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Building national capacity in Nigeria

By Mark R. Ward
NIGERIA has seen significant growth in reserves and production capacity over the years and the Government should be very proud of what has been accomplished.  For its part, ExxonMobil’s upstream affiliates in Nigeria, MPN and EEPNL have been able to play a significant role in the realisation of Nigeria’s national growth targets.  We have achieved this while, at the same time, building Nigerian capacity and skills.

I’d like to share with you how we have been able to leverage the technological, financial and organizational strengths of ExxonMobil Corporation and its National Content Strategy in building Nigerian capacity.

First, I would like to highlight what we consider to be the key enablers for effective capacity building.
Governments lead the way by creating a free market environment to attract international companies which allows all market players to compete on a level playing field.

This calls for a stable and predictable regulatory regime and sanctity of contracts, transparency in transactions and financial systems that support economic growth. When contracts and agreements are honored and when parties can be assured that their investments will provide economic returns long term, it promotes trust, continued investment and new investors. Such an operating environment enables market players to take a long term view of investment, both in resource development and, as a follow-on, capacity building.

This in turn tends to build a strong relationship between the Government and the market players, both NOC and IOCs, as all parties work toward their mutual long term goals.

Capacity building by its very nature is a long term process and those supporting it must have an incentive to continue to promote it.
One of the basic building blocks of capacity building is the sharing of technology.

We rely on technology, from the early stages of exploration where we strive to understand the subsurface, through development as highlighted in our highly successful EAP and Erha projects, to maximizing recovery from producing fields as the resource is commercialized.

We believe that technology is critical to our continued success – it is a key foundation of the company.
We take a long-term approach to investment in technology. Over the last five years, we have invested more than $3.7 billion in research and development, a distinction that sets us apart from others.

Our technologies are focused in three areas:•    Identification of new resources•    Development of resources, and
•    Optimal recovery of resources.

Much of our success over the years can be attributed to the application of technology. We have successfully applied technologies such as subsea seismic, deepwater drilling and development to increase recovery, reduce costs and thereby enhance the value of Nigeria’s resources and accelerate the generation of revenues for the country.

The sharing and application of technology is just the start.  At ExxonMobil, we also have tools that also help us on the less technical side of the business.

Corporate citizenship is embedded in our business model and integrates good corporate governance, safety, environmental commitment and social responsibility.
Throughout the lifecycle of our projects, we believe it is our responsibility to work with Governments to help build national capacity. We call this National Content.

Our National Content strategy is comprised of three elements:  work force development, supplier development and strategic community investments.
By focusing on these three areas we are able to assist sustainable human, social and economic capabilities. For us, the business benefits are clear:  a pool of highly trained employees, an expanded supplier base and harmonious host communities which benefit through improved infrastructure and education.
To expand further the first area I would like to speak to is Workforce Development.

ExxonMobil and its affiliates pursue the development of a diverse and highly talented National workforce. Achieving this objective depends on our ability to find, attract and retain the best employees.

By investing in the workforce, we are building a base for economic progress, dedicated to maximizing the number of national employment opportunities where ever we do business.

This is especially important in emerging and developing economies. In our Erha FPSO Operations, 85% of the startup team were Nigerians.
Our Workforce Development strategy has two principal aims:

Recruit and develop national resources to manage and operate the local business,Provide a longer term pool of talent to resource future global business needs, not just supporting local operations.

We are proud of the highly talented pool of Nigerians working in almost all of our producing affiliates.Through our well structured employee development programmes (ECMs, Interchange etc) and Global Networks, we are able to produce high quality and resourceful professionals whose contributions have helped the company retain its competitive edge. This is especially true for our affiliates in Nigeria. At any one time, there are at least 100 Nigerians working outside the country in the ExxonMobil global circuit.  The experiences and lessons learned they bring back to Nigeria are important in helping to build Nigerian capacity.

