Basics

Local content means the development of local skills, technology transfert, use of local manpower and local manufacturing.

History

First oil was produced in 1948 in Oloibiri oilfield in Nigeria. This means that today in 2007, two generations of Nigerian oil workers and managers used their skills to learn on the field and abroad with the international oil companies and are now experienced enough to take over most of the liabilities and duties in the Nigerian Oil & Gas Industry.

Meanwhile, and for long, every equipment manufacturing, repairs, maintenance, engineering and design was done in foreign countries due to the natural fact that the Nigerian crude oil & natural gas developments where in remote & virgin places in the Niger Delta.

In October 1996, H.E. Chief Dan Etete (former Minister of Petroleum Resources) in Warri Globestar yard made an historical course: "From now, foreign suppliers will have to bid and supply through a local subsidiary or agent".

Development

It took some time before this hope became a reality: local fabrication yards came more numerous and local independant producing companies are now part of the Nigerian landmark.

Today, the major oil operators in Nigeria have included a Nigerian Content percentage needed in their bidding process.

So, it is now necessary for foreign contractors and Manufacturers (OEMs) to be realistic on the fact that no remote business is possible in Nigeria without at least, a commercial investment which means to get close of local partners.

The targets set by the Nigerian Government for local content is 40% by 2007 and 70% by 2010.

1. FEED and detailed engineering design for all projects is to be domiciled in Nigeria.
2. Project Management Teams and Procurement Centres for all projects in the Nigerian Oil and Gas industry must be located in Nigeria.
3. Henceforth, all operators and project promoters must forecast procurement items required for projects and operational activities and forward the Materials List NCD on or before 31st January of every year. Also, a Master Procurement Plan (MPP) for ongoing and approved projects should be submitted to the Nigerian Content Division of NNPC on or before 31st January of every year.
4. Fabrication and integration of all fixed (offshore and onshore) platforms weighing up to 10,000 Tons are to be carried out in Nigeria. For the fixed platforms (offshore and onshore) greater than 10,000 Tons, all items in directive 5, pressure vessels and integration of the topside modules are to be carried out in Nigeria.
5. Henceforth, fabrication of all piles, decks, anchors, buoys, jackets, pipe racks, bridges, flare booms and storage tanks including all galvanizing works for LNG and process plants are to be done in Nigeria.
6. Henceforth, all flow-lines and risers must be fixed and must be fabricated in Nigeria except for special cases to be demonstrated and approved by NCD.
7. Henceforth, Assembling, testing and commissioning of all Subsea valves, Christmas tees, wellheads and system integration tests are to be carried out in Nigeria.
8. All FPSO contract packages are to be bid on the basis of carrying out topside integration in Nigeria. A minimum of 50% of the total tonnage of FPSO topside modules must be fabricated in Nigeria.
9. All third party services relating to fabrication and construction including but not limited to NDT, mechanical tests, PWHT as well as certification of welding procedures and welders must be carried out in Nigeria. Nigerian Institute of Welding must certify all such tests in collaboration with international accreditation bodies.
10. All operators and project promoters must ensure that recommendations for contract awards in respect of all major projects being forwarded to NNPC/constituted boards of such oil and gas companies for approval must include evidence of binding agreement by the main contractor with Nigerian Content Subcontractor(s). Such agreements shall indicate the cost and detailed scope including total man-hours for engineering, tonnage and manhours of fabrication and relevant defining parameters for materials to be procured locally as well as other services.
11. Henceforth, all low voltage Earthing cables of 450/750 V grade and Control, Power, Lighting Cables of 600/1000 V grade must be purchased from Nigerian cable manufacturers.
12. Henceforth, all Line-pipes, sacrificial anodes, Electrical switchgear paints, ropes, pigs, heat exchangers and any other locally manufactured material and equipment must be sourced from in-country manufacturers.
13. All carbon steel pressure vessels shall be fabricated in Nigeria.
14. All seismic data acquisition projects, all seismic data processing projects, all reservoir management studies and all data management and storage services are to be carried out in Nigeria.
15. Henceforth, all waste management, onshore and swamp integrated completions, onshore and swamp well simulations, onshore fluid and mud solids control, onshore measurement while drilling (MWD), logging while drilling (LWD) and directional drilling (DD) activities are to be performed by indigenous or indigenous companies having genuine alliances with multinational companies.
16. Henceforth, coating of all Line-pipes and threading of all oil country tubular goods (OCTG) are to be carried out in Nigeria.
17. Henceforth, all concrete barges and concrete floating platforms are to be fabricated in-country.
18. Henceforth, operation and maintenance of offshore production units, FPSO and FSO in particular, are to be performed by Nigerian companies.
19. All international codes and standards used in the industry are to be harmonized to support utilization of locally manufactured products such as paints, cables, steel pipes, rods, sections, ropes etc and to improve capacity utilization in local industries. Clauses that create impediments for/exclude participation of local companies should not be included in any ITT
20. Operators and project promoters must ensure that recommendations for contract award for all drilling contracts shall include a binding agreement at Technical Evaluation stage for the sourcing of Barite and Bentonite form local manufacturers.
21. Henceforth, all projects and operations in the Oil and Gas industry must demonstrate strict compliance with provisions in the insurance Act 2003 and submit a certificate of compliance issued by NAICOM to NCD as part of technical evaluation requirements for insurance or reinsurance Contracts.
    In this respect, NAICOM verified Gross underwriting capacity of Nigerian Registered Insurance companies must be fully utilized to maximize Nigerian Content before ceding risk offshore.
22. Henceforth, all projects and operations in the Oil and Gas industry must demonstrate strict compliance with provisions of the Cabotage Act.

   23.  All operators and service providers must make provisions for targeted training and understudy programs to maximize utilization of Nigerian personnel in all areas of their operations. All operators must therefore submit detailed training plans for each project and their operations.