The Nigerian Content Development and Monitoring Board (NCDMB) has said that out of the $20.4 billion industry spend on key projects between 2016 and 2020 in the Nigerian oil and gas industry, 42 per cent local content was achieved.
The aggregate industry spending, which was captured from the projects covered by the Board’s Monitoring and Evaluation Directorate focused on five key areas which include Engineering, Procurement, Fabrication, Project Management, and Services.
The Executive Secretary of NCDMB), Engr. Simbi Wabote disclosed this during his opening keynote address at the 10th Practical Nigerian Content (PNC) Conference held at the Board’s headquarters in Yenagoa, Bayelsa State from November 29 -December 2, 2021, with the theme “Driving Nigerian Content in the New Dawn of the Petroleum Industry Act (PIA)”.
Listing the top industry spend, Wabote said that $8.07bn was spent on Fabrication representing 39 per cent of spending; $4.74bn on Engineering services representing 23 per cent of spending, and $5.67bn on Procurement of manufactured materials, representing 28 per cent of spend.
Others include $1.18bn on Services representing 6 per cent of spend and $746m on project management representing 4 per cent of spending.
“The top industry spend are $8.07billion on fabrication representing 39 per cent of spending; $4.74billion on Engineering services representing 23 per cent of spend, and $5.67billion on Procurement of manufactured materials, representing 28 per cent of spend.
“While the low spend areas include $1.18billion on Services representing six per cent of spending and $746million on project management representing 4 per cent of spending,” Wabote said.
“That is why we are keen to ensure that the established in-country fabrication yards are utilized for sanctioned projects such as NLNG Train-7 as well as drive local manufacturing of goods such as chemicals, hardware, spares, accessories, and other consumables via our commercial venture partnerships and our oil and gas industrial parks. Overall, we believe we are on track towards the 70 per cent Nigerian Content target but we will need the support of all industry stakeholders to make it happen,” he added.
According to him, the Nigerian Content performance in Engineering is above the 70 per cent target. He, however, noted that for the industry to achieve 70 per cent local content by 2027, in line with the Board’s 10-Year Strategic Roadmap, the areas for focus included fabrication and procurement of materials.
Wabote also informed that the Board’s Oil and Gas parks in Cross River and Bayelsa states would be commissioned in the 4th quarter of 2022. To ensure reliable power generation and distribution at the Parks, the Board signed an arrangement with the Gas Aggregation Company of Nigeria (GACN) and INFINI Power Limited at the Conference for the provision of reliable power to the two industrial parks.
The NCDMB boss also signed the shareholder’s agreements on behalf of the Board with the Managing Director of Amal Technologies for setting up a state-of-the-art factory to produce hardware, embedded systems, and other technological devices in Nigeria. The partnership is expected to foster Research and Development.
In his address, the Minister of State for Petroleum Resources, Timipre Sylva called on NCDMB, to remain focused on its pursuit to achieve 70 per cent local content as contained in its 10-Year Strategic Roadmap, adding that the signing of the PIA would spur the rapid development of projects in the country’s oil and gas industry.
Represented by the Director of Human Resources, Dr Famous Eseduwo, he said, ”The great accomplishments of the Board as well as the activities of other key agencies under the Ministry of Petroleum Resources have positioned our Ministry as a top performer in the Presidential Scorecard, assessed by the Office of the Secretary to the Government of the Federation”.
He outlined the Nigerian Oil and Gas Parks Scheme (NOGAPS), the Brass Petroleum Products Terminal Limited, BPPT, the Brass Fertilizer Project and Methanol Plant, Gas Processing Plant, Modular Refinery, among others, as some of the strategic actions being taken by the Federal Government to industrialize Bayelsa State.
“It deserves to be mentioned that PNC has continued to grow every year because NCDMB has consistently broken new grounds with the implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
“The great accomplishments of the Board as well as the activities of other key agencies under the Ministry of Petroleum Resources have positioned our Ministry as a top performer in the Presidential Scorecard, assessed by the Office of the Secretary to the Government of the Federation”, he said.