Our Workforce Development strategy at the country level stems from a set of common global principles. We want to hire the best people and develop them for a long term career with ExxonMobil. Progression through the organisation is performance driven, and we concentrate on developing our technical and business leaders from within, only seeking specialized technical skills when needed from outside.
We share the responsibility for career development with our staff, providing assignments and job training to create the experience and competencies needed to run the business.

Supplemented by technology and skill transfer from experienced employees from our worldwide mature operations, our strategy has at its core, a proven set of global processes related to people development.

We have an unwavering focus on developing national employees.We take a broad view of Supplier Development in our business.
This includes: building competitiveness, developing local small/medium enterprises and promoting entrepreneurship and community economic development.
Entrepreneurs in developing countries can provide a catalyst to grow an economy.

In many cases, however, the lack of an enabling business framework and a scarcity of support structures for new businesses can hinder entrepreneurs from fulfilling this important role.

Increasingly multi-national companies, with their financial, technical and managerial expertise, are being called upon to provide a focal point of support for local businesses.

At the same time, these companies can work with governments regarding ways in which an enabling business framework can be developed to fuel domestic entrepreneurial efforts.

The work we award to local service providers has progressively increased to about 80% of all contract value; we estimate that a significant portion of that value is retained in-country. We are preparing to receive the first shipment of about 30km of pipeline from the SCC mill here in Abuja which we helped get started. We have also recently awarded a major procurement and fabrication contract ($71M) to two Nigerian companies (Dorman Long and Niger Dock).

The NNPC/MPN JV has used innovative financings to cover JV funding gaps over the years with over $300M USD of funding sourced from Nigerian Banks; carrying on the JV’s tradition of strengthening and expanding the capabilities of Nigerians including local banks. In 2008 the JV raised $220M in a supplemental project financing for the NGL II project in which 100% of the funding was provided by Nigerian banks marking the first time Nigerian banks provided all the funding for an oil and gas project.

Also note worthy is the full domestication of all subsurface studies and award of subsurface studies contract worth about $5m to three Nigerian local service providers (EMR, LASER and IDSL).

Successful supplier development is dependent on a number of factors.
A realistic, long term national plan for supplier development should be established by the host government. Expectations for that plan must be achievable, both in terms of timing and milestones. Additionally, all market players must have an incentive to support the plan.
Creating educational and development opportunities is also an important element. Vocational training schools to teach trade and business skills promote supplier development.

Successful national capacity-building requires long-term partnerships and joint ventures between national and international companies. These bring the advanced technology, training and control processes essential to success, thereby facilitating supplier development.
Successful supplier development does not happen over night.  It evolves in a free market with predictable, stable regulatory environment and thorough and consistent nurturing of these key elements.  It has worked in Malaysia and can work here too.

ExxonMobil and our affiliates have a long tradition in making a positive contribution to the communities and economies where we have presence.
We specifically targets and funds programs that have a direct and tangible effect on the community and on our business and an enabling environment.
With an average annual budget of about N1.3 Billion excluding Niger Delta Development Commission (NDDC) contributions, ExxonMobil Upstream companies in Nigeria invest significantly in areas that help the local communities build and expand needed capacities.
In the next few slides, I will highlight some of our capacity building investments in Nigeria.

This is a collage of photos of community investments that we have made in here in Nigeria with the support of our partner- NNPC.
Presently about 18 community assistance infrastructure projects are ongoing and over 50 are at various stages of the contracting process. Most of these infrastructure projects are however located in Akwa Ibom and Rivers States, within the 4 neighboring LGAs (Ibeno, Eket, Esit Eket , ONNA) in Akwa Ibom and Bonny in Rivers.

These projects provide long term benefits by building national capacity – supporting education and health care and promoting small business, through skills acquisition and entrepreneurship training.

