward, NCDMB has set new targets for itself and the industry. We have developed a 10-year strategic roadmap with which we are pushing to retain at least $14bn out of the $20 billion annual industry spend and create 300,000 direct and indirect jobs. We also hope to grow aggregate in-country value addition from 28 percent to 70 percent by 2027. These targets are backed with specific initiatives such as completion of five planned oil and gas parks to grow local manufacturing, establishment of two additional pipe mills, local fabrication of modular refineries; attaining at least 50 percent FPSO Integration in-country during the implementation of the world-class Zabazaba and Bonga SouthWest Aparo projects.

    In the last year and six months since I assumed duty as the Executive Secretary of the NCDMB, we have sustained the momentum of implementation and injected some fresh impetus. Our first major activity was to convene the Nigerian Oil and Gas Opportunity Fair (NOGOF), to aggregate industry business plan. This culminated in the compilation of a compendium of investment opportunities in the industry. We launched the $200 Million (USD) Nigerian Content Intervention Fund (NCI Fund) in partnership with the Bank of Industry (BoI). The fund offers a single digit interest rate with five year tenure and we hope to unveil the first set of successful applications in a few weeks. Our goal with the NCI Fund is to optimize the capacity and efficiency of our local supply chain and the overall competitiveness our oil and gas industry.

    We also issued guidelines to drive research and development implementation in the oil and gas industry. This was followed by the Nigerian Oil and Gas R & D Fair held in September 2017 to sensitize and galvanize the industry and relevant stakeholders to embrace the culture of research and innovation, a key parameter for sustainable local content practice.

    We concluded the bid evaluations for NAOC’s Zabazaba Deepwater project within an unprecedented period of 14 months, in line with the directive of the Minister of State for Petroleum Resources to reduce the protracted contracting cycle in the industry.

    Just recently we held the ground breaking of the pilot Nigerian Oil and Gas Park Schemes NOGAPS) at Odukpani, Cross River State. As we lead the rest of the industry to mark the eighth anniversary of the Nigerian Content Act, we congratulate all industry stakeholders for their various contributions to the achievements recorded so far. We must all be proud of the jobs we have created, the value we have retained in-country and the sense of pride we have brought to our country.

    Let me also hasten to add that Nigerian Content is not about Nigerianisation but has the main objective of domiciliation and domestication of value-adding activities in-country. We welcome investors far and wide to set up in our dear country Nigeria for unrivalled returns.

    Our 10-year journey has just begun. Please come on board so that together we could catalyze Nigeria’s industrialization and bequeath to our youth a virile economy.

     

    • Engr. Wabote is Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Yenagoa, Bayesla State.

  • $16b Egina probe: National Assembly to amend Local Content Act

    The Senate will amend the Nigeria Oil and Gas Industry Content Development (NOGICD) Act, 2010, the Chairman of the Senate Ad-hoc Committee on investigation into the Local Content and Cost Variation of  $16billion Egina Deep Sea Project, Senator Solomon Adeola, has said.

    Adeola spoke at the committee’s sitting at the weekend.

    He said the Act has failed to achieve the aims for which it was enacted with Nigeria and Nigerians being the big losers.

    Adeola said the investigations has shown loopholes in the Local Content Law that being exploited by foreign companies with some local collaborators.

    He said: “From what we are discovering in this investigation, it is clear that the Local Content Act is not achieving much result with Nigeria losing billions in expatriated hard currency and not much local skill or transfer of technology taking place. We have a case of award of a contract of $42million to a supposedly local company by Total Upstream Nigeria Limited under the Egina Project with Total making direct payment to another foreign company on behalf of the local company in just a pipeline procurement contract without the money passing through the Nigerian company. This is unacceptable and is a way of circumventing the NOGICD Act. It is apparent that indigenous companies are just being used as conduit pipe when they are used at all.”

    Adeola said the committee has made startling discoveries of  “unqualified foreign companies” like NOV Oil and Gas Nigeria Limited  cornering multi-billion dollar contract  that should ordinarily go to Nigerian companies  from Total Upstream.

    He said the  amendment to the Act would seek to place final approval for projects and its execution under the NOGICD Act in the National Assembly.

