On October, 15 the African Research Institute, ARI hosted a debate on how Africa’s extractive industries can be leveraged to spur economic diversification. The governments of established hydrocarbon producers such as Nigeria, and newcomers like Kenya, were seen as taking proactive steps to realise the potential of natural resources through local content policies.
International oil and gas companies also increasingly recognise the need to invest in local value-addition; provide opportunities for training, employment and entrepreneurship; and create shorter supply chains.
The Nigerian Content Development and Monitoring Board, NCDMB, with the responsibility to ensure growth of local content in the country has consistently reiterated its commitment to achieving its target of 70 per cent.
The Board would always vow to ensure full implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010.
The executive secretary of the Board, Mr Simbi Wabote, recently said at the 2023 Nigeria Oil and Gas (NOG) Energy Week in Abuja that the Board has already successfully grown local content implementation in Nigeria’s oil and gas sector from 26 per cent in 2017 to an impressive 54 per cent in 2002.
Speaking at the NOG Energy Week, with the theme: “Nigerian Content Role in Achieving Energy Security,” Wabote said the implementation of the Act would help to drive development and utilisation of in-country capacities.
According to date obtained by our Correspondent this year shows that local content in the oil and gas sector grew from 26 per cent to 54 per cent in the last five years, a rise by about 107 per cent during the period.
The law setting up the Board was passed in 2010 by the Goodluck Jonathan government, following the seeming domination of the sector by expatriates. The organisation was thereafter charged to ensure the domiciliation of activities in the sector.
Wabote, at the NOG, conference stated that the organisation has given effect to the provisions of the law by launching the 10-year strategic roadmap in 2018 to drive the attainment of 70 per cent Nigerian content in the Nigerian oil and gas industry by 2027.
“In the last five years of implementation of the strategic roadmap, the board has more than doubled the level of Nigerian content in the industry by moving the needle from 26 per cent in 2017 to 54 per cent in 2022,” the executive secretary noted.
According to him, another key function of the Board as stated in Section 70(d) mandates the board to supervise, coordinate, administer, and monitor the development of Nigerian content as specified in the Schedule to the Act.
He further reminded operators that it was important to get the Nigerian Content Compliance Certificate (NCCC) signed off for every contract awarded by the operators.
“I therefore implore all operators to ensure that the NCCC is signed off with the board to avoid delays in getting related approvals or getting sanctioned for implementing contracts without the required regulatory certification,” he stated.
Wabote disclosed at the end of June 2023, the NCDMB had 290,000 individual records, 10,400 service company records, 107 operator company records, and about 600 Marine Vessel records contained on the board’s Joint Qualification System (JQS) portal.
He reiterated that the Board has embarked on several initiatives, including funding support and other initiatives that are skewed towards developing both human capital and infrastructure, including the $300 million Nigerian Content Intervention Fund, the $100 million matched fund, the $50 million R&D Intervention Fund and the $50million manufacturing fund.
Due to the challenges identified in the area of manufacturing, the board, he said, is also providing assistance to local businesses by developing the industrial gas parks to provide modern infrastructure using the to support in-country manufacturing.
“The industrial parks are at various stages of development in seven states namely: Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, and Ondo States.
“The NOGAPS Industrial Parks at Odukpani in Cross River State and the one at Emeyal-1 in Bayelsa state are both at advanced stages of completion and will commence operations in 2024. We have commenced allocation of manufacturing shopfloors and services plots to qualified applicants,” he disclosed.
Just on Tuesday October 3, as he hosts the Guild of Corporate Online Publishers to a breakfast in Abuja, Wabote, said the Board is poised to redouble its efforts to deepen Nigerian Content in the oil and gas industry and the linkage sectors and to continue to contribute to the growth of our national economy.
Listing some of the Agency’s initiatives he said one of the most and successful initiatives is the Service Level Agreement (SLA) it has with key entities in the Nigerian oil and gas industry.
