A Review of the Nigerian Energy Industry

‘Nigerian firms to receive first consideration in oil block sales’

Executive secretary of the Nigerian Content Monitoring and Development Board, Ernest Nwakpa, says Nigerian independent oil and gas operators will henceforth be given first consideration in the award of oil blocks, oil field licenses, oil lifting licenses and in all projects for which contracts are to be awarded in the Nigerian oil and gas industry.

This is in compliance with the provisions of the Nigerian Content Act and a departure from the past whereby a chunk of the juicy deals were reserved for the foregn multinationals with the local companies playing the second fiddle.

Nwakpa however said the award of oil blocks to the local companies would be subject to their fulfilment of conditions in the Act or as may be specified by the Minister of Petroleum Resources.

Between 1980 and 2010, the Nigerian oil and gas industry had imported goods and services worth over $300billion from foreign economies, while the Nigerian economy was left to do with the crumbs from the oil and gas companies. The implication of this, is that job opportunities which would have gone to Nigerians, are being exported to foreign countries. According to him, the potential to train Nigerians and invest in infrastructure and also create and support over 300,000 direct job s is being exported.

These opportunities are exported to the United States of America and Europe for engineering, Research and Development, exploration and production. Some of the work is even contracted to other developing countries in Africa, such as Gabon and Cameroun, for vessel and rig repairs. Other aspects are contracted to South Korea and China. Such contract include those for pipes,equipment, Floating Production offshore Vessels (FPSO), LNG Carriers and Heavy Fabrication industries.

Noting that the situation with the oil and gas sector was more than that of capital flight, Nwakpa said the government was doing its best to reverse it. H e said exclusive consideration would be given to Nigerian indigenous service companies which demonstrated ownership of equipment and engaged Nigerian personnel and capacity to execute such work.

“In the bidding for any license, permit or interest, and before carrying out any project in the Nigerian oil and gas industry, an operator shall submit a Nigerian Content Plan to the board, demonstrating compliance with the Nigerian content requirements of this Act”, he said.

The Act requires multinationals to domicile a proportion of their assets in Nigeria . It promotes indigenous ownership of equipment and mandates local capacity development.

The Act also provides for a dedicated Nigerian Content Development Fund for capacity building, requires increased participation by indigenes and creates opportunity for integrating oil producing communities into mainstream industry activity as well as mandates enlightenment and awareness programmes.

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