    A member of the committee, Senator Chukwuma Utazi (PDP, Enugu), said: “If Nigerian companies cannot benefit from mere procurement contracts, it is unlikely we benefit from technical aspects of the oil and gas industry contracts.”

    During the proceeding, Mr. Mario Lagunes, the managing director of FMC Technologies Nigeria Limited,  that got a subsea pipe contract that was varied from $1.3billion to $1.6 billion told the committee that his company is 100% owned by a parent company in Netherland and its dividends were paid to the offshore owners.

    The committee frowned at a situation where three quarters of FMC Technologies Limited procurement were purchased abroad with approval of regulatory bodies in flagrant contravention of the NOGICD Act.

    Other companies involved in the Egina Project that appeared before the Committee and requested to re-appear with Total Upstream Nigeria Ltd and Samsung Heavy Industry (SHI) this week include Dorman Long Nigeria Limited, AVEON, Bell Oil and Gas Services Ltd, EWT Services Ltd and DUCO Technic Offshore Ltd.

  • ‘IOCs undermining Local Content Act’

    ‘IOCs undermining Local Content Act’

    •We will punish offenders, says Nwapa

    THE Federal Government’s drive to involve local oil firms in the oil and gas sector is being thwarted by some oil majors that are bent on maintaining the status quo and denying indigenous companies their place as enshrined in the Nigerian Local Content Law, The Nation has gathered.

    The  Act, which became operational in 2010, gave Nigerian oil companies the leverage to be given first consideration in the award of contracts in virtually every area in the sector, including oil blocks, oil field licences, oil lifting licences,  in addition to being considered for award of contracts in all projects for which they have demonstrable competences and proven capability  in the oil and gas industry.

    The Act says there shall be exclusive consideration to Nigerian indigenous service companies which demonstrate ownership of equipment, Nigerian personnel and capacity to execute such work to bid on land and swamp-operating areas of the Nigerian oil and gas industry for contracts and services contained in the Schedule to this Act.

    However, this legal provision which is binding on all operators in the energy sector, is being  flouted by some foreign players.

    It was gathered that some  foreign companies, amongst them, Nigerian Agip Oil Company (NAOC)  and General Electric (GE), are working in unison against the provision and the intent of the Local Content Act,  to edge out an indigenous oil servicing company, ARCO Petrochemical Engineering Company Plc, in an existing Gas Turbines and Equipment  Maintenance Contract Working Agreement.

    The intent of the scheme, it was learnt, is to introduce another foreign firm,  Plantgeria Nigeria Limited, with no pedigree of any related experience, to take over the job from ARCO

    A source who asked that his identity be veiled, said the surreptitious action of NAOC and GE, if allowed to stand, will negate everything the Local Content Act represents.

    The source explained that the object of contention is the Obob/Kwale/Ebocha Gas Plant Rotating Equipment Maintenance Contract, involving Nuovo Pignone, GE and ARCO.

    The five-year contract was awarded by the Board of NNPC  sometimes in 2006 to Nuovo Pignone,  together with Arco Petrochemical Engineering company Plc, a wholly Nigerian company as the local Technical Partner, for the maintenance of the OBO/Kwale/Ebocha gas plants.

    It was learnt that the Nigerian Agip Oil Company (NAOC) later changed the contract terms and awarded the same contract to GE on its own terms. By the new arrangement, Arco was reduced from being a partner to a sub-contractor.

    However, just under a year of the commencement of the contract, the Niger Delta crises erupted, leading to the evacuation of GE’ expatriate staff from the site. On their exit, Arco’s engineers and technicians took up the challenge and maintained the plants for over six months before the crises abated and the evacuated GE expatriate  staff eventually returned to site.

    Apparently surprised that ARCO successfully performed the task for that length of time without any hitches, and for unexplained reasons, GE turned against ARCO, reduced the scope of Arco’s jobs and introduced a third-party company, Plantgeria, to perform part of Arco’s scope of work in the contract.

    “But surprisingly” the source exclaimed, “GE poached 19 of Arco’s engineers and technicians to do the job.”

