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Nigerian Content: Indigenous companies get $1.8bn contracts from ExxonMobil

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By Clara Nwachukwu & Yemie Adeoye
TO demonstrate its leadership role in Nigerian Content development, ExzonMobil affiliate companies in Nigeria say they awarded contracts in excess of $1.8bn to Nigeria-registered companies in 2009.

The companies also admitted that 43 percent of this amount was domiciled in-country, while majority were executed offshore.

The American giant and world’s biggest oil company by asset base told journalists in Lagos on Friday at a workshop that its annual budget for Nigeria is about $2bn, and that it is striving to comply with regulatory requirements to boost indigenous participation in the nation’s oil and gas industry.

Nigerian Content Act
Given the domination of multinationals of Nigeria’s oil and gas industry, the Federal Government tried unsuccessfully for years to increase Nigerians participation in the industry, which accounts for more than 80 percent of our national revenues by setting a target of 70 percent local content by 2010.

But government realised it could not make any headway with this mission except by an act of legislation, as local content could not go beyond 20 percent and thereafter came up with the NOGIC Development
Act 2010, which was signed into law on April 22.

With increased pressure and backed by the act, the fortunes of indigenous oil and gas companies are beginning to turn around, as more oil and gas contracts, hitherto executed abroad are now being domiciled in-country, According to the General Manager, Nigerian Content Development, Mobil Producing Nigeria Unlimited (MPN), Mr Yinka Bashorun, indigenous participation is now put at between 30 and 40 percent, with ExxonMobil affiliates taking the lead.

Nigerian content challenges
In spite of the enabling law, Mr Bashorun noted that Nigerian Content development equally comes with several challenges, among which include specific provisions in the act and set targets in the schedule,
particularly with regard to engineering services, which he said may not be realistic in view of other related issues.

These are energy infrastructure that will boost the set targets, project funding as only the operators bear the cost of funds, inadequate in-country capacity and deficiencies in relevant skills.

In this regard, he said industry operators are trying to sort out the issues with the Nigerian Content Development Board, which is in charge of the execution of the law.

Contracts executed by Nigerian registered companies Some of the big contracts ExxonMobil awarded to Nigerian registered companies during the period include the $84m compressor fabrication and installation contract to Globestar; the $42.3m environment waste management services to Halden Nigeria Ltd and ITS Drilling services; $39.7m Calm buoy fabrication and installation to Nigerdock Nigeria
Plc; and $32.2m crude storage tank fabrication contract to Hopic Nigeria Ltd and Nestoil Ltd.

Crude Production
With regard to crude oil production, ExxonMobil affiliates put their half year crude production from January to June, 2010 at about 950,000 barrels.

ExxonMobil in its 2009 Corporate Citizenship Report made available to journalists at the workshop, however, put its affiliate companies’ (MPN and Esso Exploration and Production Company) net production at 391,000 barrels of liquids per day.

“This performance is remarkable, given the challenging environment under which the industry operated,” the report said, adding, “The production volume was severely impacted by OPEC quota restrictions and operational issues, which we plan to address via integrity maintenance activities and investments in new projects in 2010 and beyond.”

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