report1 otc12-2local contnt

7/28/2019 Report1 Otc12-2Local Contnt

1/37

LEVERAGING NIGERIAN CONTENT FOR GREATER OPPORTUNITIESPresentation at the PETAN OTC 2012 Panel Session

byEngr. E.C. Nwapa (FNSE), Executive Secretary, NCDMB

May 2012


2/37

A Threat to Oil willthreaten NationalSurvival

Oil & Gas Industry isrepositioning toPromote Utilization ofLocal goods &Services

Building capacity onthe back of megaProjects andOperations

Other Linkagesectors need to bemobilized

NATIONAL REVENUE PROFILEOver Dependence on Oil


3/37

Distribution of Oil and Gas Assets. Foreign Vs Indigenous

Snapshot of reserves:Oil-36.22 billion barrels (2.92% of worldreserves)

Gas- 178 TCF(2.98% of the world reserves)1.6 Majors

Addax, Chevron, Eni-Agip, ExxonMobil, Shell and Total

Control 98% of reserves andproduction assets

2.Indigenous companies Over 30 operators (Afren, Oando,

Seplat etc) Over 30 independents and local

operators ( Summit, Conoil etc) Own 2% of reserves

Indigenous players positioned to be in the league

of High Performance Energy Companies (HPEC)

More fields ready for indigenous players - OML26,30,34, 40 & 42

Majors allocating oil fields for Full FieldDevelopment using local capabilities as part ofR&D program

DPR: Oil blocks in Nigeria

1. Combined daily production capacity of 80,000 bpd2. With aggressive equity participation indigenous players will increase

market share3. NPDC making significant progress , hitting the 100 barrels per day

equivalent mark.4. Full Field Development by indigenous companies being promoted

NDPR


4/37

$14b

Defining theRoadmap

for Change

Technical Services

$78b

$20b$39b

$20b

$39b

$107b$214b

$7b$9b

Fabrication

Engineering

Procurement

2006- 2020Nigerian Content Implementation

Bringing Nigerian Jobs BackHub for oil and gas servicesEstimated $191 billion could be retained300,000 new direct job opportunities -(Engineering,

Sciences, Technicians etc)

Pre-Nigerian Content ImplementationBuying rather than selling.Exporting Nigerian JobsEstimated capital flight $380 billion

Estimated lost job opportunities 2 million

10yrs30yrs

Research &Development

Changing the Pre NOGICD Act FootprintBringing Nigerian Jobs Back

Over 95% of industryspend Abroad

Over 65% of industryspend domiciled
http://www.theodora.com/maps


5/37

Signed into law by Mr. President in April 22 2010

Established the Nig Content Devt and Monitoring Board

Inaugurated Governing Council for the Board August 2010

NCDMB commenced operations in Yenagoa in June 2010

Introduction of the Nigerian Content Act

NCDMB has steered non-disruptive implementation for 2 years


6/37

Thrust of the NOGIC Act 2010

Nigerian Content aspiration derived from the thrust of the NOGIC Act are focused on ensuring thatcompanies benefitting from our natural resources also contribute to economic development of Nigeria .

Develop local capacity in key areas such as manufacturing fabrication,engineering etc

Promote indigenous ownership of assets and utilization of indigenous assets inoil and gas operations

Develop indigenous skills pool across oil and gas value chain Provides mandatory training requirements on the back of projects Creates JQS to manage and track available skills

Promote establishment of support industries that will sustain oil and gas industryoperations

Enhance multiplier effect of oil and gas investments in economy

Develop pool of competitive supply chain rooted in oil bearing communities Create customized training and sustainable employment opportunities structured awareness and enlightment campaigns

Institutionalize inter-agency collaboration on local content development Integrate NCDMB into planning and contracting process to ensure Nigerian Content

COUNTS Dedicated NCDF for capacity building

Maximize utilization ofNigerian made goods

Maximize utilization ofNigerian human resources

Link the oil and gasindustry with other sectorsof the Economy

Focus on communityparticipation in the supplychain

Foster institutionalcollaboration

1

2

3

4

5


7/37

HMPRs Medium Term Targets - 2010 to 2015

Retain $10 billion out of $20 Billion average annual industry spend

Create over 30000 direct employment and training opportunities

Establish 3 to 4 pipe mills to service industry demands

Develop 1 or 2 dockyards and maximize use of existing shipyards

Increase indegenous ownership of marine assets to 60% minimum

Integrate indigenes and businesses in the oil producing areas

Capture 50 to 70 % of banking, insurance and legal services


8/37

Various Initiatives in:i) R&Dii) Human Capital developmentiii) Steel Pipemills and associated industriesiv) Manufacturing and Component Assemblyv) Marine Vessel and Rig Ownershipvi) New facilities and Upgrade of existing infrastructurevii) Dry Docks and Shipyards