  • ‘Local Content Act implementation key to poverty reduction’

    ‘Local Content Act implementation key to poverty reduction’

    Executive Director, Business  Development of Concrete Design and Works (CDW) Limited Oladimeji Oganla, has said proper implementation and monitoring of the Local Content Act has the potential to reduce the poverty that is pervading the country.

    According to him, if the Act is implemented, it will grow indigenous capacities, not only in the oil and gas sector of the economy but other sectors.

    He said: “The implementation of Local Content Act has the capacity to reduce the high level of poverty in the country. it is a law that was passed with the best intention but as you can see, there is a difference between good intention and reality.

    “I strongly feel the Job Creation Office of the Presidency should device measures to ensure compliance with the law. It will create employment opportunities for Nigerians. Contracts will also come.

    “Our government needs to do more for her people, Nigerians are hard working people and are not waiting to be spoon-fed,  they just need laws that would favour them to tackle poverty and joblessness. It is only a committed government at the centre that can do this. Governor Babatunde Fashola is doing a lot in Lagos State, so we need a serious government such as his at the centre to bring about significant change to the economy.”

    Speaking on the high incidence of building collapse in the country, especially in Lagos State, Oganla said quacks and property owners are responsible for it. He said: “Most property owners believe more in using quacks for their building, they compromise standards.

    “I am not saying everyone should patronise professionals, but standards should be maintained, whoever does not have a name to protect can easily maximise profit by using irregular mixture, substandard materials and so on,

    “What is the essence of trying to save professional fees when eventually the building you have spent so much on would eventually collapse, or dilapidate before time. If you examine critically the standard and quality of pre-colonial houses in Lagos Nigeria, they are still very strong over 50 years after, it is because these houses were built by professionals and quality control measures were put in place.

    “So it’s high time we started to appreciate professionalism in Nigeria, a tailor should avoid doing carpentry work just because he wants to save money, a mechanic should have nothing to do with a tape rule, a jack of all trade can never be master of anything.”

  • ‘Local Content Act establishment not enough’

    ‘Local Content Act establishment not enough’

    Oladimeji Oganla, the Executive Director, Business Development of Concrete Design and Works Limited, in this interview with Adediwura Aderibigbe, speaks on his approach to work and the Nigerian Local Content Act among other issues. Excerpts

     

    Oladimeji Oganla
    Oladimeji Oganla

    What is CDW’s business philosophy?

    Our philosophy is based on local ownership, we take into cognisance the fact that ownership must be indigenous at set up, we needed to establish a firm that would compete with other foreign firms in a competitive market; add value and also fill the lacuna that has been created in the construction industry in Nigeria. We were very determined to outshine other construction firms, we had sleepless nights, we saw the whole thing as making our success and other variable an opportunity cost scenario, it was either we succeeded or we failed, so we had to forgo one for the other, but I will tell you categorically that it wasn’t easy at all, considering the fact that we, the management team came from a diverse discipline. Just one of us trained as a civil engineer. We all learnt on the job and only few trained engineers can outsmart us as I speak to you today.

    You recently won an award as Outstanding Indigenous Construction Firm, what do you think earned you the award?

    Well, the award came as a surprise to us, we do not even believe we are there yet, we are just going to be three years old in the industry this year; so it came as a big surprise I must confess. Although it’s been motivational for the staff and management, we were really excited when we got the award, but in my quiet times, I begin to think if we really deserved the award or not, but the truth is if God says yes no one can say No. I’m also of the opinion that our crusade for implementation of the local content act in Nigeria earned us some recommendations and fame. We are thankful to the organisers of the National Career Fair for recognising us amidst other qualified indigenous construction firms; we are totally committed to offering qualitative solutions to government, corporate organisations as well as individuals at affordable rate. The era of building collapse as well as outdated building designs are over, we are prepared, willing and also motivated to add value, when I say value I mean great value.

    Building collapse has been a recurring problem especially in Lagos State, as a professional, what would you attribute to the cause?

