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History & Development
Since the discovery and first oil production in Nigeria in 1948, the industry has been run by International Oil Companies, IOCs and Original Equipment Manufacturers, OEMs. From then until 2006, almost every exploration, production, equipment manufacturing, repairs, maintenance, engineering and design, and project management were done by foreign companies in their home countries.
In 2006, the Federal Government of Nigerian through the Nigerian National petroleum Corporation realized that Nigerians should have learnt and acquired enough experience to take over most of the responsibilities and liabilities in the Oil and gas Industry; hence, the establishment of the Nigerian Content.
On October 13, 2006, the Federal Government of Nigeria gave Nigerian Content Development (NCD) short term directives. This directive enumerated a list of 23 categories of work which must be executed in Nigeria.
Nigerian Content is the quantum of composite value added or created in the Nigerian economy through the utilization of Nigerian human and material resources for the provision of goods and services to the petroleum industry within acceptable quality, health, safety and environment standards in order to stimulate the development of indigenous capabilities.
In establishing the Nigerian Content, the Federal Government of Nigeria realized that it can neither be achieved overnight, nor without Joint Venture Partnerships with International Oil Companies and Original Equipment Manufacturers. Hence, in 2006, the government set a target of 75% Nigerian Content to be achieved in 2010.
Following the signing of the bill into law by the then acting president of the Federal Republic of Nigeria, Dr. Goodluck Elele Jonathan, the Nigerian Oil & Gas Industry Content Development Act (Nigerian Content Act 2010), came into effect on April 22, 2010. The act applies to all operations in the Nigerian Oil and Gas Industry including Exploration and Production / Service Companies.
The act establishes that Nigerian independent operators shall be given first consideration in the award of oil blocks, oil field licenses, oil lifting licenses and all projects for which contracts will be awarded; it also gives exclusive consideration to Nigerian indigenous service companies which demonstrate ownership of equipment, Nigerian personnel and capacity to execute work on land and swamp operating areas. Such Nigerian indigenous services company can however enter into technical partnership with original equipment manufacturers and international oil companies.
The Act also establishes a Nigerian Content Development Fund (NCDF) managed by the Nigerian Content Development and Monitoring Board (NCDMB), and funded through a 1% deduction at source of every contract awarded to any operator, contract, subcontractor, joint venture partner, etc, in the upstream sector of the Oil & Gad industry in Nigeria.
Engineering Systems Limited is registered with the Nigerian Oil & Gas Industry Content Joint Qualification System (NOGICJQS), and maintains a Nigerian Content Policy that complies with the requirements of the Nigerian Content Act..
The Act establishes the Nigerian Content Development and Monitoring Board (NCDMB) which is the regulatory agency vested with the responsibility of regulating the Nigerian Content Act. The Board implements the provisions of the Bill with a view to ensuring a measurable and continuous growth in Nigerian content in all activities of the Oil & Gas industry in Nigeria.
Key Elements of Nigerian Content
Basically, there are four (4) key elements of the Nigerian Content, namely;
1. Materials – Materials to be used for Oil and Gas projects in Nigeria should be sourced locally.
2. Services/Contracts – Local suppliers and sub-contractors should be used for services and contracts to be executed in the Oil and Gas industry in Nigeria by International Oil Companies.
3. Equipment/Capital Assets – Equipment, tools and capital assets to be used in the execution of Projects in the Oil and Gas industry in Nigeria should be procured in, and sourced from Nigeria, except where such are not available in Nigeria.
4. Labour – Oil and Gas projects in Nigeria shall involve the utilization of local manpower including training and development, and Technology Transfer.
Nigerian Content, IOCs, OEMs and JV Partnerships
From the Nigerian Content Act 2010, it is clear that for IOCs and OEMs, no remote business will be possible in the Oil & Gas industry in Nigeria without presence in Nigeria, or least some commercial investment in equipment manufacturing and human capacity development. This means that foreign companies interested in doing business in the Oil & Gas Industry in Nigeria should form Joint Venture Partnerships with Nigerian companies. Foreign suppliers have to bid and supply through a Nigerian partner, subsidiary or agent.
The philosophy of Joint Venture Partnerships is geared towards achieving technology transfer into Nigeria through investments in manufacturing of machinery & equipment and raw materials, and training and development of Nigerian staff to gain the necessary skills to perform the operations required in the Oil & Gas industry, from exploration and production to refining and maintenance of Oil & Gas facilities.
Engineering Systems Limited (100% Nigerian Content) welcomes Original Equipment Manufacturers (OEMs) and International Oil Corporations (IOCs) for Joint Venture Partnerships in the Oil and Gas Industry in Nigeria. We are duly registered with the Department of Petroleum Resources-DPR, Nigerian Petroleum Exchange-NIPEX, Nigeria Oil & Gas Industry Content Joint Qualification System-NOGICJQS, and major IOCs like ExxonMobil, Addax Petroleum, Total Exploration and Production, etc.
If you are an OEM/IOC in Nigeria or seeking to enter the Nigerian Oil & Gas Industry and need to increase your Nigerian content or as a first timer wishing to explore the very challenging but profitable Nigerian Oil & Gas business environment and succeed then you should talk to us.
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