A good example is the collaboration with the Growing Business Foundation (GBF). In 2002, Mobil Producing Nigeria (MPN) initiated a micro credit program that empowers the local community to help alleviate poverty. The project is being undertaken in collaboration with a local Nigerian non profit organization,

Growing Businesses Foundation (GBF). The activities and operations have focused on communities close to MPN operations. In 2005, MPN replicated this micro-credit scheme in Bonny, Rivers State. Over 600 entrepreneurs have now been trained and financed. 55 groups with over 1500 members have been benefited from the training and financing provided by this program.  80% of the beneficiaries are women. GBF has partnered with 12 groups and individuals (joint venture) in undertaking small business ventures. Over $750,000 has been disbursed as micro credit loans to the various groups.
This project has a multiplier effect which has long term benefits for all sectors of the population.

Programs to help build capacity in education include the employee volunteer program, the University Partnering Program and various science teachers training and quiz programs.

Mark Ward is the Chairman/Managing Director, MPN and Lead Country Manager, ExxonMobil affiliates in Nigeria.
Being part of presentation at the 2nd Panel Session on “Capacity & Capacity Development and the Seven Point Agenda” SPE Nigerian Annual International Conference & Exhibitions, Abuja, 5th August 2009

teer program focuses mainly on educational development services, during which employees mentor and teach science-based subjects in some selected secondary schools in Lagos and in Akwa Ibom.

Over 190 hours of regular company work-time hours is expected to be contributed by employee volunteers in Lagos.
The University Partnering Program funded by Esso focuses on building capacity of Geology departments in 6 Nigerian Universities. Progress is being done through donation of equipment to aid geosciences field work.

ExxonMobil Foundation (the charity arm of the Corporation) through its Educating Women and Girls Initiative (EWGI) is investing close to $10 million annually on programs that train and empower women in the developing world to acquire skills and attain economic potentials. Nigerian women are benefiting from programs such as the Global Women in Management Program – a month long leadership and Management program for community based women who run NGOs.
Other notable programmes are the;

•    Nigeria/NNPC/Mobil Track & Field Championships – for the past 20 years •    AKS/NNPC/MPN Secondary Schools Athletics with Scholarship – since 2001
•    Science Quiz competition for secondary schools in Akwa Ibom

•    Mobil/STAN National Science Quiz Competition Annual Science and English Teachers Intervention Workshops
•    Maintenance and support to Motherless Babies Home, Eket & VVF Treatment Centre, Uyo
•    Salary Subvention to Teachers/Health Workers in remote communities in Ibeno (sustained for over 10 years)
We view capacity building as a business and partnership imperative.

I think this chart summarizes what ExxonMobil and our affiliates in Nigeria contribute:
We maximize resource value for countries where we operate by generating revenue from oil production
We generate employment opportunities for the people and support local businesses
We create jobs and transfer technology

We sponsor training programs for employees and contractors
We purchase local goods and services

We make contributions and carry out community service projects
We are proud of our accomplishments in Nigeria and look forward to furthering our relationships with governments, suppliers and communities.

In summary, EM and its affiliates in Nigeria have demonstrated their commitment to make long term investments in projects and partnerships this country.  These investments have not only been in steel and hydrocarbons, but, perhaps most importantly, in capacity building, which, in turn has strengthened the Nigeria economy.

We have been able to do this with the resources of ExxonMobil’s worldwide organization…. financial, technological and organizational.
Our proprietary technology has, over the years, enabled us to overcome incredible obstacles. International partnerships such as we have in Nigeria, are essential to fostering technology transfer that increase supplies, reduce environmental impacts and thereby enhancing capacity building.

ExxonMobil affiliates  and the people of Nigeria benefit from the development of a strong, diverse and internationally competitive national supplier base and from training business professionals to be tomorrow’s leaders. We have partnered with NNPC and host communities to accomplish this goal by making investments, creating local jobs, helping educate and train local citizens, applying knowledge and skills and purchasing local goods and services.

We continue to work with local vendors to help them qualify for jobs. We are committed to growing the capacity of Nigerian companies to be world class service providers.  We also have an unwavering focus on developing local employees.  We have structured hiring and development processes, with long term career plans.  International assignments and access to global networks allows broader perspectives to utilize in our own business here in Nigeria.

We look forward to continuing our partnership with Nigerian government as, together we develop not only the country’s petroleum resources but also its economic strength through capacity building.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.