BY SEBASTINE OBASI & MICHAEL EBOH

When President Goodluck Jonathan signed into law the Nigerian Content Act, on April 22, 2010, it was intended among other reasons, to build local capacity and competencies, increase indigenous participation in the oil and gas industry and boost industry contributions to the growth of Nigeria’s gross domestic product.

It was also meant to create linkages to other sectors of the national economy. The federal government also envisaged that the act would stem the tide of capital flight and shore up employment among teeming Nigerian youths. Three years down the line, the implementation of the Act, by the Nigerian Content Development and Monitoring Board, NCDMB, has saved Nigeria a capital flight of about $380 billion and a job loss of 2 million in the oil and gas sector.

According to Ernest Nwapa, Executive Secretary of NCDMB, prior to the advent of the Act, more than 95 percent of the jobs in the industry were done abroad. Specifically, he stated that $214 billion worth of procurement and $9 billion worth of research and development were done in North America, while $78 billion worth of technical services and $39 billion worth of engineering work were done in Europe. Asia dominated the fabrication aspect to the tune of $39 billion.

The NCDMB boss stated that with the coming into place of the Act, $107 billion procurement, $20 billion fabrication, $14 billion technical services, $20 billion engineering and $7 billion research and development are domiciled in Nigeria.

Nwapa also said that $191 billion could be retained, while 300,000 new direct job opportunities are expected in such areas as engineering, sciences, technical services and manufacturing. Though the NCDMB executive secretary did not give the figures, he pointed out that there is a marked increase in contract award to Nigerian companies, as proportion of work done in the country has peaked.

*Jonathan

Similarly, Nwapa said that 90 percent local content has been achieved in engineering, while 50 percent has been achieved in fabrication.  On the one percent of the contract sum for any project, which must be deducted at source and paid into the NCD fund, he said that $150 million has accrued as at January, 2013. He maintained that strong stakeholder collaboration and local value addition framework would be required to achieve real Nigerian content.

Chevron
Following the federal government’s initiative, some oil companies operating in Nigeria have taken a cue. At Chevron, the Nigerian content of the Agbami floating, production, storage and offloading, (FPSO), vessel includes the fabrication of about 10,000 tonnes of topsides, subsea manifolds, export buoy and suction piles fabricated in Nigerian yards. This was said to be the highest Nigerian content of any deepwater project in Nigeria.

Module 7P which weighs 1,700 tonnes is the heaviest and largest module ever fabricated in Nigeria. Agbami FPSO has a processing capability of 250,000 barrels per day and a storage capacity of 2.15 million barrels of oil. Also, Meren X Well Platform, used in Meren field in Escravos, Delta State, was locally fabricated and has a drilling capacity of more than 7,000 barrels per day.

Another achievement was seen in the in-country execution of the Meji Redevelopment Project and the Meji Production Platform (PP) Capacity Upgrade Project. The project management, engineering, fabrication and installation were also completed in-country. The Meji Redevelopment Project consists of two new wellhead platforms, a riser platform (connected through a bridge to the Meji PP.

The Meji PP Capacity Upgrade Project increased the capacity of facility by 15,000 bopd. Chevron pioneered the marginal field initiative by voluntarily farming out the Ogbelle Field to Niger Delta Exploration and Production, an indigenous company. That landmark gesture made Chevron the first major operator in Nigeria to hand over a marginal field to a Nigerian firm.

ExxonMobil
For ExxonMobil, its investments in the Nigerian content is valued at over $1 billion (N156 billion.In 2011, its subsidiary, Mobil Producing Nigeria, MPN, became the first oil company in Nigeria to deploy Nigerian-made pipes (30kms) in its pipeline network. MPN worked with an indigenous pipe manufacturing company to develop new specifications for Double Submerged Arc Welded Helical (DSAWH) pipes that would meet international standards for low pressure and shallow water applications. Also, in 2012, MPN completed the fabrication of three wellhead platforms fully developed in Nigeria.

The three platforms were developed under the Satellite Fields Development Project Phase-1 for the Abang, Itut and Oyot (AOI) oil fields located offshore Nigeria and are the first ever wellhead platforms designed, fabricated and commissioned by Nigerian companies. Specifically, the company said that in 2011, a local manufacturer delivered and installed 2,000 metric tons of specialized steel pipeline in the Edop-Idoho field offshore Nigeria, representing the first time the oil and gas industry has used pipe made in-country for an offshore application.