Dry dock/shipyard Manufacturing/ AssyRig/vessel ownerHuman Capital DevSteel mills Facility / upgradesR&D Manufacturing/assembly

A MULTI LANE HIGHWAY TOWARDS INDUSTRIALISATION

NIGERIAN CONTENT ROAD MAPRealizing the Vision Instrument for the industrialization of Nigeria


9/37

Stakeholder Collaboration Implementation Model

Government

Oil companies

Service providers

Investment policy

Contracts approval

Bid roundsNCDF

Capacity development

NC regulation

InterministerialInterface- RMRDC onR&D

Nigerian content scopeon projects (NCCC)

Capacity development1% remittance to NCDF

Nigerian ContentConsultative Forum(NCCF)

Capacity development

Nigerian ContentEquipment Certificate(NCEC)

1% remittance to NCDF

Foreign Direct Investment

Benchmark models(learning from others)

International

partners

NCDMB act as facilitator, bringing together a broad array of


10/37

Nigerian Content Roadmap developed to manage challenges , deepencapacity and maximise utilisation of Nigerian goods and services

Implementation challenges

Strict compliance without disrupting industry activities Capacity Gaps

Handling increased cost + schedule

Transparent effective model for NCDF Management

Ensuring Quality of delivery

Absence of manufacturing capability and confidence to use local goods-

Extending implementation to Downstream

Growing new organization to meet wide responsibility

Funding the Boards operations from appropriation

Interface

Exposure to frequent litigation


11/37

Nigerian Content Measurement

NC VALUE(70% - 85%)

Based on proportionof value of contractsawarded to Nigerian

Companies

NC VALUE(12% - 18%)

Based on proportionof contract sumsspent on Nigerian

made goods

Real NCPartial NC

There is marked increase in contract award to Nigerian companies Spend proportion in Nigeria has peaked Without manufacturing, no further NC Growth No employment growth


12/37

Current Performance levels

100

80

60

40

20

0

Fabrication ManufacturingEngineering

90%

50%

7%


13/37

NCDMB adopts 3 pronged approach to promote utilization of locallyManufactured goods

Issued Research and Development guidelinesto industry operators & service providers

Enforcing compliance with provisions and

schedule of Act on material utilization onprojects and operations

Promoting local manufacture of materials usedin the industry


14/37

COST BENCHMARK TEMPLATE FOR LOCAL MANUFACTURING

Imported Pipes Locally Manufactured Pipes

Valueabroad

Costallocation

Localinput

Cost element LocaiInput

Costallocation

In countryValue

Remarks

1 Raw Material(imported)

2 Raw Material (local)

3 Custom Duties

4 Excise Duties

5 Taxes

6Inland transport (

port to factory)

7Inland TransportFactory to site

8Finance costs

(foreign)

9Finance costs

(local)

10 Wages

11Amortization for

equipment

12 Power generation


15/37

STRATEGIC INTERVENTIONSAsset Ownership.

26Highest spend is on category 2 vessels

AHTs/LHTs, DP PSVs, DSVs, Pipe Lay BargesOperators have put in place robust plan to replace foreign owned with indigenous owned vessels.

2+1yr ContractsLow Cost

Domination of foreign crew men and rig operators

Ownership of vessels and rigs lies with foreigners ~$3

billion in capital flight

Pre NOGIC Today

Indigenous players dominate category 1 vessels retention of$1.8 billion

Structured intervention for more Nigerian ownership ofcategory 2 vessels- potential for retention of >$1.5 billion

Status of Marine Vessels Utilization


16/37

STRATEGIC INTERVENTIONSTraining & Employment

Compared to rising prices of oil, the capacity of operating companiesto employ nationals has been on the decline since 2008

PUBLICSECTOR

(Regulator)~30,000 jobs

SERVICE PROVIDERS(Services, equipmt)2 million jobs

INTERVENTIONS:

1.(NOGETTS) Project Based Training and Attachment -

Over 6,000 candidates captured on JQS Platform

Over 1,500 attached to O & G Projects

Developing geosciences Training

Developing environmental remediation training

2.Institutional Development -

Established OGTAN

Establish Engineering Academy with PPP

NIW Welding Technology Complex (NIW/NCDMB/Shell)

Establish Subsea Academy

3.Expatriate Quota Management -

EQ allocation supported by robust succession planningMonitor utilisation of EQ slots

Productive Employment

Social Employment


17/37

FPSO topsideIntegration capability

Subsea Training &Certifying Academy

Subsea EquipmentManufacturing Capability

Heavy Industry FabricationYard - $ 250million

TYPICAL PROJECT SPIN-OFFS


18/37

Consolidate existing Mill

3 new Pipe mills

Start Production by 2015

Cost of $150m each

Generate 15000 Jobs

3000 trainingopportunities

NLNG, BLNG focus

LNG carrier sizeDockyard

Complete by 2015

Cost of $250m

Generate 55000 Jobs

20 000 trainingopportunities

FPSO TopsideIntegration Facility Pipe Mills DockYards

TUPNI committed toEGINA topsideintegration

Integration Facility setby 2014

Cost of $150m to$200m

Generate 30000 jobs

Training opportunities

Erha North/ Egina

Umbilical facility & Treeassy

Start Production by 2015

Cost of $250m each

Generate 5000 Jobs

2000 trainingopportunities

Subsea Equipment

ManufacturingComplex

Legacy Programs.EGINA/GAS MP/ BONGASW/ERHA NORTH/BRASS LNG


19/37

STRATEGIC INTERVENTIONSIndigenous Marine Vessels Utilization

27

Category 1

Category 2

Category 3

Marine Vessels Ownership

Issued guidelines for utilization and

Categorization

Obtained commitments for replacement

of foreign vessels extracted from

operators.

Directed marine providers, to upload

details of vessel fleet unto NOGIC JQS

Organized workshop with marineproviders to establish opportunity

Mandate vessel providers to carryout

maintenance in Nigerian yards

Economic and Technical Benefits

Impact on the economy

Retention of Nigerian jobs in marine

crew

Growth of indigenous capacity and

sustainability of services

Impact in linkage industries

merchantshipping, Ports development and

Utilization


20/37

STRATEGIC INTERVENTIONSOffshore Rig Acquisition Strategy

28

Land Rig

Jack up Rigs

Semi subs/Drillships

Indigenous Rig Acquisition

Mandate Use of Nigerian Operating Company

for Contracting.

Domicile equipment and technology in theCompany.

Phased increase in indigenous equity to meet

Acts requirement of 50%.

Assistt with long term funding and equity

Financing

STRATEGIC INTERVENTIONS


21/37

STRATEGIC INTERVENTIONSLine Pipe Mill Pilot Scheme

2500km of pipe

Replacement of vandalised and aged pipelines

Water distribution projects

PILOT SCHEME DESCRIPTION

Partnership roles

NCDMB Buy Land (SPV)

Shell + Operators - (Jetty)

Yulong - Equipment

Site Map

Proposed

Layout

STRATEGIC INTERVENTIONS


22/37

STRATEGIC INTERVENTIONSEquipment Components Manufacturing

2011 to 2017

G

rowth

Year

Components and Frames Equipment Parts Equipment Packages

Industry guideline mandates all OEMs to domicile manufacture of equipment components, parts,

packages and systems in Nigeria


23/37

The Board is issuing NCECs to

companies that have met the

requirements

About 52 applications being

processed

IOCs are taking initiatives to support

OEM presence in Nigeria

Guidelines issued to the industry

making NCECs a requirement in

tenders

STRATEGIC INTERVENTIONSNigerian Content Equipment Certificate (NCEC)


24/37

1.Categorization of oil and gasservice companies

2.Industry data base for skills

verification.

