By Kiana Wilburg
Industry analysts acknowledge that developing skilled local workers and competitive suppliers able to perform to the exacting standards of the elite operators of the oil sector is a difficult—and time-consuming—process.
Nevertheless, members of the International Petroleum Industry Environmental Conservation Association (IPIECA) find that the time and effort invested in developing robust local content programmes have been worthwhile in terms of developing a capable workforce and a competitive base of local suppliers.
Headquartered in London, IPIECA said that this can be achieved by ensuring that four key factors are considered in the implementation of the country’s local content policy. It listed these to be: contextual analysis; starting early; a long-term perspective; and free-flowing, transparent information streams.
With respect to contextual analysis, IPIECA said that this is needed to ensure a thorough understanding of the local context with emphasis on demand-side requirements, supply-side capabilities and barriers. The Association said that this enables a company to manage the challenges that limit local worker and firm participation.
Speaking on the “Starting early” factor, IPIECA said that there are long lead times in developing local capabilities. Therefore, decisions made early in the project life cycle have significant implications.
With regard to the factor on taking a long-term perspective, IPIECA said that local content development can be costly and time-consuming in the short term. The Association said that bearing this in mind from the start facilitates the achievement of more realistic and sustainable outcomes.
Turning its attention to free-flowing, transparent information streams, IPIECA said that a steady supply of information enables local firms and workers to understand opportunities and requirements, and supports client companies in understanding local capabilities. In this regard, the Association said that having an effective communications programme in place is a low-cost exercise that helps markets to function better and often reduces the requirements for other more costly interventions. It said, too, that transparency throughout is fundamental to the integrity of the process and the perceptions of stakeholders.
To further cement its case, IPIECA showed how Nigeria was able to enhance fabrication capabilities of its locals so that they could better participate in the industry.
The Association said that in 2000, the Governments of Norway and Nigeria commissioned a detailed industry study. Its aim was to assess the enabling environment for private sector development in the Nigerian upstream petroleum industry and to recommend strategies to improve the capabilities of local supply and service companies.
The report that resulted, Enhancement of Local Content in the Upstream Oil and Gas industry in Nigeria, identified the fabrication industry as having the highest potential for increasing Nigerian content. The study based this conclusion on analysis of the potential for increasing employment and locally manufactured equipment. The study led to the development of the EFCN Project.
IPIECA said that this is now working to increase the competence and capabilities of small- and medium-sized fabricators in Nigeria, enabling them to better compete for business from the oil and gas industry.
Furthermore, the Association said that the International Finance Corporation arm of the World Bank manages the project, which is funded on a 50/50 basis by Nigeria and Norway.
It said that on the Nigerian side, the main contributors are the Nigerian National Petroleum Company and the Petroleum Training Development Fund. IPIECA explained that the Norwegian contribution is split between the Norwegian Agency for Development Cooperation and industry partners which include Statoil, Aker Solutions and FMC Technologies.
IPIECA said that the execution phase of the project started in early 2008. During the course of two years, IPIECA said that the quality management standards of seven small- and medium-sized Nigerian fabricators were assessed. It said that the results of this assessment are now forming the basis for a two-year training programme.
The Project also established a Fabrication Training Centre (FTC) in Lagos. Officially opened in 2009, IPIECA said it included classrooms and welding workshops. The FTC provides the EFCN’s technical courses.
Work is ongoing to establish sustainable governance and participation to ensure that the FTC has a long-term future after completion of the EFCN project.
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