Tuesday, August 2, 2011

Nigerian Oil and Gas companies to receive first consideration in oil block bids

Olusola Bello

From now on Nigerian independent Oil and Gas operators will be given first consideration in the award of oil blocks, oil field licenses, and oil lifting licenses and in all projects for which contracts are to be awarded in the Nigerian oil and gas industry.

This is a departure from the old tradition where local companies are peered with foreign companies under the guise of local content vehicle whenever there is bidding for oil blocks.

A number of indigenous operators have complained that government has not helped them to grow, in spite of their capabilities and investment, but that it rather gives out the blocks to foreign companies.

This time, the country is set to adopt the Brazilian model, where at least 20 of the oil blocks up for bidding are reserved for indigenous companies.

But the compliance with the provisions of the Nigerian Content Act and promotion of Nigerian content development shall be a major criterion for award of licenses, permits and any other interests in bidding for oil exploration, production, and transportation.

Other conditions that must be fulfilled, include technology transfer, research and development and retention of industry expenditure and employment innovation capabilities.

According to Ernest Nwakpa, the executive secretary of the Nigerian Content Monitoring and Development Board, the conditions which are laid down to encourage companies would be subject to the fulfillment of such conditions as may be specified by the Minister of Petroleum Resources.

Nwakpa said the oil and gas industry had imported goods and services worth over $300billion between 1980 and 2010 from foreign economies, while the Nigerian economy was left to do with the crumbs from the oil and gas companies.

The implication of this, is that job opportunities which would have gone to Nigerians, are being exported to foreign countries. The potential to train Nigerians and invest in infrastructure and also create and support over 300,000 direct job s is being exported.

These opportunities are exported to the United States of America and Europe for engineering, Research and Development, exploration and production. Some of the work is even contracted to other developing countries in Africa, such as Gabon and Cameroun, for vessel and rig repairs. Other aspects are contracted to South Korea and China. Such contract include those for pipes,equipment, Floating Production offshore Vessels (FPSO), LNG Carriers and Heavy Fabrication industries.

Commenting further on ways to correct the situation, Nwakpa, observed that the issue of the oil and gas industry is more than that of capital flight and that the government was doing its best to reverse the situation.

H e said exclusive consideration would be given to Nigerian indigenous service companies which demonstrated ownership of equipment and engaged Nigerian personnel and capacity to execute such work.

“In the bidding for any license, permit or interest, and before carrying out any project in the Nigerian oil and gas industry, an operator shall submit a Nigerian Content Plan to the board, demonstrating compliance with the Nigerian content requirements of this Act”, he said.

The act requires multinationals to domicile a proportion of their assets in Nigeria . It promotes indigenous ownership of equipment and mandates local capacity development.

The act also provides for a dedicated Nigerian Content Development Fund for capacity building, requires increased participation by indigenes and creates opportunity for integrating oil producing communities into mainstream industry activity as well as mandates enlightenment and awareness programmes.

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