Yemie Adeoye
18 November 2008
In an effort to provide ample opportunities for local contractors in Front End Engineering Design (FEED), detailed engineering designs, project management and procurement, fabrication and integration of all fixed offshore and onshore projects, Shell Petroleum Development Company (SPDC) has set a target of 70 per cent local content attainment by 2010.
These were the words of the Managing Director of the company, Mr. Mutiu Sunmonu while delivering a paper titled Towards the Achievement of Nigerian Content Development in Exploration & Production Businesses: Opportunities and Challenges, at the 2nd Nigerian Content Consultative Forum which held in Lagos recently.
He also noted that in 2006 and 2007, the average yearly value of contracts awarded by Shell Exploration and Production companies, (SPDC and SNEPCo) have continued to exceed the $1 billion mark in core business areas.
"A key objective of the NCD policy directive is the availability of in-country capability to take up opportunities created by the directive. Our view is that we can create these opportunities, but local companies have to brace up and use them. The NCD provides ample opportunities for local contractors in feed and detailed engineering design, project management and procurement, fabrication and integration of all fixed (offshore and onshore), and a target has been set at 40% by 2006 and 70% by 2010.
"In Shell, we realised that attaining our Nigerian Content strategy would require developing and nurturing an appropriate policy framework. We have, therefore, developed guidelines to ensure that major contractors in all our high-value engineering, procurement, installation and commissioning contracts include a Nigerian content plan. And to give this additional relevance, we have made this to count in the evaluation of tenders. In 2006 and 2007, the average yearly value of contracts awarded by Shell EP companies (SPDC and SNEPCo) to Nigerian companies has continued to exceed the $1.0 billion mark in the core areas of our business.
Nigerian Content Development policy, no doubt offers win-win opportunities for both E&P companies and the country. It is, therefore, not surprising that IOCs have over the past few years, supported it. When Nigeria wins the local content development challenge, everyone in the industry invariably benefits.
I say this because winning the Nigerian content development initiative will lead to growth in productivity and with it, a higher standard of living for Nigerians. A nation's standard of living depends to a large extent, on the capacity of its companies to achieve higher levels of productivity, and to increase efficiency overtime.
For E & P businesses that are keen on achieving competitive advantage, key drivers would include lower operating costs, a skilled workforce, and more advanced technology.
Localizing the development and execution of project packages is central to the attainment of these objectives."
Sunmonu also stated that in the past, the EP industry identified measurement of unit costs (technical, operating etc.) as the most important indices of measuring the health of businesses.
"Faced with the challenge of continuously upgrading our performance against these indices, Shell, however adopted a structured approach to upgrading the quality of Nigerian workforce through training, challenging assignments, and through international postings.
"Shell also pioneered the training of Nigerian technical and engineering graduates through the Shell Intensive Training Programme in our Regional learning hub in Warri and Port Harcourt. Today, we can be justifiably proud of the successes achieved by the SITP programme, which has not only enabled Shell to meet its manpower requirements with quality graduates, but has also proved beneficial to other E&P companies in the country.
"I am proud to note, that long before NCD became an official policy of government, Shell had in 1997, pioneered the development of local content in its activities. We have to date, successfully executed a number of our major projects and activities using service providers. We have also supported the transfer of technology. The prosperity of nations, to a large extent, depends on their ability to adapt, create and use technology in their industries.
One can even argue that without technology, we would not have had the many advances that have been the hallmark of the E&P industry. But as the English Economist, Alfred Marshall put it, it is better for a nation to have its technology developed at home."
The oil boss also said that propelled by the inherent benefits of developing local content and capacity, Shell had developed an Indigenous Contracting policy in 1998, which later evolved into a Nigerian Content development strategy. Its major goal was to facilitate the development of competencies, capabilities and competitiveness of Nigerian contractors.
"In this way, we strive to support Nigeria's industrial development in line with our commitment to Sustainable Development. Since then, Shell operated companies have pursued that vision, by investing significantly in building local capacity, and in enhancing the skills and competencies of Nigerians to make them suitable for assuming leadership of the industry.
We have also taken significant interest in executing major components of our large projects in Nigeria. One area where we have achieved remarkable results is our drilling-related activities, where we have handed over most of the jobs to Nigerians and would continue to do so in future."
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