It was meant to boost local capacities and capabilities. It was meant to create more jobs for Nigerians, prevent capital flight and boost the economy of the country. Most multinational companies have struggled to meet the federal government’s minimum local content target of 75 per cent for all works and contracts to be undertaken in or on behalf of all oil and gas companies operating in the Nigerian oil and gas industry. But a novel concept initiated by Shell in collaboration with Petroleum Technology Association of Nigeria (PETAN), The Global Nigerian- Aberdeen, is fast-tracking the concept.
IN a bid to ensure that Nigerian companies were involved in the oil and gas sector, the Local Content Act was enacted in 2010 and is also embedded in the Petroleum Industry Bill (PIB) that is presently before the National Assembly.
The Local Content Act calls for a deliberate utilization of Nigerian human and material resource and services in the exploration, development, exploration, transportation and sales of Nigerian crude oil and gas resources.
To meet this target a number of processes are now in place including a contract evaluation and award criteria, which favours bids, which meet or exceed the minimum local content target. The Nigerian government, via the Nigerian Content Division (NCD) of the Nigerian National Petroleum Corporation (NNNPC), has issued a list of 23 categories of work, which must be executed in Nigeria.
The objectives of local content within the Nigerian context are to: increase value-added content, thereby contributing to national economic development as well as that of our stakeholders, partners, clients, company, employees and contractors; and transfer technology and develop local know-how.
President Goodluck Jonathan has on several occasions emphasized that government alone cannot create enough jobs for the entire population and the private sector is known everywhere to be the real employer of labour.
A leading player in Nigeria’s private sector and oil and gas, the Shell Petroleum Development Company of Nigeria Limited (SPDC) and Shell Nigeria Exploration and Production Company (SNEPCo) in collaboration with Petroleum Technology Association of Nigeria (PETAN) and Nigerians in Diaspora Organisation (NIDO) United Kingdom (UK) Chapter are fast tracking the process with the institution of ‘The Global Nigeria- Aberdeen.’
The Global Nigerian-Aberdeen Forum is an initiative of Shell Nigeria Exploration Production Company Limited aimed at fostering value-driven partnership between Nigerian companies and their foreign counterparts and to facilitate an interactive session to explore opportunities for partnership, employment and synergy.
PETAN is a 22-year-old umbrella organization of Nigerian technical industries operating in the oil and gas industry. PETAN is non-profit making organisation with the primary objective of building the development and domestication of Nigerian technology in the oil and gas sector.
SPDC started its Indigenous Contracting Policy in 1998 and this has evolved into a Nigerian Content development strategy with the goal of facilitating the development of competencies, capabilities and competitiveness of Nigerian contractors.
General Manager Nigerian Content Development for Shell, Igo Weli, said The Global Nigerian- Aberdeen Forum is basically aimed at building a framework that will enable young Nigerian experts in Diaspora to participate in Nigerian content development. “So what we are doing basically is to bring those Nigerian experts into contact of Chief Executive Officers (CEOs) of Nigerian service companies to form synergy. That is why we are here,” he said.
Chairman, House of Representatives’ Committee on Local Content, Mr. Asita Honourable, told The Guardian in an exclusive interview: “Essentially I am here to support Shell because Shell is one of the companies in Nigeria that has shown sincere commitment to the growth of indigenous companies in Nigeria. Again to see if I can put a word or two of encouragement to Nigerian experts in UK to build alliances and partnerships with Nigerian companies because I believe that will reduce the volume of technical work that is given to expatriates. I believe that if strong partnerships are established in core technical areas, we will be able to reduce capital flight through the oil and gas sector.
“The oil and gas industry is the highest earner for Nigeria. Unfortunately, most of the funds generated in the industry are spent outside Nigeria. So much money goes to procurement, especially of steel products. Now, if we are able to reduce the volume of money that we spend outside, it means more money will be available to spend in the country and it has a multiplier effect on the economy. So, it will grow the economy. It means that more jobs will be done in Nigeria, more employment opportunities will be created directly and ancillary businesses will also grow from there. So, it is directly and indirectly going to bring so much development to the country.”