ExxonMobil said its Nigerian affiliate, Mobil Producing Nigeria worked for more than four years with the manufacturer and a government agency to prepare the contractor to meet its specifications. According to the company, this partnership has led to contracts creating hundreds of direct and indirect jobs for Nigerians. The local manufacturer has pending orders for more than 100 kilometers of specialized pipe, and it plans to continue to apply international technical standards as they work to meet local demand with globally competitive quality.

The company stated that the limited local fabrication capacity in Nigeria, along with strict certification standards, had been obstacles in establishing local manufacturing capacity in the past. To overcome these hurdles, ExxonMobil arranged for joint visits with the manufacturer’s employees to South Africa and South Korea to study mill facilities and materials procurement approaches.

They also sent contractor employees to the United States to learn more about engineering standards. In Nigeria, ExxonMobil retained experienced inspectors to train the manufacturer in proper pipe-milling procedures.

TOTAL
In Total Nigeria PLC, the local content in its Nigerian operation has continued to record significant improvement over the years. Through the company’s contractor prequalification process carried out well ahead of the actual project, local content reached 28 per centof total hours worked during the construction of the Akpo floating production, storage and offloading (FPSO) unit. On the project, launched in 2008, local content increased to 59 per cent, representing close to 11 million hours of work for local contractors. The took the company’s commitment to local content to the next level, with all of the front-end engineering and design (FEED) work performed in Nigeria.”

For Total, local content is important in Non Organisation for Economic Co-operation and Development, OECD, countries because of the fact that the poorest three-fifths of the global populationlive in countries that are actually rich in fossil fuel and mineral resources.

According to the company, only five of the countries with an abundant supply of oil and gas fall into the top quartile of the United Nations Development Program’s (UNDP) Human Development Index.

It said, “These statistics concern us directly because nearly 75 per cent of our production comes from non-OECD countries. We therefore constantly strive to: help make oil and gas production a of development at the national, regional and local levels. Against a backdrop of heightened competition between oil companies, the ability to implement a local content policy increasingly gives us a competitive edge and is critical to forging partnerships with national oil companies. By improving the acceptability of our operations, local content also helps us gain a firm foothold in the local social and economic environment.”

AFREN
To drive the Nigerian Content initiative, Afren PLC is partnering with local players in the development of major oil fields and oil and gas projects.

The company partnered with an indigenous company, Amni International Petroleum Development Company, in July 2012, to commence early development drilling at the Okoro Field Extension, just six months from discovery. The Okoro-14 (Okoro Field Extension) development well was drilled by Afren and Amni from the existing wellhead platform (WHP) and delivered rates in excess of 6,000 barrel of oil per day (bopd) on production test from the new reservoirs.

The well was subsequently completed and brought on stream through the existing Okoro Floating Production Storage Offloading vessel (FPSO) at a stabilized rate of 5,000 bopd of 38° API oil on 31 October 2012. The Partners initially utilized the available wellhead slots on the existing Okoro platform to gain early production information that allowed optimal design of the full field development configuration, which involved up to a further ten production wells.

Also, in 2012, Afren partnered with another indigenous player, Oriental Energy Resources to complete the drilling of two additional fields and one water injection well at the West Fault Block.

According to the company, “The discovery at the Ebok North Fault Block (Ebok NFB) in 2012 has added approximately .25 mmbbls of gross 2P reserves to 2011 year end volumes, representing a 2012 replacement ratio of 114%. The Ebok NFB well had successfully encountered 370 feet of good quality oil in the same tertiary reservoir sands equivalent to those that have been developed and are in production at the main Ebok field development.”

The company also added that, “The well reached a total depth of 4,230 feet and was targeting a separate fault block structure located approximately 2 kilometres to the north of the main Ebok field. On January 21, 2013, Afren and its Partner, Oriental Energy Resources, announced that the Ebok NFB early production well had been successfully drilled, tested and was producing. Performance data from this well would provide important information ahead of implementing an optimal full field development solution.”