Nigerian oil and gas content under review

Nigeria’s oil and gas industry provides 90% of its foreign exchange earnings each year, a large proportion of the country’s GDP. However, the country is concerned that the profits from this massive industry are not distributed fairly among Nigerians themselves, with much of the legwork going to companies based in other countries, including Europe. As a result, a new initiative has been launched: local content development.

Local Content Development is an initiative by the Nigerian government to help develop local capacity building in the oil and gas industry and enable Nigerians to take a more proactive role in their larger industry. Basically, they are local jobs for local workers. The cause for concern at the moment is that less than 5% of the total annual budget of the Nigerian industry comes from local Nigerian content, which means that local people have a very small share of the business. The object of the local content development scheme is to significantly increase the contribution of spending in the upstream sector to GDP over a defined period of time. The target set by the Federal Government for Nigerian content is 70% by 2010. The vision is to transform the oil and gas industry and create jobs and national growth by building capacity in the country, with greater proportion of jobs upstream. by Nigerian companies and local workers. The goal of the proposal is an increase in drilling work, work on oil rigs and other oil careers.

Under the new proposals, only those companies qualified by the Nigerian National Petroleum Corporation (NNPC) will receive contract sponsorship, particularly in exploration and production. Oil prospecting companies will be forced to domesticate most of their jobs based on official certification, and prospecting organizations will be forced to offer specific jobs to specific companies based on their competencies.

The local content development scheme really came to the forefront of the Nigerian federal government when it realized that basic engineering services such as front end design, fabrication and other petroleum works could be carried out effectively by local companies in Nigeria, were being outsourced to other countries. such as South Korea, Singapore, Dubai and Europe. Since unemployment rates among Nigerian workers were already high, this situation compounded the effect and had a direct effect on the country’s economy.

Aspirations of reaching the local target of 70% by 2010 may be elusive as things on the African continent can often move slowly, but it does show that the Federal Government is taking a proactive role in promoting its own industry for ‘in-domestic businesses and employment of local workers. This does not mean that the country will close its doors to foreign organizations or that foreigners will not be able to work in the oil and gas industry in Nigeria. Severing connections in this way with the rest of the world would be counterproductive and the Nigerian government is aware of this.

However, the local content development scheme will mean a more equal share of oil and gas jobs for local workers, thus utilizing local skills and going some way to alleviating the chronic unemployment situation faced by local workers within of the industry. Since Nigeria is a key player in the African oil industry, any move to improve and develop its industry can only be a good thing for all the oil consuming economies trading Nigerian oil and gas.