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Nigeria's local content objective as it concerns the oil and gas sector is to domesticate up to 45 per cent of oilfield services in 2007 with a 70 percent target by 2010. As at today, it is clear that the nation is not near the targets.
“We all know we are very far from these targets,” says Shawley Coker, chairman of the Petroleum Association of Nigeria, PETAN, as he bemoaned the inability of Nigeria to reap from the potentials associated with the successful achievement of the Nigerian Content Development policy. Odein Ajumogobia, Minister of State for Energy (Petroleum), affirms that though the Nigerian content level in the oil and gas sector had increased since the Federal Government introduced the policy in 2005, “the present level is still below the policy target of some 50 to 55 per cent by 2008”.
The government introduced the policy to create a platform for the country to maximize the opportunities in the oil and gas sector as well as improve the linkages of the sector with the domestic economy.
The need for this policy could be best understood in the context of the fact that since the industry commenced operations 50 years ago, the nation had built four refineries, three petrochemical plants, over 5,000 kilometres of pipelines, six liquefied natural gas, LNG, trains, four Floating Production Storage and Offloading, FPSO, vessels, hundreds of oil platforms, thousands of wells and flowstations, and millions of square kilometres of seismic data had been acquired, while some $300 billion had been generated as income in the last 20 years alone, yet, the country has little to show in terms of local capacity and capability for indigenous participation. This is also happening in a country where annual oil industry expenditure stands at some $12 billion.
The Nigerian content policy aims at correcting this situation, which Ajumogobia decribes as an 'anomaly'. A 23 domiciliation guidelines by the Nigerian National Petroleum Corporation, NNPC, set out the scope of services that must be performed in Nigeria if the government's target of 70 per cent by 2010 is to be realized. These areas included engineering design, fabrication, wells and drilling, operations and maintenance, manufacturing, shipping and insurance as well as workforce development.
While the oil exploration and producing companies operating in the country beat their chest as to having made meaningful progress in some of these areas, industry watchers say the truth is that their performance has been woeful.
John Chaplin, chairman and Managing Director, Exxonmobil Nigeria Upstream Companies, disclosed at the second Nigerian Content Consultative Forum last week in Lagos that Mobil Producing Nigeria, operator of the joint venture with the NNPC, has a workforce comprising more than 85 percent nationals while Esso Exploration and Production Nigeria, operator of Erha deepwater development, is operating with a staff that is 85 percent Nigerian.
“On the Erha project alone, Nigerian personnel have undergone technical training and international assignments resulting in equivalent of 55 working years of training,” he said, adding, “Our new engineers and geologists go through a two year specialized foreign training to develop the skills necessary to have successful carriers and be internationally competitive”. A latest case of their exposure of a Nigerian to global competitiveness, according to him, is the appointment of a Nigerian as the operations superintendent for the company's US east operations.
He also highlights other efforts at local content by his company to include award of Engineering Services Agreement, ESA, to seven Nigerian companies, use of Nigerian banks only to raise $200m for the Oso Natural Gas Liquids, NGL, supplemental funding, award of engineering procurement and construction management for integrity-related projects to a local company, DeltaAfrik, fabrication of Erha deepwater buoy and award of satellite field wellhead platform to Niger Dock and Dorman Long. Also included is the production of linepipes by Abuja-based SCC Mill through technical support from ExxonMobil, purchase of 3,000 feet of 13-3/8” and 11,000 feet of 7” Threaded OCTG pipes locally, domiciliation of reservoir management studies in Nigeria, among others.
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