3.Verification of available in-countrycapacity

4.Effective information exchangeacross stakeholders

5.Compliance Monitoring

6.Test data uploaded

7.Launch Q2 2012

NOGIC JQS

STRATEGIC INTERVENTIONSNigeria Oil & Gas Industry Content Joint Qualification System

Expatriate Quota Utilization and

Succession data

Marine Vessels data

Contract Processing data

Equipment Ownership

Nigerian Content Compliance

Certificate Data

Skill Base Tracking

Training and Employment data

Nigerian Content Plans and

reports repository

Ni i C t t D l t F d M d l


25/37

Direct Capacity Development

intervention by the Board

Equity Participation to stimulateInvestments in Critical facilities

Skills Development & JobCreation interventions

Provide Guarantees for

low interest lending

Industry Advisory committee &SPV to strengthenGovernance

Fund will not be depleted

NCDF1% Upstreamcontract sums

30%

Direct Intervention Lte

70%Guarantee Ltd

IndustryAdvisoryCommittee

FundManagers(BGL/UBA

global)

OtherParticipatingCommercial

Banks

Nigerian Content Development Fund Model(Clause 104 of the Act) Letter on NCDF implementation

Nigerian Content Governance on Monitoring


26/37

35

COMPLIANCE MONITORING & ENFORCEMENT STRATEGY ( COMES)

Nigerian Content Governance on Monitoring.COMES

Legal firm

Engineering firm

Accounting/ Audit Firm/ForensicAuditor

Engineers, Geologists, Subjectmatter specialist

Industry experienced

professional

NCDMB Personnel

THIRD PARTY INSPECTION TASKFORCE


27/37

36

INSISTENCE ON COMPLIANCE HAS CREATED FACILITIES


28/37

INSISTENCE ON COMPLIANCE HAS CREATED FACILITIESBK TUBULARS OCTG THREADING FACILITY

Before Today

INSISTENCE ON COMPLIANCE HAS CREATED FACILITIES


29/37

April 2011 January 2012

INSISTENCE ON COMPLIANCE HAS CREATED FACILITIESTOTAL PREMIER OCTG Welding/Threading Facility

IT IS WORKING


30/37

IT IS WORKINGNIGERDOCK Drydock and Fab Yard

TODAY

BEFORE


31/37

IT IS WORKING

SAIPEM FAB YARD

TODAYBEFORE

GLOBESTAR invested in new fabrication capability

New NC work scope required over $100 million jumbo yard


32/37

IT IS WORKING

TODAYBEFORE

LADOL Offshore Logistics Base

TODAYBEFORE

ONNE FZ Offshore Logistics Base

Major service

Hub forlogistics and

industryservices forNigeria and

GoG


33/37

Programs Scope Achievements Benefits

Indigenous ownership of Assets

Marine Vesselsownership andutilization,Cabotagecompliance

OwnershipManningMaintenanceUtilization

85% of category 1 vessels in operationowned by Nigerians these include crewsupply vessels, mooring launch vessels,shallow draft vessels etcFirm commitment from operators to replace

49 foreign category 2 vessels with Nigerianowned. of foreign category 2 vessel withNigerian ownedEstablished vessel maintenance capability -

Dry-docking facility at NigerDock ( thelargest in West Africa )

$1.8Bn out of &3.5Bn spend retainedin the Nigerian economyRetention of over 3,800 jobs andcreation of about 300 new jobsStimulus for investment in dry dock

and shipbuilding facility

Rigs ownership andutilization

OwnershipManningMaintenanceUtilization

Guidelines issued to industry on onshoreand offshore rigs ownership and utilization

Achieved Indigenous ownership of certainrig types -semi-submersible , swamp andland rigs (Oando, Seawolf, Bell Oil andGas)

Retention of about $500 million in theeconomy

Equipmentownership andutilization

Minimum of 50%ownership ofequipment toexecute projects byindigenous companyor Nigeriansubsidiary

Indigenous companies with capability andwhich own equipment used in theiroperations are now exclusive players in landand swampIndigenous companies with equipment andsubsidiaries of multinationals which ownminimum of 50% of equipment used are

allowed to bid for offshore work

Indigenous companies havedeveloped capacity and now have asay as major stakeholders inpartnerships with multinationalsRetention of over 50% of spend fromprojects executed in the Nigerianeconomy

PROGRAMS & ACHIEVEMENTS


34/37

Programs Scope Achievements Next steps (6 months)

Manufacturing

EquipmentComponentsManufacturing(ECM) Initiative

Domiciliation ofEquipment componentmanufacturing

Nigerian ContentEquipment Certificate(NCEC)

Public notice to industry, to submitdomiciliation plan for equipmentcomponent manufacturingSignificant progress with concrete plans fordomiciling manufacture of equipmentcomponents -52 applications for NCECwithin 7 monthsOperators are developing their own

framework to promote and encourageOEMs to set up manufacturing facilities inNigeria, in line with the principles of theECM

Monitor implementation ofdomiciliation plan.

