Abuja — A two-day workshop on ways of improving local content and indigenous participation in the Nigerian oil sector began here Thursday with calls for empowerment of the local people.
Government officials, local entrepreneurs in the oil and gas sector as well as some officials of leading companies in the industry lamented over the dismal level of indigenous participation in the industry, and called for reforms that will make it possible for more opportunities to be opened to the local people and companies.
"It is however regrettable that local content development and indigenous participation are not receiving attention they deserve among the benefits envisaged by government from its investment in the upstream sector of the oil industry," Rilwanu Lukman, Presidential Adviser on Petroleum and Energy, said in his keynote address at the start of the workshop.
Lukman disclosed that government invests over $5.0 billion annually into the oil sector. He regretted however that "over 90 percent of the yearly expenditure escape the domestic economy as capital flight through technical services rendered by foreign companies and goods procured outside the country at the expense of indigenous and Nigerian owned companies."
The Nigerian government holds an average of 57 percent equity interest in joint venture projects with seven oil companies, six of them multinational, that account for about 98 percent of the country's total crude production.
Lukman said part of the reasons for government's involvement in the oil industry was to encourage domestic of oil technology and of local expertise. He noted that the capital-intensive nature of the oil industry as well as non-active participation of the Nigerian financial sector has worked against this.
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He said the convening of this workshop marked the turning point in the life of this industry. "It is now time for the multinational operating companies as well as the service companies to make deliberate efforts to develop strategies that will support local content development within the industry in the shortest possible time."
In a speech read on his behalf, Jackson Gaius-Obaseki, Group Managing Director of state-run Nigerian National Petroleum Corporation, urged the multinational companies to place value on the development of indigenous participation. He said these companies should be willing to pay in the short run a premium on local content development, which he said would yield benefits in the long run.
Lukman spoke in the same vein, arguing that participation by companies classified as indigenous firms should be at a premium.
"We therefore need all participants in the oil and gas industry to cooperate with us in ensuring acceleration of the indigenisation of the operations of the industry in Nigeria up to the highest practical level in order to ensure that the industry contributes fully to the nation's economic development, he said."
