Engr. Simbi Wabote, Executive Secretary, NCDMB
Nigerian Liquefied Natural Gas (NLNG), is one of the thriving gas companies in Nigeria with several track records in terms of gas sales and maximization of profits. NLNG has 6 trains in which it uses for gas business across the globe.
As part of its burgeoning progress, the gas company is planning for the 7th Train which will be added to the existing ones. To show its commitment to Local Content and penchant for indigenous participation as well, NLNG recently organized a Public Workshop that was held in Abuja. The Workshop brought together indigenous service companies that will participate in the proposed Train 7.
Speaking to contractors at the Public Workshop, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, said, the Workshop showed strategic ways put in place for upcoming opportunities in the industry which was well communicated to all stakeholders both local and international. He stressed further, “When I Look at the projects in the portfolio of Nigeria in next coming months and years, one of those that stand out that I have more than 70% assurance that is going to happen is the NLNG Train 7.”
Wabote emphasized on other projects that were to be started about twenty years ago, that have not been put in proper perspective, “There are other projects in the funnel that have been discussed since I got employed by Shell, some twenty seven years ago and they are still being discussed.”
The ES addressed participants interested in NLNG project that the structure is completely different from other ones hence it will neither fail but be existence. He mentioned other projects that are either Production Sharing Contracts (PSCs) or Joint Ventures (JVs), but for the NLNG, the company has Board of Directors who take responsibility and decisions on behalf of the company devoid of political encumbrances. The opportunity is genuine.
Wabote highlighted the prevailing situation in the Nigerian oil industry before the advent of Local Content Act. The Nigerian Oil & Gas Industry Content Act (NOGIC), was signed into law in 2010. Prior to the Act, all fabrications, engineering and procurement were done outside the shores of Nigeria resulting in estimated capital flight of about $380 billion in fifty years. He recalled that when the Bonga project was to be built the only time Nigerians knew about it was when the expatriate came to the country to install it. Thus, “Practically everything was done outside this country, designing, engineering, everything was done outside.” Most multinational oil companies preferred to take their employees who are Nigerians to be trained abroad for major projects. This was the picture prior to the enactment of the NOGIC Act.
Wabote explained to the Workshop participants that when the Content Act was enunciated by previous administrations in Nigeria, one of the first instructions given by the Nigerian National Petroleum Corporation (NNPC) was the development of twenty-three directives. One of the directives stated clearly that all engineering activities must be domiciled in-country. This did not go down well with International Oil Companies (IOCs). Estimated job opportunities was in the region of two million. For the last eight years, capacity has been established to reverse adverse effect of reliance of importation.
The ES dissected objectives of the Public Workshop which is to set the tide for Nigerian upcoming opportunities in NLNG Train 7 and to create platform for identification of local supply chain opportunities that are available in-country. This has to be in line with (NOGIC).
He disclosed further that concerned stakeholders have argued that the focus of local content is only in the oil and gas sector, Wabote reacted that 90% of Nigeria’s foreign exchange earnings come from oil and gas sector. Proceeds from oil and gas exceed the country’s budget hence the focus has to be on the sector. It is also one of the greatest employers of labour. Some IOCs have more than four thousand employees. The ES submitted that the beauty of oil and gas sector, is that it indirect and induce effect of having things being done in-country. This is in the ratio of 1 to 6 while the supply chain that the process creates has capacity for job creation.
According to the ES, fundamentals of (NOGIC) Act are domiciliation of industry activities in Nigeria and utilization of Nigerian made goods including personnel. The mandate includes; develop capacity of local supply chain for effective and efficient service delivery in the oil and gas industry without compromising standards and to implement and enforce provisions of the Act.
Besides, core mandate as enshrined in NOGIC Act 2010, evolves around six main areas: foster institutional collaboration to ensure that the oil and gas platform is used to affect other institutions of government. To integrate oil producing communities into the oil and gas value chain. It gives room to maximize Nigerians in oil and gas activities, maximize utilization of Nigeria resources which includes goods, services and assets. This will attract investments in the Nigerian oil and gas sector including equipment and service providers. The Act is to link the oil and gas sector with other sectors of the economy.
