18 October 2018

Tanzania: Skilled Personnel Key to Oil, Gas Industry Development

TANZANIA may reap more from oil and gas if it develops highly-skilled and experienced personnel to penetrate in the complex operations of the multinational companies operating in the country.

Natural resource extraction consists of highly complex operations with advanced processes and specialized inputs that make the development of backward and forward linkages into a local underdeveloped economy very challenging.

Policy Research for Development (REPOA) Director of Strategic Research Dr Abel Kinyondo said the oil and gas sector companies have complex systems of operations for an individual with knowledge and skills from the higher learning institutions to comprehend.

"Most oil and gas companies have been operating in this industry for over 50 years thus building complex operations system that cannot easily be understood and penetrated without having practical experience," he said.

Although Tanzania has been exploring oil and gas for more than 60 years now but may be missing huge opportunities, particularly revenues in oil and gas industry for lacking high skilled and practical experienced personnel.

Of recent, the country has become a significant hunting ground for foreign investors following series of discoveries in the mining and more importantly in the oil and gas sectors.

According to Local Content Policy 2014, Tanzania has few local experts in the oil and gas industry, most of whom are serving in public sector.

These experts are capable of operating and maintaining the respective facilities e.g. the wells and gas processing plants in the producing gas fields of Songo and Mnazi Bay.

The policy states explicitly further that there is the need for the government to invest heavily in research and development if it has to seize the high calibre opportunities in the oil and gas industry.

It also says that Tanzania has adopted the use of Production Sharing Agreements (PSAs) that allows the International Oil Companies (IOCs) to transfer their technology, knowledge and finance.

To address that gap, contractors, subcontractors, licensees or other allied entities shall support and facilitate local capability development aspects of the local content framework, the policy states.

"An Operator, while carrying out operations in the oil and gas industry is therefore expected to prepare and implement plans for the transfer of technological know-how and skills relating to oil and gas operations to Tanzanians.

Emphasis may also be put on establishing in country any necessary facilities for technology transfer," states the policy.

Similarly, in the Petroleum (Local Content) Regulations 2017, section 8 (a) states that the qualified Tanzanian citizen is given priority in employment and training in any matter relating to the petroleum activity.

(c) States that a Tanzanian citizen is given priority in any matter relating to the technology transfer, research, development and innovation in any petroleum related activities.

To address the problem in Tanzania, Dr Kinyondo underscored the need for the government to invest directly in building critical mass of human capital with practical experience in oil and gas.

"The government may select few individual to cover the whole production chain in the oil and gas sector and pair them with high skilled personnel in global companies in their day to day operations," he said.

Attachment of local talents for capacity building and practical experience may be done in global oil and gas companies like BP and SHELL operating in countries like Brazil, Libya, Saudi Arabia and other Far East Countries.

With this initiative, the government may begin with few individuals in the whole production chain but covering all key sectors in the oil and gas production chain.

For example, in Norway it took more than 10 years to mould its local talents to have close engagement before starting serious operations in the extractive sectors.

The skills of the workforce are another important factor influencing local content. In Norway, the workforce was relatively educated with experiences in relatively advanced technical industries such as shipbuilding, hydropower, and powerintensive industries. It became common in Norway to include requirements for using local employees in various contracts.

To require oil companies to split up supply contracts into smaller parts suitable for local companies. To train local companies in the requirements necessary for delivering in accordance with accepted standards.

In Botswana, the government attached its personnel in big and global companies in extractive industry operating in different parts of the world and after few years they helped the country to reap more benefits from diamond and gold production. The impact of investing on local talents in Namibia has paid off as the country.

The world's sixth largest diamond miner by value has the state mining company owns 50 per cent share on each new mining established. Namibia has currently one of the largest diamond cutting factory in Africa with almost all the personnel employed being local.

According to Dr Kinyondo, the local content that Tanzania has today is insufficient and cannot guarantee the country's maximum benefits from the oil and gas sectors.

He said reviews conducted in the mining companies show that some investors have started to implement the local content policy and regulations but it is seen as conjurer.

In actual fact, the local content implementations here has remained in papers as most of the local talents are employed in low cadre jobs like cleaning, office assistant, managers without portfolio.

"With this experience, local personnel cannot comprehend the actual operations of the oil and gas companies which could have been helpful in knowing the right amount of revenues to be paid," he noted.

Tanzania Petroleum Development Corporation (TPDC) Acting Managing Director, Mr Musomba Kapuulya said the government has taken initiative to increase local participation in oil and gas sector by introducing various courses at the higher learning institutions.

"The number of graduates in oil and gas courses has been on the increase giving hope for occupying key positions in the companies operating in the country," he said.

Also he said countries like Norway, China and Australia which have long experiences in oil and gas operations been offering scholarships to Tanzania students to pursue further studies," he said.

However, according to Dr Kinyondo, the courses taught in the country's higher learning institutions may be used as base for scaling up into practical experiences from the operations of the global companies operating in different parts of the world.

Attracting the right people with the proper skill set is a real challenge even in developed countries as graduates with engineering, science, technology and math skills have been opting for careers outside of energy industry.

Still, as the International Energy Agency predicted that the energy demand will grow by 40 per cent by 2030, it has been more significant than ever for the oil and gas sector to lean on new frontiers in an effort to raise production.

According to a survey by the Hays Oil and Gas Salary Guide in November 2014 on over 45,000 oil and gas professionals across 25 disciplines in the world's 188 countries, what most concerned employers was skills shortage (30 per cent) although the close second is economic instability (24 per cent).

About 29 per cent reported insufficient succession planning for knowledge transfer as well as skills retention was the main cause of skills shortage in the industry. Whilst potential layoffs can locally reduce the skills shortage.

There will still be shortages for the experienced talent in such in-demand skill areas as petroleum engineering, subsea and Liquefied Natural Gas.

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