    Most property owners believe more in using quacks for their building. They compromise standards. I am not saying everyone should patronise professionals, but standards should be met, whoever does not have a name to protect can easily maximize profit by using irregular mixture, substandard materials and so on, What is the essence of trying to save professional fees when eventually the building you have spent so much on would eventually collapse, or dilapidate before time. If you examine critically the standard and quality of pre-colonial houses in Lagosa, they are still very strong at over 50. It is because these houses were built by professionals, and quality control measures were put in place. So it’s high time we started to appreciate professionalism in Nigeria. A tailor should avoid doing carpentry work just because he wants to save money. A jack of all trade can never be master of anything.

    How can the problem of building collapse be tackled?

    As I mentioned earlier, we should stop compromising professionalism, let’s re-orientate ourselves, the problem of building collapse would be reduced drastically if not eradicated completely. Fortunately, the Council for the Regulation of Engineering in Nigeria has proposed death penalty for those involved in the construction of collapsed building across the country. This development came after the Federal House of Representatives expressed concern over the occurrence of building collapse in the country and appealed to relevant stakeholders and regulators to put an end to the trend, the house of assembly were also implored to enact a criminal law on owners of collapsed buildings as obtainable in international countries like Malaysia and Singapore. If all these things are implemented, it will be a positive step towards the right direction.

    How big is your workforce?

    We currently have no fewer than 51 members of staff, out of which 7 are expatriates.

    What are the challenges being faced by the company and industry at large?

    The major challenge is funding. You will agree with me that no economy would thrive without an unaltered mechanism of wealth distribution, there are so much to be done in terms of infrastructural development in Nigeria, recently the federal government came out to say it requires 2.9 trillion dollars for infrastructural development, that’s about 100 times our entire budget for a year (both recurrent and capital). With this figure, it is so obvious we are not even operating at a deficit, we are not even in contention at all, so we should try as a nation to at least use positively the funds we have to at least achieve a conducive infrastructural environment to drive other sectors of the economy, we in the industry know what to do, the funds are just a major hindrance, also the non-implementation of the local content act in the construction industry is also affecting indigenous firms such as ours.

    Can you mention some of high profile projects you have carried out?

    We’ve carried out various projects from inception till date, some are completed, some are ongoing and we still discussing on some other ones as well, example at the top of my head are 12 units of luxury duplex at Ajah Lagos for Bridge Solutions, road construction at Kotangora in Niger State, 10 story luxury apartment on Webb Road Ikoyi amongst others. Also in view is consultancy at ecological fund, a 1000 unit of housing in Yenagoa, Bayelsa State, and a private university at Nasarawa State, Nigeria. We have also successfully signed a Memorandum of Understanding with a hospitality firm in Ghana to build their brand of four-star hotels across 10 countries in West Africa concurrently, that’s the biggest project we have now.

    Has the government been fair in terms of the local content act?

    On the establishment of the act, I say yes, but on implementation, I say no! It is one thing to establish a law, it is another to implement. The office of the president on job creation should device measures to ensure compliance in terms of employment and also contracting. We all know that with full implementation of this law, a rapid growth would occur, in fact the growth and development would definitely be at a geometric progression. Our government needs to do more for its people, Nigerians do not need to be spoon-fed, they are hardworking people, they just need laws that would favour them to tackle poverty and joblessness, we need a very serious and committed government at the centre, I am not a politician but I admire the government of Governor Babatunde Raji Fashola a lot. It is a very serious government, they make laws and implement it, they are not joking, they are working assiduously for the welfare of Lagosians, and we need such serious government at the Centre.

    Where do you see the company in the next five years?

    We are driven by our own vision 2020, 5 years from now is 2019, we have a blue print on our road to success already, and by God’s grace, the sky is our limit. We are hopeful and determined; we are energized, motivated, collected, all to a single course to be the biggest in West Africa and being a household brand like the Julius Berger’s of today.

    Do you feel threatened by competition?

    No we don’t, competition is very healthy; it makes you do right what other people are doing wrong. It makes one very creative, also there are lots of projects to be done in this country, the infrastructural deficit in the country does not even tally with the number of both indigenous and foreign construction firms. There is room for every construction firm to get engaged as long as they possess what it takes to operate under the terrain, our system even encourages synergy among construction companies. We are registered as sub-contractors for some big names and also we have small companies that are also registered with us. If our existing manpower does not correspond with the jobs we have at hand, we outsource to other companies that are capable.

