”Local Content Laws need to be fully enforced to make indigenous firms grow -LADOL CEO”
Amy Jadesimi is the chief executive officer of LADOL in this interview a Olusola Bello ,Energy Editor, she spoke passionately about the need for the government to enforced the local content laws during at the PETAN panel session at the just concluded offshore Technology Conference ( OTC) held in Houston Texas, so that Nigerian can enjoy the full benefits of the oil and gas industry. Except:
What are specific policies and enabling laws needed to encourage further investment in the Oil and Gas industry?
We were fortunate that Senior Members of the National Assembly participated in the conference sessions organised by PETAN. The members of National Assembly made it clear that they were 100% ready to support the changes needed to make Nigeria the premier investment destination in West Africa.
We have some good laws already on the books which need to be fully enforced, such as the Local Content Act, which we were
pleased to learn is even now being strengthened through an amendment by our law makers.
We all have to ensure that we support REAL local content, that is investment by Nigerians in building facilities and providing services that add value. Real local content is easy to spot
because it lowers costs and creates jobs, the idea that local content adds costs is false and that perception was only created due to rent seeking, monopolistic and agency contracting models
that distorted our industry and short changed Nigerians. What is important now is that we make the most we can out of this short window of opportunity we are currently in and focus
on making the changes in behaviour and tendering practices that will yield immediate positive results. Also, we cannot allow foreign companies to dominate the local market under the guise of providing services through indigenous companies who are in reality just commission agents. We need the full support of our government as our regulator and law maker to help create a level playing and maintain the strict rule of law, as this will provide
fertile ground on which private sector investments can grow.
Nigeria’s future has never been brighter, so let’s hold hands, sit down and get down to work.
Are you optimistic that the current administration has any good plan the oil and gas industry?
Ans: The administration has indicated plans to bring some the hurdles faced in the industry to the barest minimum. The hurdles include the long contracting cycle and the foreign controlled private monopoly strangling the industry, as well as the need for close collaboration amongst Nigerians, in the public and private sector to create the hundreds of thousands of jobs that could be generated by this industry.
Further more the administration of President Muhammadu Buhari must be commended for assuring investors that an end had come to corruption and the private foreign controlled
monopoly in oil and gas logistics services, which have booth stifled investment for so many decades.
It will be recalled that President Buhari has praised LADOL for taking a lead role in the implementation of Real Nigerian Content and for making strategic investments in critical
infrastructure that has not only created thousands of jobs but also built a haven for IOCs and their service providers in West Africa.
The Total Egina project which includes building the (FPSO) platform valued at $3.8billion, is the first of its kind to be built in the sub-Saharan Africa and marks, Total’s investment
and faith in LADOL shows Total’s foresight and commitment to improving the oil and gas landscape in West Africa.
Did you see any hope as regards local content development with the comments made by the legislators attending the Nigerian Content panel session of PETAN at this OTC?
Ans:The discussion during the Nigerian Content panel session of PETAN during OTC was very frank and open, we discussed the hurdles facing the industry and the huge opportunities that
will be realized once these hurdles are overcome – which we know is only a matter of time.
Indigenous private sector companies, some of whom are now heavy invested in the industry,and the government have a lot of work to do together. This workshop was part of this work
and it showed the readiness on all sides for all stakeholders to work closely together. Going forward the industry requires huge private investments, at least USD 20 billion per year of
investment is needed just to maintain the status quo and an additional USD15 to 20 billion is needed to grow the market. This means Nigeria has to become more competitive, Nigeria has to become the hub and premier investment destination for the oil and gas sector in West Africa.
Altogether the industry is targeting production levels of 3 million barrels of oil and 10 million scf of gas per day. Fortunately, the fundamentals of the Nigeria petroleum sector are very strong, with many acreages being self-funding, when they are in production and they have strong operational and cost controls in place. With this huge market potential and strong
fundamentals Nigeria should naturally be the most attractive oil and gas investment destination in the world.
Currently local governance and global macroeconomic factors are in Nigeria’s favour, from an investment perspective – President Buhari’s administration is respected throughout the
world and the low oil price means asset prices are attractive to international investors, creating a perfect window of opportunity at precisely the right moment in the life of our industry.
What are the issue that militate against this robust scenario you have painted?
The time has definitely come for public and private stakeholders to work together and quickly overcome the issues that might derail our otherwise bright future. This issues are well known and easily identifiable – which means that if we want to fix them we can do so immediately.
Such issues include the long tender cycle; we commend the Honourable Minister of State for Petroleum Resources and the Group Managing Director of NNPC, Emmanuel Ibe
Kachikwu, for taking significant strides towards reforming the sector, including his announcement that the tender cycle will be reduced to six months. However, six months is still longer than our neighbouring countries and to reassure investors that six months is achievable we would like to see concrete and detailed plans on how it will be achieved.
Cost reduction is another vital area that must be addressed, obviously maintaining an expensive foreign controlled monopoly over the provision of oil and gas logistics will
literally kill our chances of growing the market and attracting new investors. In 2007 NNPC and NAPIMS insisted that all logistics had to be done from a particular location in this country at prices that were the most expensive in the world, as a direct result of this Nigeria lost billions in investment to neighbouring countries and exploration ground to a halt.
Now, in this new era of real local content, with many facilities operating across the country, and with the immediate need to attract tens of billions in private investment we are urging
all stakeholders to come together and focus on collaborating to grow the market – which will naturally create more work and good returns for all participants, both old and new.
What is the role of LADOL in this investment drive?
LADOL is playing a prominent role in the entire value chain but particularly in the areas of cost reduction and job creation. Operators that carry out their services at LADOL have halved their offshore drilling and production costs, sending a message to the global market that Nigeria is an attractive location from which to support your offshore blocks. Cutting costs also makes investment decisions for future exploration and production in Nigeria easier and quicker.
For Nigerians wanting to participate in the sector for the first time, our low cost solutions make their business plans viable and our word class facilities make it possible for them to compete on a global scale.
We also expect that our example will encourage investment in other new facilities. To achieve our market ambitions we need several more facilities and service providers in Nigeria, we need to create clusters of service providers, engineering companies and fabricators all over the country, just as they have in Norway, Aberdeen, Houston and Louisiana.
LADOL’s ship building yard was built in just under one year, so any new investors can use that as a benchmark, proving how easy it is to build new capacity in Nigeria, making that a viable option for all future projects.
LADOL is still developing and building but our future success depends on other investors and facilities also coming up – so that we have the capacity across the nation to make Nigeria
West Africa’s hub.
Olusola Bello