Abuja, Nigeria — Efforts to increase the local content and participation by indigenous firms in Nigerias oil industry will form the focus of a two-day workshop that starts here Thursday.
The 'Workshop on Improvement of Local content and Indigenous Participation in the Upstream sector of the Petroleum Industry' is being organised by the Nigerian National Petroleum Corporation.
The low level of local involvement in the Nigerian oil industry has become a source of concern to both the government and indigenous operators in the industry. After about 40 years of petroleum exploration and production in Nigeria, local involvment in the industry stands at just 15 per cent.
That applies to onshore production; in the deep offshore and ultra-deep offshore, the level is only five per cent.
The low level of participation has been blamed partly on the provisions of the joint venture agreements ("JVs") between the government and multinational oil companies that currently dominate the industry.
"The JVs are governed by the Joint Operating Agreement (JOA). In this context, we recognise the agreement is probably overdue for review as its provisions in some areas are no longer in tune with present aspirations of the nation... it makes only cosmetic provisions for the growth of local content and participation of indigenous firms," said Andrew Uzoigwe, Executive Director, Exploration and Production, at NNPC, at a pre-workshop press briefing, Tuesday.
The Nigerian government holds an average of 57 per cent equity in joint venture projects with seven oil prospecting and producing companies, six of which are multinationals - Shell, Chevron, Agip, Elf, ExxonMobil and Texaco. The JVs account for about 98 percent of Nigerias total crude production, with Shell alone accounting for nearly half of the output.
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Uzoigwe explained Tuesday that one of the ways to increase indigenous participation in the industry would be to reserve some types of contract work for indigenous firms, as well as requesting foreign firms to subcontract part of their work to local firms.
Issues selected for discussion at the workshop include the calculation of local content in the oil industry, opportunities for indigenous participation in the oil industry, and strategies for enhancing local content development in the upstream sector of the oil and gas sector.
Others are the role of financial institution in promoting local content development and indigenous participation, and Norwegian Experience in Local Content Development and Indigenous Participation.