PIA: Niger Delta Unsure of its Place in Equitable Sharing of Resources
Declaring the Conference open, Bayelsa State Governor, Senator Douye Diri, stated that the recently signed PIA has made the Niger Delta state and its people unsure of their place in the equitable sharing of their resources, while urging the Federal Government and key players in the oil and gas industry to take steps towards addressing areas of concern.
He noted that one sure way of evolving a gratified local content equation is for the Board to activate the tenets of its law, in engaging the oil majors appropriately, to have their offices relocated to their operational bases.
“Given the provisions of the Petroleum Industry Act which has gotten the host communities and by and large the entire Niger Delta and in particular Bayelsa State, unsure of their place in the equitable sharing of their resources, one sure way of evolving a gratified local content equation is for the Board to activate the tenets of its law, in engaging the oil majors appropriately, to have their offices here in Bayelsa State.
“They should also engage the local businesses more and consequently, take a lot of unemployed youths off the streets. This is the essential ingredient of local contentment and the bedrock of Nigerian content and the PIA.
“The Nigerian Content Law and PIA, are analogous to the foundation and therefore, if the objectives for these Acts will be attained, it is highly essential in discussing the theme for the Forum, to be mindful of some foundational realities; including peace and security, which remain irreducible minimums, to the survival and success of businesses.
“To ensure peace and security for a conducive business climate to thrive and create a multiplier effect for massive growth in the Niger Delta the essence of local contentment must be vigorously pursued.
“There is a need to help build the local environment that supports oil and gas business. The Nembe/Brass Road is a metaphor for how the indigenes and host communities have been overlooked in the allocation of resources, even when we collectively, stand to gain more from collaborating,” he said.
FID on Key Projects to be Taken in 2022
The delay in the passage of the Petroleum Industry Bill (now PIA) led to the suspension of key upstream development projects in Nigeria. Most of the IOCs had wanted issues around uncertainties in terms of investment in the country addressed. However, speaking on a panel session at the conference, the Group Executive Director, Upstream, Nigerian National Petroleum Corporation (NNPC), Adokiye Tombomieye, said that Final Investment Decision (FID) can be taken on these projects in 2022 with the assent of PIA by the President, current efforts being made to improve the security situation, and the utilization of dispute resolution mechanism as contained in the Nigerian Upstream Cost Optimisation Programme (NUCOP) initiative of the Federal Government.
Represented by the Group General Manager, National Petroleum Investment Management Services (NAPIMS), Bala Wunti, he identified energy transition, energy investment, and energy crisis as key impediments confronting the oil and gas industry.
“Whether we go ahead with the energy transition or not we have already created a monster and that monster is that we now have finance activists, investment activists that have come into the space to create problems for energy investment.
“Energy investment is being attacked and will continue to be attacked in the fossil fuels industry. Investment capital is now very discriminatory against fossil fuels, but not only that, it has become more and more impatient.
“Everybody wants to invest today and recoup the money tomorrow. Nobody wants to invest that money for 10 years, but I need to let you know that the upstream space is not a day’s job. You will invest today and wait for 10 years. These issues have created an impediment to investment,” Tombomieye explained.
Some of the FID candidate projects include Shell’s Bonga South-West and Aparo, which is expected to add about 225,000 barrels per day (BPD); Bonga North (100,000bpd); Eni’s Zabazaba-Etan (120,000bpd); Chevron’s Nsiko (100,000bpd); ExxonMobil’s Bosi (140,000bpd); Satellite Field Development Phase Two (80,000bpd) and Ude (110,000bpd).
The combined estimated cost of these projects is put at around $100 billion. They are expected to boost the country’s production by as high as 875,000 BPD and increase revenue by about $1.5 billion.