    What does it take to be awarded a project contract in Nigeria?

    I am not the government but from my own experience, I have observed that one needs to know the people that matter in government, then track records are also very essential, whoever is giving you a job wants to be sure that you have handled such in the past and you are also capable of doing it again. By and large, one must be positioned appropriately.

     

  • Local Content Act: How far can it go?

    Local Content Act: How far can it go?

    The Local Content Act designed to cede 70% of oil contract jobs to Nigerian firms, is seen as one strategy to push sustainable growth, create employment, value-addition and technology transfer. The initiative, when fully implemented, is expected to drive the economy, Daniel Essiet reports.

     

    To ensure oil and gas resources generate large, long-term economic benefits for the nation, including, skilled employment for Nigerians, the government promulgated the Local Content Act.

    As a result, the industry’s activities are coming under increased scrutiny to guarantee Nigerians access to its operations.

    Some positive outcomes have been achieved in the past two years. Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke said the Nigerian Content implementation has attracted foreign direct investments worth over $500million in the manufacturing of equipment components for the oil and gas industry.

    The minister spoke at the opening ceremony of the Practical Nigerian Content in Yenagoa, the Bayelsa State capital. She said the equipment components manufacturing initiative is an effective way to drive industrialisation of the economy, adding that the initiative has already created over 1,000 skilled jobs.

    Mrs. Alison-Madueke, who was represented by the Permanent Secretary, Ambassador Abdulkadir Musa, explained that the initiative which mandates original equipment manufacturers to partner with their representatives to set up facilities to manufacture or assemble equipment components in Nigeria, will also ensure the retention of spend within the economy on critical industry equipment, such as valves, pumps, electrical and instrumentation products.

    She expressed confidence that the initiative will ensure that about 30 original equipment manufacturers would have set up fully in Nigeria within the next five years. She described the Nigerian Content Act as the most important development in the Nigerian oil and gas , noting that the impact of the Act is being felt in several sectors of the economy.

    She said: “Nigerians now own land, swamp, jack up rigs and some proportion of deep offshore rigs. More Nigerians are acquiring anchor handling tugs, dynamic positioning platform vessels, line handling tugs and other larger vessels otherwise called category two vessels.”

    The Minister directed the Local Content Board to lead the industry to establish vessel and rig maintenance facilities so that the Nigerian economy will realise maximum economic benefits from asset ownership.

    In training and employment, Mrs. Alison-Madueke indicated that the Board has also introduced guidelines that will ensure that investments in the industry lead to employment generation and training opportunities.

    She said: “In the last two years, over 5000 Nigerians have been provided training and employment opportunities under the project based training scheme of Nigerian Content Development and Monitoring Board (NCDMB),” adding that the developments has always impacted other sectors of the economy.

    Also, the Nigerian National Petroleum Corporation (NNPC) has pledged to partner with the NCDMB in the oil and gas industry to ensure that the 70 per cent target set by the Federal Government, especially in the complex deep offshore operation is attained..

    The Group Managing Director, Andrew Yakubu said the participation of Nigerians in the industry, especially in the upstream sector, has substantially increased from a merger 10 per cent before the enactment of the law to more than 30 per cent, citing the recent USAN Deep Offshore Field development as one significant milestone in this respect.

    He said: “These percentages are even higher and in some cases have attained 100 per cent. The Utorogu Gas Plant Expansion Project, is an example,” he stated.

    The GMD listed other projects with high local content value to include the OB3 Pipeline Project, Escravos Lagos Pipeline Phase 2 and the Aba Depot and Okirika Jetty Rehabilitation Project.

    He explained that windows of opportunities to grow Nigerian Content exist in the upstream, midstream and downstream segments of the oil and gas value chain.

    Yakubu advised Nigerians to set up medium sized companies in both exploration and production in areas like well services engineering, measurement, mud and logging engineering services.

    He said the monetisation of the country’s natural gas endowments presented other opportunities for growing local content, just like the revamping/rehabilitation of existing downstream infrastructure, adding that the enactment of the Nigerian Content Law has positively impacted on the sector. He said the passage of the Petroleum Industry Bill will further enhance benefits from the Nigerian Content Act.