Hold stakeholder workshop toelicit consensus onimplementation of ECM initiative

Steel pipemillscheme

Maximize utilization ofexisting facility

Promote establishmentof pipemills

Increased utilization of existing HSAWpipemill by industry (over 100km of steelpipe being serviced by SCC Abuja )Firm commitment received from 2 investorsto set up facility Yulong 250,000Mt LSAW,Vigeo 200,000Mt HSAW

Steer industry to put more workin SCC

Monitor project developmentactivities for new pipemills

Support direct investmentswhere necessary

Local manufacture ofdrilling mud

Promote utilization of atleast 60% of bariteneeds of the industryfrom Nigerian deposits

Structured collaboration with AMAPOB onlocal manufacture of baritesPromoted studies by SGS to validatequality of Nigerian barite deposits asmeeting industry standards

Steer industry to source baritesfrom Nigeria



35/37


Training

Infrastructuredevelopment,training andemploymentopportunities

Establishment of a privatesector led center for skillsdevelopment andinternational certification inthe field of engineering

Project concept put together forengineering training center ofexcellencePackaged geosciences training totrain critical skill requirement in theindustryCompleted first set of welders

training

In country training facilities for oil and gastype skillsManage capital flight associated withoffshore trainingKnowledge transfer1000 candidates to be trained onenvironmental management

Retention of at least 30% of environmentalremediation budget in communityOver 500 candidates trained on the backof oil and gas projects welding,pipefitting, scaffolding, engineering designetc.Over 50% trainees have been placed onsustainable employment

Direct facilitation oftraining in critical industryskill requirements

Packaged environmentalremediation training to addressrecurring environmental challenges

Oversight on projectbased trainingopportunities

Industry is already promotingforeign trainers to conduct criticaltrainings in Nigerian facilities

Nigeria Institute of Welding New multimillion dollar facilitymodelled after International Instituteof welding with capacity to certify.

Will provide certification for welders andweld integrity tests on projects



36/37

Programs Scope Achievements Next steps (6 months)

Supplier Development

NigerianContentDevelopmentFund (NCDF)

Partial guarantee -70%Direct investment -30%

Guidelines on remittance developed;remittance of 1% ongoingNCDF operating model developed anddiscussed with CBNSelected 3 service companies for pilotimplementation -partial guarantee facility2 SPVs incorporated to oversee the NCDF on

behalf of the Board

Obtain approval to launch pilotscheme partial guaranteefacility

Nigeria Oil &Gas IndustryContent JointQualificationSystemNOGIC JQS

Data base for industryskills, capacity andproject opportunities

Built NOGIC JQS infrastructure in Yenagoaand Disaster Recovery Center in AbujaEngaged stakeholders and obtained feedbackfrom end usersGo live event held in August 2011

Manage test phasePrepare for launch




37/37


Some Infrastructure Development & Facility Upgrade

Saipemfabrication(Tier 1)

Fabrication yardupgrade

Completed yard expansion project(jumbo yard)

Capability for high tonnage fabrication andlead-outRetention of existing jobsIn-country capability for fabrication, drydocking, training and maintenance.Technology transferRetention of spend associated with shiprepairs and maintenance

Creating ship repairs industry withinNigeria to service vessels operating inNigeria and West Africa.Employment generationCapability for high single tonnagefabrication and lead-outRetention of existing jobsSelf sufficiency in domestic supplyLocal facility maintenance capabilityEstablished Nigerian foot prints in West

AfricaOver 10,000 jobs to be created.Retention of about $5.4 billion from FPSOvalue chainPrivate sector led training facilities for Oiland Gas skills

Nigerdockfabrication(Tier 1)


Established and commissioned largestdry docking facility in West Africa

Acquired capability for high singletonnage fabrication and lead-out.

Major aspiration/project launched fordeep offshore skill base with FPSOintegration capacity. Expected completion- 2015

Globestarfabrication(Tier 1)


Fabricated first subsea tree frames andsubsea modules in Nigeria

Dormanlong Fabrication yard

upgrade

Obtained certification for pressure

vessels manufactureFabricated pressure vessels for IOCsincluding Shell GabonInstalled major galvanizing facility servingLNG and telecommunications industry

Trainingfacilities

Heavy Fabrication andSubsea training

facility/Academy

Hyundai establishing a fabricationtraining academy

Akersolutions to setup subsea acadey


report1 otc12-2local contnt

Documents