Over the last five years, the Nigerian Oil and Gas Industry Content Development Act (NOGICDA) has arguably been the single most impactful piece of legislation for the Nigerian oil and gas industry since the Petroleum Act of 1969.
The NOGICDA prescribes that indigenous operators be given first consideration in the awarding of contracts and licences, first consideration for training and employment opportunities and preference must be given to domestically manufactured goods.
At a time of shifting global energy markets, oil price at its lowest since February 2009 and the high operating costs, the implementation of Nigerian Content is all the more crucial for wealth creation and capital retention for the sustenance and growth of the Nigerian economy.
The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Denzil Amagbe Kentebe, who will be addressing the oil and gas industry in October at the Practical Nigerian Content Forum (PNC) in Yenagoa noted:
“The profile of the Nigerian oil and gas industry has gone through greater transformation than seen in previous decades; there are more indigenous players in the industry than ever before, a wider pool of skilled Nigerian professionals and indigenous asset ownership has increased steadily as has the domiciliation of manufacturing and fabrication.”
And indeed the enactment of the NOGICDA added impetus to the local capacity development initiatives some of the multinationals were already undertaking and galvanised others to work towards compliance.
In just one year Shell Producing Companies in Nigeria awarded $2.4bn worth of contracts to indigenous companies and Total launched the TOTAL Supplier’s Financing Scheme worth $7.5bl to be made available through Nigerian banks to bridge the gap between local vendors/suppliers and financial institutions.
Indigenous operators have also emerged as key players as a new dawn has broken for the Nigerian oil and gas industry. Divestment of onshore assets by the likes of ENI, Chevron and Exxon spurred by the NOGICDA and the incessant pipeline vandalism and oil theft, provided the opportunity for indigenous producers and service providers to rise to the occasion and in no small measure; during Q2 of 2014, Nigerian firms Taleveras and Aiteo placed the highest bid for Shell’s OML 29 at $2.85bl.
In the same year, Oando Energy Resources completed its landmark acquisition of ConocoPhillips’ onshore and offshore businesses in Nigeria for $1.5 bn.
By the third quarter of 2014, it was recorded that $5 billion was contributed to the country’s revenue as a result of the NOGICDA. It was also noted that Nigerian Content in the Nigerian oil and gas industry grew from around 5 percent to 18 percent, while 89.2 percent of marine vessels were either built in Nigeria or owned by Nigerians and domestic fabrication facilities had increased by 40 percent.
Kentebe will be summarising the progress of Nigerian Content and discussing solutions to challenges that remain at the upcoming Practical Nigerian Content Forum, taking place from 20-22 October in Yenagoa. Government representatives including senior management from NCDMB and PTDF and industry players including Oando Energy Resources, Shell Petroleum Development Company of Nigeria, Bell Oil & Gas, Statoil, Marine Platforms, Platform Petroleum, will convene at the Forum to discuss plans to ensure Nigerian Content growth and in country wealth retention for the next three to five years.
Hosted by Orleans Invest, Forum participants will also visit the Onne Oil and Gas Free Zone – the only free zone in the world dedicated exclusively to the oil and gas industry, to witness Nigerian Content in action. Facilities to be visited include those of; GE Oil & Gas, Tenaris, West Atlantic Shipyard, WAMS Machinery and Services and Deep Offshore Services amongst others.
“I look forward to welcoming all stakeholders across the oil and gas industry for what will be a very productive and enjoyable meeting,” Kentebe said.