“We initiated this concept in 2017 to shorten the contracting cycle in the Nigerian oil and gas industry from an uncertain 2 to 3-year period to 6 months.
“Our goal was to spur the speedy development of new oil and gas projects, ensure compliance with the provisions of the Nigerian Content Act, and guarantee timely approvals of Nigerian Content documents.
“Our objectives were also to facilitate ease of doing business, set new standards of quality service delivery in the public and private sectors and provide evidence that the Nigerian Content Development and Monitoring Board (NCDMB) is not a mere regulator, but essentially a Business Enabler.”
The executive secretary said that these aspirations are even more urgent today to arrest the monumental decline in the nation’s oil production numbers and to support President Bola Tinubu in every possible way to achieve the economic policies in his Renewed Hope Agenda.
He, however, pointed that contrary to the popular view, the unfortunate stealing of our crude oil by vandals is not the only reason for Nigeria’s low production numbers and the decrease in our foreign exchange earnings.
In his thoughts the nation’s production deficit is partly caused by the lack of major investments in the past decade, declining oil production from aging oil fields, and the clamour for energy transition which caused international oil companies to cut back on new projects.
“There is also the emergence of attractive oil-producing nations in Africa and across the globe, leading to intense competition for investment capital. These challenges were exacerbated by our inexplicable delay in the enactment of the Petroleum Industry Act and of course the long contracting cycle time.
“At the NCDMB, we took bold steps to use the SLA to cut down time in all our touchpoints during pre-qualification, bidding, and award stages of the oil and gas tenders, starting with Nigeria LNG Ltd in June 2017.
“That SLA with the Nigeria LNG was the first of its kind between a regulator and another entity in the Nigerian oil and gas industry. The implementation ensured that we broke a record for the shortest contract approval period,” Wabote noted.
He said that before instituting the SLA, the Board had already introduced the 15-DAY Rule to the industry in 2017, where it promised to respond within 15 working days to any formal request for approvals that relate to oil industry projects execution.
The 15-Day Rule also permitted operators to go ahead with their projects if we fail to respond to their request after 15 days.
“As further proof of our commitment to a short contracting cycle, we achieved a 14-month contract approval record on the Zabazaba and Etan deepwater project which was promoted by the Nigerian Agip Exploration, in partnership with SNEPCo. We had accomplished this record before the project was suspended due to non-technical reasons.
“We are extremely delighted that our SLA template has been adopted across the entire oil and gas industry through the Memorandum of Understanding (MoU) and Service Level Agreement (SLA) we signed last week with the Nigerian National Petroleum Company Ltd (NNPC Ltd) and five international oil-producing companies.
“Other participating companies in the SLA included Shell Petroleum Development Company, ExxonMobil, Chevron Nigeria, Nigerian Agip Exploration and Total Exploration and Production Nigeria.
“We also have a separate SLA with the Indigenous Petroleum Producer Group (IPPG), which we signed in October 2018.
“Last week’s SLA signing is the climax of the adoption of the initiative and we commend the Management of the NNPC Ltd for their participation.
“With the position of the NNPCL as the senior partner in the joint ventures (JV) and concessionaire of the production sharing contracts (PSC) arrangements, the chances of achieving the 6-month target period and other aspirations of the SLA look very bright,” he noted.
The Indigenous Growth Trend
Wabote, is an apostle of decency and transparency and believes in the growth of Nigeria.
But he is now worried that his efforts are being truncated by those he has shouldered the responsibility to support.
He was weak and traumatized when he tried to digest the theme of his engagement with GOCOP which is “Sustaining Nigerian Content Amidst Divestments to Indigenous Oil Companies: The Role Of The Media.”
He said the Board decided on the theme because of the growing profile of Nigerian operating companies through their recent acquisitions or planned acquisitions of key assets divested by some international oil companies.
Currently, he said two major divestments are on the cards, which would change Seplat Plc and Oando Plc from midsized players into big-time operating companies.
