*It’s concerning that Nigerian firms can’t undertake deep offshore drilling
Speaking at the recently concluded Practical Nigerian Content Forum, organised by the Nigerian Content Development and Monitoring Board (NCDMB) in Yenagoa, Bayelsa State, Minister of State for Petroleum Resources (Oil) Heineken Lokpobiri stated that no Nigerian company has the capacity to undertake drilling in deep offshore waters. He was apparently responding to concerns within the petroleum industry that the NCDMB continues to grant waivers for the award of some contracts to foreign companies in contravention of the local content law.
Officially known as the Nigerian Oil and Gas Industry Content and Development Act, which became law in 2010, the Local Content Act prioritises the promotion of Nigerian participation in the oil and gas sector. The law mandates the use of local resources, services, and personnel in the industry to build indigenous local capacity, generate employment and reduce capital flight.
The President Bola Tinubu administration has further consolidated on this policy through its Nigeria First initiative that emphasises the patronage, as much as possible, of local contractors, expertise and raw material input by private firms and public sector organisations in the conceptualisation and implementation of projects.
With particular reference to the oil and gas sector, however, Lokpobiri, insists that adherence to this policy is impracticable and even harmful to the economy. He contends that, as a result of lack of capacity for deep offshore drilling by Nigerian companies, contracts awarded to the latter are subcontracted to big foreign multinational oil companies with negative implications for production costs and the country’s competitiveness in the global market.
The minister, who, statutorily, is the Chairman of the NCDMB, argued that “When you see waivers being given, as somebody who also participated in the local content law, I would never, under my chairmanship of the local content governing council, outsource Nigerian jobs to foreigners; but rather than give a Nigerian a job that he will still outsource to foreigners, I take that cost and give it directly to that foreigner so that our pricing can be competitive.”
Lokpobiri stressed his point with reference to the Petroleum Technology Association of Nigeria (PETAN), whose members, he claimed, dislike him because he doesn’t give them jobs. His words: “We can’t give PETAN members jobs that they cannot do in the name of employing Nigerian companies. They will add up their 20 per cent, and they will still go to those big boys.”
The minister may well have been just blunt and realistic, not given to emotional patriotic idealism. But we worry that he does not question why, nearly seven decades after the commencement of prospecting for oil in Nigeria, indigenous firms cannot participate actively in all aspects of the industry, including deep offshore drilling. The ministry needs to focus on this question, and go beyond lamenting the deficiency of local companies, and draw up policies to correct the clearly unacceptable situation.
Why have indigenous Nigerian companies over the years not developed the capacity to operate in the highly specialised sectors of the oil and gas industry? Have there been government policies targeted at enhancing their capacity in this regard? If so, why have these failed? Is there any linkage between curricular development in our higher institutions in the sphere of petroleum technology and the need to respond to the critical needs of the industry as adumbrated by the minister?
What incentives are in place to encourage indigenous companies to acquire local expertise to enable them compete effectively in all segments of the industry to boost local capacity and significantly reduce technological dependency in the interest of self-reliant national development? We urge the Ministry of Petroleum Resources to address these issues speedily.
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