The Oil Industry Needs to Remain Efficient
Despite evidence that the world is likely to face an energy crisis with the dwindling investment in the upstream end, there is increasing advocacy against the funding of fossil fuel projects. Big lenders and oil firms are under pressure. Some weeks back, Moody, a consultancy, had estimated that about $500 billion investments are needed in the upstream end to avert the energy crisis.
Speaking at the Conference, the Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe said that the global oil and gas industry need to remain efficient and innovative in responding to the emergence of renewables.
“As we forge ahead, it is critical for the global oil and gas industry to remain efficient and innovative in responding to the emergence of renewables, to sustain the relevance of hydrocarbon resources in the global energy mix.
“Local content development and research is a major driver of most productive economies and a trigger for socio-economic development.
“It is a multi-professional area that requires all stakeholders to be closely synergised for effectiveness towards achieving national goals and objectives,” he said.
Represented by the Senior Technical Adviser NUPRC, Abel Nsa, he noted that since the enactment of the NOGICD Act, the country has recorded so many positives in terms of building indigenous capacity, adding that this had helped in stimulating the local economy, businesses, creation of jobs, and retention of a significant percentage of annual industry spend in-country.
Komolafe called for the development of strategies for the sustainability of Nigerian content policies in the oil and gas, stressing that the signing into law of the PIA had created the much-desired stability to the country’s oil and gas industry, which would boost investors’ confidence.
According to him, the NOGICD Act had helped the development of indigenous capacity, a resurgence of new businesses, creation of jobs and retention of wealth in the country, adding that it was critical for stakeholders to devise strategies to optimise business recovery and sustainability of Nigerian Content policies in a post-pandemic era.
“This is to foster economic growth and development in the energy sector and the oil and gas value-chain for the benefit of all Nigerians and our stakeholders,” he said.
Impact of Covid-19 on Local Capacity Development
The outbreak of the Covid-19 pandemic resulted in lockdowns and restriction of movement. As a result, expatriate oil and gas workers could not come to Nigeria. It was a difficult period for Nigeria but at the same time an opportunity to test the local capacity that has been built in the oil and gas industry in the last few years.
Speaking on a panel at the Conference, the Managing Director, Shell Nigeria Exploration and Production Company (SNEPCO), Elohor Aiboni, said that the company had to rely on local capacity to carry out its activities.
She noted that last year was a difficult year for the oil and gas industry as the outbreak of the pandemic slowed down activities, adding that digitization played a key role in saving the day for the industry.
Aiboni acknowledged that the country has built capacity, but stressed that more can be done to bridge the capacity gap for improved local content implementation.
Also speaking on the panel, the General Manager, Sub-Saharan Africa, Schneider Electric, Ajibola Akindele, said that as part of measures by Schneider Electric to survive the situation as well as take advantage of the opportunities the pandemic provided, the company decided to localize.
“What we did at that time was that we decided that we have to localize. We needed to localize. And for the part of our business that covered oil and gas, we domesticated key skills in Nigeria to support the whole of Africa. So, we established two Centres of Excellence last year,” he said.
A testament of local capacity was demonstrated by the Managing Director, Coleman Technical Industries Limited, George Onafowokan in a presentation at the Conference.
Onafowokan who took the delegates on a virtual site visit disclosed that Coleman can do 100 per cent marine cable in-country, adding that 100 per cent of cables needed for Train 7 is guaranteed by the company to be done in-country.
Coleman has been responsible for 80 per cent of installed wire and cables production in Nigeria since the launch of its Sagamu factory. Along with Cutis Cables, Nigeria produces 70 per cent of wires, cables in West Africa. Coleman as of last year does 48,000 metric tonnes of copper.
The company attributes its growth in the sector to many factors, including strategic planning, commitment, perseverance, training, skilled workforce, Nigerian Content Act, and support of the NCDMB.
The Conference which gathered key industry stakeholders across Nigeria also provided an opportunity for the delegates to visit Polaku to see some of the ongoing projects there.
