Nigeria strives to lift local content in oil industry

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ABUJA  — Nigeria wants more local content in its mainstay oil and gas industry, but a lack of skills training and shambolic infrastructure mean it is struggling to provide the white-collar manpower or materials the sector needs. 

Government officials say Africa’s biggest energy industry has not provided enough domestic job growth in the five decades since oil was first pumped, as foreign firms employ expatriate executives and purchase supplies and materials from overseas.

“Nigeria is highly blessed in terms of human and material resources, but unfortunately still looks outside for competent hands,” Funso Esan, head of the energy department at the National Planning Commission, told an industry conference. 

Industry experts estimate that Nigerian content in the oil and gas sector is around 40 percent, indicating that most white-collar jobs, engineering, materials and maintenance work are provided by foreign workers and overseas suppliers. 

That is below the government’s target of 45 percent Nigerian content by 2006, making its 70 percent target for 2010 look almost impossible to reach. 

“Is 70 percent achievable in 2010? No, it is not achievable,” George Osahon, Nigerian content manager for state-run oil firm NNPC, told the conference in Abuja. 

Educational standards have fallen sharply in Africa’s most populous nation since the mid-1980s. Its once proud universities are a shadow of their former selves, and those Nigerians who can afford it prefer to study in Europe or the United States. 

Aside from a lack of skills training, Nigerian manufacturing has been crippled by poor infrastructure. Intermittent mains power supply and high operating costs mean much of the equipment needed in the oil sector cannot be locally produced. 

Royal Dutch Shell, the first foreign oil producer in Nigeria, nonetheless said it awarded nearly $1 billion worth of contracts to Nigerian companies in 2007, more than half its total outsourcing. The industry average is around 40 percent. 

BOLSTERING SECURITY 

The Niger Delta, a vast network of mangrove swamps which is home to the Nigerian oil and gas industry, has been plagued by unrest caused by militant groups and community activists who complain they are not seeing their share of oil profits. 

The region’s most prominent militant group, the Movement for the Emancipation of the Niger Delta (MEND), has shut down around a fifth of Nigerian output since launching a campaign of pipeline bombings and attacks on facilities in early 2006. 

“One of the key things is getting indigenous involvement in production, that makes a big difference,” Wale Tinubu, chief executive of Nigerian energy firm Oando told Reuters in an interview last month, when asked about the insecurity. 

Many security experts argue that if the militants can be brought on side — given jobs guarding or working at industry installations — they will become stakeholders in the development of the region and be less inclined to take up arms. 

Others see them as criminal networks bent on getting rich from stolen crude and kidnapping for ransom and say nothing will change unless those supplies of funds are cut off. 

At the Abuja conference, Nigerian government officials urged oil companies to look at the benefits of hiring locally not least because it would save costs during the economic gloom. 

“The downturn … could be an opportunity as investors are encouraged to establish facilities and infrastructure in-country through incentivized investment,” Osahon said.

af.reuters.com

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