Nigerian Content scopes for new and ongoing oil and gas projects will not be reduced because of the substantial drop in crude oil prices, the Executive Secretary Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzil Kentebe has confirmed. The Nigerian Oil and Gas Industry Content Development (NOGICD) Act spelt out percentages that must be achieved for every activity connected with operations in the upstream sector of the Nigerian oil and gas industry and these benchmarks are enforced by the Board on projects through various mechanisms.
Speaking when he met with the Managing Director of Total Exploration and Production Nigeria Limited, Mr. Nicolas Terraz in Abuja on Thursday, the Executive Secretary regretted the negative effect the fallen oil prices has had on the Nigerian oil and gas industry, which included contracts being reviewed downwards, delays in approving new contracts, drop in drilling campaigns and even attempts to negotiate away Local Content in projects. He affirmed that the Board was convinced that there was no need to cut back on Local Content requirements for projects. Rejecting the perception that Local Content increases cost of projects, Kentebe called for “a holistic review of every contract scope and realistic and honest efforts to adjust costs across the board.”
He stressed that industry stakeholders “have to look at the long term and realize that a strong and viable local supply chain ultimately helps in reducing cost of projects while creating a local conducive atmosphere for business to thrive.” Speaking further, the Executive Secretary underlined the close collaboration the Board had enjoyed with international operating companies and other key stakeholders, noting that it helped to institutionalize Local Content practice in the oil and gas industry. He stated that Total E&P’s Egina project was the first deep water project to take off under the Nigerian Content Act, adding that major breakthroughs were being recorded on the project in terms of scope of work given to Nigerian companies in engineering, fabrication, training, procurement of manufactured goods and other areas.
According to Kentebe, “a legacy project (Floating Production Storage and Offloading Topside Integration Yard) is under construction. This facility will create thousands of job opportunities, domicile major engineering, procurement and construction (EPC) activities in-country and keep future FPSO integration scopes in Nigeria.” He confirmed the Board’s commitment to ensure that all agreed Nigerian Content scopes on the Egina project are fulfilled, charging Total E&P to work closely with the Board and the EPC contractors in addressing all issues that may impact schedule, quality or pricing on the project.
In his remarks, the Managing Director of Total E&P stated that the company had taken steps to cut costs in view of the fallen oil prices. Some of these strategies according to Terraz include improving efficiency, eliminating waste, reducing expatriate workforce and accelerating succession plans for Nigerian understudies. While assuring that the company had no intention to downsize its workforce in Nigeria and other locations, the Managing Director called for an industry effort to reduce the long contracting cycle, which he believes contribute to the escalation of project costs.