    Speaking during the signing of the MoU, the Executive Secretary of NCDMB,Ernest Nwapa, said the service companies would now be required to submit a pupilage programme committing to employ Nigerians as a precondition for participation in tenders.

    He said: “To qualify to play in the industry, you must demonstrate that you are running an employment programme. Companies will employ young Nigerians and put them through pupilage before the contracts are awarded, so they can work when the contract is awarded.”

    Nwapa explained that PETAN was chosen for this programme because its members were the most enterprising players in the service end of the sector and they were partnering voluntarily with NCDMB on the programme.

    He added that the Petroleum Technology Development Fund (PTDF) will also be involved in the programme.

    The availability of sufficient skilled labour to support the growth of the oil and gas industry continues to be of concern and hence a high value-adding priority in the local content act. The areas of greatest concern are in the supply of trades and skilled labour for building new projects and supply of adequately trained and experienced technical staff to operate new and existing projects over the longer term. Nwapa said the board is committed to providing full and fair opportunity to local suppliers.

    These include processes for identifying industry capability and for working with suppliers to enhance their competitiveness and maximise their participation. The industry, government and training providers have made a solid start at developing a suite of measures for responding to the expected growth in the industry’s skilledlabour requirements. However, much remains to be done in developing and implementing a number of these programmes.

     

    Challenges

    Some of these obstacles include the lack of capacity, in terms of human resource and infrastructure, to meet the challenges in the industry which is capital intensive, requires a great deal of infrastructure and a highly skilled labour force.As new projects have started construction, expectations have risen as to the volume of work likely to flow to local industry. Delays to contract awards or disappointment at not winning work considered to be within the capability of local companies, have prompted criticism of the industry and generated calls for government intervention.

    The phase of industry growth provides the opportunity for suppliers of goods and services to the resources sector to grow their businesses. However, suppliers need to ensure that they are internationally competitive and understand and meet projects’ requirements for cost, schedule and deliverability. Suppliers face the same cost pressures and skilled labour shortages as project proponents and are further disadvantaged by the high dollar.

     

    Funding

    One of these challenges is that local businesses servicing the oil and gas industry require a sound capital base because of the capital intensive nature of the industry. However, many local companies may not be in the position to afford this and the only way out is to source funding from banks which could affect the quality and efficiency of goods and services provided. Another option is to partner foreign companies to boost their financial capabilities but this will in a way defeat the purpose of the policy itself which seeks to encourage indigenous businesses to take up the challenge of providing goods and services for the oil and gas industry.

     

    Prospects

    The NCDMB and the Petroleum Technology Association of Nigeria (PETAN) has signed a Memorandum of Understanding (MoU) that will make creating employment for young and qualified graduates part of the conditions for winning oil and gas contracts.

    The two organisations signed the agreement dubbed-NCDMB-PETAN Capacity Building Internship Programme during the opening ceremony of the conference in Yenagoa.

    Nwapa signed for the Board, while PETAN Chairman, Mr Emeka Ene, signed for the service companies association.

    Under the MoU, PETAN companies will make commitments in the form of plans that they will recruit Nigerian graduates.

    The NCDMB will issue certificates to the service companies on receipt of the plans and the commitments will count alongside other variables in the evaluation of bids by service companies for industry contracts.

    Thereafter, NCDMB and PETAN will recruit qualified Nigerian graduates and expose them to various training and skills development workshops and on-the-job training to prepare them to work in the course of the contracts and gain employment.

    PETAN companies will then absorb the trainees once they win the contracts and retain them after the internship phase based on their performance.

    Part of the MoU reads: “PETAN Companies will recruit qualified Nigerian graduates as trainees attached to a contract for a period of one year.

    “PETAN companies will absorb the candidates after the programme based on their performance and available vacancies.”

    Growth in gas demand is being matched by equally strong growth in the gas resource base.

    Unconventional gas resources are now estimated to be as large as conventional gas resources .

    Investment in other forms of unconventional gas is gathering pace, made possible by new developments in technology.