Seplat PLC is hoping to conclude the acquisition of the entire share capital of Mobil Producing Unlimited (MPNU) from ExxonMobil Corporation, a deal that would triple Seplat’s production and add 95,000 barrels of oil equivalent per day.
Similarly, Eni signed an agreement last month to sell Nigerian Agip Oil Company Ltd to Oando Plc, a deal that will include NAOC’s 4 onshore blocks, the Okpai 1 and 2 power plants, and two onshore exploration leases. The transaction will double Oando’s reserves to 996 million barrels of oil equivalent.
What is playing out is the implementation of the oil majors’ strategic move to sell down their onshore assets in Nigeria and concentrate on their offshore operations, where they retain a competitive advantage and contend with minimal human interferences.
He said the implication is that we should expect other majors to soon offer their onshore assets for sale, while many other Nigerian independents will have a shoe-in.
The ongoing and planned divestments are big accomplishments for Nigerian Content development. They are bold statements that Nigerian indigenous operating companies have come of age and have acquired the technical, managerial, and financial capabilities to play in the big league.
He went on to say, “We are proud that we have moved from near zero participation in the oil and gas sector to the point that our indigenous operators such as SEPLAT, AITEO, EROTON, and others are now responsible for 15 per cent of our oil production and 60 per cent of our domestic gas supply.
“With this planned acquisition, the share of local firms in crude oil production could reach 30 percent or more in a short while.”
According to him, It is heart-warming to see our local operating companies deploy ingenious techniques to double and sometimes triple production volumes from their acquired assets and apply homegrown solutions in addressing host community concerns.
The Sabotage
Bewildered Wabote, told the media, that beyond the positives, it must also be observed that the divestment of producing assets to indigenous players poses significant challenges for the implementation of the Nigerian Oil and Gas Industry Content Development Act.
The worries are predicated on research findings and our experience in implementing the NOGICD Act in the past 13 years which indicates that indigenous firms, especially the indigenous operating companies are serial violators of the Nigerian Content Act.
In many instances, international operators tend to comply with the Nigerian Content because it is in their DNA to obey laws or they have to show evidence of compliance to their home offices.
On the contrary, he said some many indigenous companies feel entitled and assume they can get away with non-compliance. At other times they want to save costs to the detriment of the local economy.
Said Wabote, “Some of indigenous have also argued that they should be excluded from the implementation of the NOGICD Act since their primary investors are Nigerians. Some of the common violations by indigenous firms range from executing projects without obtaining prior approvals, non-execution of mandatory Human Capacity Development Initiative (HCDI), Non-Utilization of vendors without approved Nigerian Content Equipment Certificate (NCEC) and Utilization of the services of contractors that are not registered on the Nigerian Oil and Gas Industry Joint Qualification System Portal (NOGIC JQS) and several other violations.
Other times, the firms fail to remit their 1 per cent mandatory Nigerian Oil Content Development Fund and engage expatriates without requisite approvals from the Board or even award contracts to foreign firms, even when other Nigerian companies can execute.”
Feeling pains he said, “It is very surprising to see local companies undermine and flout the Nigerian Content Act despite being the immediate beneficiaries of the Nigerian Content policy, thereby causing capital flight, loss of jobs, and opportunity for technological development.
“While we commend the indigenous companies that are gearing up to acquire the divested assets, it is pertinent to remind all stakeholders of the industry that the provisions of the Nigerian Content cover all entities and all activities connected to the Nigerian oil and gas industry.”
However, he said the Board will continue to study the changing ownership dynamics in the industry and will continue to partner with the industry stakeholders to institute regulations that will ensure that the increasing footprints and stakes of indigenous production companies will not lead to a reduction in Nigerian content compliance and participation of Nigerians in the industry.
He solicited the media to continue its advocacy for Nigerian Content compliance by all stakeholders of the industry and remember that the Nigerian Content implementation is a marathon, and the Board will require all hands on deck to ensure that the benefits of the oil and gas industry is retained maximally in Nigeria.