Contrary to insinuations making the rounds, Wabote expressed further that “Nigerian Content is not about Nigerianization, it is about domiciliation and domestication of services in the country.” If an international company wants to establish its capacity in-country because of the technology involved, it will be allowed to bring expatriates in order to domicile the technology. But, there will an agreement with the Board that within five years, it has to domesticate some positions. This gives opportunity to training and capacity building. The Act is about domestication and domiciliation of goods and services for the benefits of the country.
Wabote assured IOCs that their investments and activities in Nigeria are protected by the Act.
The ES commended NLNG for its efforts to deepen Local Content in the Train 7 project by actively demonstrated its intensions with actions in a transcend process. The company has portrayed its commitment in the development of Local Content.
He explained further that NOGIC Act has brought development in the country including Bonny vocational centre that was established to build capacity of Nigerians. Many Nigerians participated in the project and at present more than 95% of employees in NLNG are Nigerians.
Wabote told participants in the Workshop that “As we go into the development of NLNG Train 7 project, we believe that project will bring about real opportunities for utilizing local goods and services in addition to foreign local companies’ prospects to enhance their capacities and capabilities thereby further stimulating local supply chain.”
Although, foreign companies will participate in the Train 7 project due to technology involved, there is still opportunity for local operators, “You don’t expect a Nigerian company that has not built an LPG plant before to become a leader in building an LNG plant, we want the project to succeed but the opportunities within the activities of those contractors if you have to share it among the number of people here everybody will get substantial chunk so long as you have capacity.”
He asserted further, “We expect that the Train 7 project will provide a platform to expand the existing businesses and create ample opportunities for new businesses.” The ES expressed delight on the fabrication yards that were created after Egina project across the country. Thus, he advised operators to create value in case they are able take part in the project so as to grow capacity, “We must continue to build capacity if we must compete in Nigeria and sub-Sahara Africa.” This is the vision of the Content Board for indigenous operators to be key players in Nigeria in order to dominate the sub-Sahara Africa in oil and gas sector.
The ES revealed that at present, almost all African countries are involved in oil and gas business. Therefore, Nigeria started the oil business first and should be able to export its capacity to those African countries and work to dominate the market. He told the service companies who are the major focal point of the Public Workshop, that they should brace up and take the challenge to invest in capacity to position their companies for opportunities available. “It is not a game of entitlement, it is a game of you having the capacity and the capability to able to take up those services, Wabote added.”
The ES also highlighted key achievements of NCDMB since the Board started Local content drive. Before the Act, the country had an annual spend of $20 billion with nothing in-country. Nigeria targeted $20 billion in-country spent at the start of January in 2010. At present, the country spent $5 billion in-country which has been retained for the past eight years. With this achievement, the Board has moved forward and there are indigenous companies participating actively within and outside the shores of Nigeria in engineering, fabrication, manufacturing and sub-sea construction of FPSOs. Indigenous companies also pride in manufacturing of components and equipment including components used in the oil and gas sector are manufactured in Nigeria.
Before the enactment of the NOGIC Act, most technical jobs were done and manufactured outside the country but as present, the story is different. The cables used in the industry are manufactured in-country. This has given room for over thirty-five thousand jobs that have been created as a result of implementation of NOGIC Act.
The ES projected that since Egina succeeded, definitely, NLNG Train 7 will succeed because the vision of the Board is to achieve 70% in-country value retention within the next ten years from current level of 30%. He said at the Public Workshop that 80% of job done in Egina project was in Nigeria, NLNG Train 7 will also be done in-country in spite of pressure from IOCs that would have built in modules, shipped them in the country and coupled the project, “That is not going to happen, we are going to steel built your Train 7 in-country.” “We need project to deepen Local Content practice so that local business can thrive and grow, if there is no project, there is no Local Content, we need to work together to bring project alive, Wabote exclaimed.”