Weli added: “What informed it is that for us to achieve our objectives in Nigerian content development, we need to tap all the resources we have as a country. We are all aware that all over the world we have Nigerians in various disciplines that are actually excelling, experts doing very well.
“What we feel is that for us to achieve our Nigerian content objectives quicker, we need to find a way to tap into this huge resource. You know the Nigerian content Act has determined targets for different work categories in the oil and gas industry. But in some of those areas we have gaps in country. We don’t have enough in country capacity yet. But we have young Nigerians outside of the country who are working in the same oil and gas industry who have this experience, who have this knowledge, who are very much verse in how to meet the global requirements.”
Global Local Content Manager for Shell, Simbi Kesiye Wabote, who is based in Dubai looking after the local content challenge across the globe told The Guardian: “Before my current role I used to manage local content for Shell companies in Nigeria as a general manager in charge of it. We started this journey as a company quite a long time ago even before the government started thinking about it. We believe as a company that local content is good for business. It ensures your security of supply, it also secures your license to operate and these days it more of your license to even acquire more assets.
“Shell has been in this journey for a while and Nigerian government saw an opportunity to come unto the frail to push the agenda of local content. The bottom line of local content is about job creation it is in-country value addition. How do we ensure that the owners of the resources participate effectively in exploiting the resource?
“It has been a very tough journey because back in Nigeria there are challenges in terms of ensuring that you have the right kind of skills, ensuring that the capacity and capability of local contractors is up to scratch to meet our very high tech industry. Most importantly in terms of job creation, as an Exploration and Production (E and B) company we don’t employ too many people because it is a high technology kind business we do.
“Nigerian local content has gone through evolution starting from when the National oil company issued a directive in terms of local content culminating into the regulation and then came the local content law enacted by the National Assembly. Shell in itself is prepared long time ago to the legislation that was coming even though we felt it is a bit steep because of the challenges of capacities and capability in the country, we have been able to take the bull by the horn and lead the industry in Nigeria in local content development.”
Chairman PETAN, Emeka Ene, said the Association in partnership with Shell and United Kingdom (UK) Trade and Investment is trying to explore the opportunities of human capital in Nigeria.
Ene said The Global Nigerian- Aberdeen Forum came out of the need to grow human capital and the ideas and innovation that exists in the oil industry particularly Nigerians in the Diaspora linking with entrepreneurs and companies in Nigeria to continue to grow the development of the industry in the country.
The PETAN Chairman said: “You have to realize that in countries like China over 70 per cent of Foreign Direct Investment (FDI) that came into the country flew in through the Chinese in the Diaspora. So in a way it is important that we create the linkages between the Nigerian oil industry and Nigerians in the industry outside Nigeria. This is a very important step.”
How far has Shell gone in meeting its target in Nigeria content initiative in oil and gas?
Managing Director, SNEPCo, Chike Onyejekwe, said: “Let me say something upfront. Nigeria content initiative or law did not take us by surprise. Nigeria content was already our way of doing business even before the Nigeria content law came. We have been in it for a long time. When Bonga started production in 1995 we sent out a lot of our staff, engineers to Houston, Aberdeen and co to get trained.
“Today as I am talking to you more than 90 per cent of our staff who operate Bonga is Nigerians. Deepwater operation is not something you pick people from the streets. So when people talk about Nigerian content for us in Shell we preceded the Nigeria content. We started earlier than that. So it is a journey that has become part of our business, it has become part of our resolve to grow Nigerian business and I am happy and proud to say openly without any contradiction that Shell is number one International Oil Company (IOC) in terms of Nigeria content development and status today. The brand field maintenance, which a huge activity job that is going on in Bonga is done by a Nigerian company.”
Information from The Guardian was used in this report.