When preparation meets opportunity in Local Content Act

The oil and gas sector, like other sectors in Nigeria, was not immune from government policies. Various governments enacted different regulations, acts and laws, including the petroleum (drilling and production) regulations; Industrial Training Fund 1971; Petroleum Technology Development Fund 1973, and National Office of Technology Acquisition Act 1979.

At the onset, the Nigerian oil sector was within the purview of the international oil companies (IOCs) in areas ranging from exploration to production, refining and trading. Major players in the oil sector then were expatriate companies like Shell, Esso and British Petroleum, and they controlled operations in both the upstream and downstream sectors.

However, the Federal Government decided to nationalise assets of the major oil players in the country by awarding onshore and offshore oil blocs to Nigerian entrepreneurs through competitive bidding in 1991.

A major breakthrough for indigenous players in the industry came with the enactment of the Nigerian Oil and Gas Industry Content Development Act 2010, which seeks to increase indigenous participation in the sector by prescribing minimum thresholds for the use of local services and materials, and to promote transfer of technology and skill to Nigerians in the industry.

The Act also gave birth to the Nigerian Content Development and Monitoring Board (NCDMB), which was empowered to implement the provisions of the Act, make procedural guidelines and monitor compliance by operators within the sector. The uniqueness of the 2010 Act is that it takes precedence over other existing enactments and laws in respect of all matters and operations relating to Nigerian content in the oil and gas sector.

Another unique feature of the Act is that, it provides a more conducive playing field for indigenous players in the sector, more leverage for indigenous players in the industry and also makes a case for the promotion of the Nigerian content development as a sine qua non in the oil and gas space in Nigeria.

By extension, the Act gives first consideration to Nigerian independent operators in the award of oil blocks, lifting licenses as well as all projects for which contracts are to be awarded. This principle applies to all spheres of the industry, including employment of skilled and non-skilled staff, staff training and procurement of goods, materials and services, etc.

Among contemporary player in the sector, Nestoil Limited has made tremendous strides in the oil and gas space and it has become a reference point for other players, who now use its module as a template for success. Established in 1991 by Ernest Azudialu whose perchance for far-sightedness is unparalleled, Nestoil has placed the pillar of its growth and development on innovations and in spite of being a leading Engineering, Procurement, Construction and Commissioning (EPCC) services provider in the country, the company has not stopped innovating. The company is indigenous in content and outlook and over 95 percent of its 3000 employees are Nigerians.

Yet, the company, which has a network of offices in five major Nigerian cities as well as two offices in the United Kingdom and United States of America and an operations base in Abuloma, Port Harcourt, Rivers State, is still innovating. The Abuloma modern facility helps Nestoil Limited to boost its operations and enhances the Nigerian content dream with ‘adequate in-country facility.’ The facility comprises of marine/load out jetty, large fabrication yard, workshops and work-area including, open air storage, sensitive items storage, and above-ground storage tanks (AST) with adequate security of personnel and equipment. Nestoil Limited offices and yards are linked with a strong IT infrastructure, which supports 24 hours access to information via intranet and the internet.

Nestoil Limited also has a facility that contains the largest pressure vessel and offshore fabrication facility in West Africa, and the company is proudly championing local content in Nigeria. Moreover, the scope and extensive project experience of the company allows it to deliver – on any terrain – on a scale that no one else can.

What rattles industry observers is that these huge and strategic investments were made while in the early 90s, not much was known about local content or indigenous participation in the oil and gas industry, the way we all know it today. The Nigerian Content Act definitely was not in existence then. However, their thinking then was very similar to the issues that informed the enactment of the Act. This clearly explains that the Nestoil Limited story is a clear case of preparation meeting opportunity. Looking at the giant strides of firm in the oil and gas industry, it can be safely said that, preparation breeds fortune.

Hope Moses-Ashike