OUR APPROACH TO LOCAL CONTENT
Underpinned by federal legislation
- Nigerian local content development is not a discretionary consideration.
- The 2010 Nigerian Oil and Gas Industry Content Development Act sets rules and regulations governing local content requirements and sets targets for the level of Nigerian content that must be achieved in various categories.
- E ven though local content is now mandated by law, Shell Companies in Nigeria have for many years taken actions that demonstrate a strong commitment to developing local content.
Critical business enabler
- L ocal content is aligned with our business strategy and in fact, serves as a critical business enabler.
- We believe that we best serve our customers and maximise our competitiveness when we help to develop local capacity.
- We strive to harmonise this with our need for quality and delivery.
DEVELOPING CAPACITY OF PEOPLE
Shell Companies of Nigeria employees
- Developing the local skills, talent and contracting capacity on which the Nigerian oil and gas industry depends, starts with the people working at Shell Companies in Nigeria.
- At the end of December 2018, 2,790 people were directly employed by Shell Companies in Nigeria, 96% of whom are Nigerians.
Local value chain
- Developing the capacity of people is also reflected throughout the local value chain, with the use by Shell Companies in Nigeria of locally manufactured goods and Nigerian service companies which create jobs within the communities in which they operate.
- In 2018, 92% of the total number of contracts was awarded to Nigerian companies.
- In 2018, the total value of contracts awarded to Nigerian companies amounted to $1.3 billion (N393.94 billion).
Indigenous participation in oil and gas sector
- Shell Companies in Nigeria have also contributed to more indigenous participation in the oil and gas sector.
- Former employees of the Shell Petroleum and Development Company of Nigeria (SPDC) and the Shell Nigeria Exploration and Production Company (SNEPCo) now serve as leaders in the Nigerian oil and gas industry.
ASSET OWNERSHIP AND ACCESS TO CAPITAL
- Nigerian ownership of key assets such as marine vessels, rigs, helicopters and oil mining leases (OMLs) is a focus for many of our successful local content initiatives.
- Shell Companies in Nigeria have provided technical and financial support to Nigerian companies across a range of sectors including transportation, manufacturing and research and development. For example, in our South Swamp Associated Gas (SSAGS) Project:
- SAIDEL Nigeria Limited deployed the first Nigerian Flagged Pipelay Vessel (S900).
- AOS Orwell Limited, built new workshops and facilities for assembling control and security panels. They also developed capacity for carrying out Factory Acceptance Testing of the panels in Nigeria, which previously had been done outside of the country. Kasal Engineering Limited and Pemac Engineering Limited fabricated steel structures and expanded their fabrication yard and standardised their processes.
- A total of 117 host community companies were contracted during the project.
Access to capital
- Lack of access to capital hinders many Nigerian companies from competing for and executing contracts effectively.
- To support local contractors, the Shell Contractor Support Fund was expanded in 2016 with seven participating banks committing about $2.2 billion (N693.55 billion21) to fund contract execution by Nigerian companies working for Shell Companies in Nigeria.
- In December 2016, the programme was among the few initiatives recognised and approved by the Organisation for Economic Cooperation and Development plenary session on “Shared Value creation and local content” and included in the compendium of global best practices.
- Since the renamed programme’s creation in 2011, loans worth approximately $1.12 billion (N339 billion) have been awarded to small and medium-sized Nigerian enterprises with no recorded defaults on the loans.
- The programme was also recognised by the IPIECA Local Content Guideline released in 2016 as being among the best practices of the industry. IPIECA is a global oil and gas industry association for environmental and social issues.
Partnerships between foreign and local companies
- Our support to Nigerian companies include strategic partnerships between foreign and local companies to stimulate technology transfer and accelerated capacity development.
- For example, Dorman Long Engineering Limited entered into a local content partnership with a USA based company Enerflex Energy Systems in SPDC JV’s Assa North gas development project that enabled Dorman Long to develop capacity in designing and fabricating modular gas components for the project.
- Shell Companies in Nigeria continue to support Nigerian companies on their certification journey to facilitate an increased use of locally- manufactured products in our operations.
- For example, we worked with Nycil Limited, which produces scale inhibitors, to complete laboratory tests prior to planned offshore field tests in the Bonga field.
Local content exhibitions
- We continue to provide opportunities for Nigerian companies to showcase their product, services and capabilities through our annual local content exhibitions. In 2018, the theme was “Made in Nigeria, Fit for the Future” that provided opportunities for local manufacturers to showcase import substituting goods and services for possible use in the oil and gas industry supply chain.
HUMAN CAPACITY DEVELOPMENT
University and graduate educational grants
- Since 2011, Shell Companies in Nigeria have awarded more than 5,000 university and graduate educational grants.
- One particular initiative – the Shell Niger Delta Post Graduate scholarship programme – has benefited more than 75 Niger Delta indigenes and was established by the SPDC JV to grow the
Nigerian talent pipeline for the oil and gas industry through overseas scholarships at three UK Universities (Imperial College London, University College London and University of Leeds).
- For the academic year commencing September 2018, the SPDC JV in partnership with these three UK universities awarded ten scholarships for one-year post-graduate M.Sc. studies.
- In addition, scholarships were awarded to three SNEPCo scholars to pursue studies and training abroad in Geotechnical Engineering and Hydrography.
- Through the Shell/PETAN internship programme, 140 young engineers and geologists have acquired industry experience since 2014. As was the case in 2017, another batch of 30 graduates are currently undergoing a one-year internship programme.
A partnership between SNEPCo and SAP launched a three-month intensive ‘SAP Skills for Africa’ digital training and certification programme in financial accounting and project management. Eleven SNEPCo sponsored beneficiaries graduated in 2018 and are currently undergoing a nine-month internship with SNEPCo.
Capacity development and financial empowerment
- SNEPCo helped to create the first generation of Nigerian deep-water oil and gas engineers and service providers when it commenced production at Bonga field in 2005, Nigeria's first oil and gas project in more than 1,000 metres depth of water.
- SNEPCo has also led the way in providing financial empowerment and facilitating the transfer of knowledge and competencies from global offshore service providers to local firms in exploration and production activities.
Growth of support industries
- Bonga also stimulated the growth of support industries vital to deep water projects. SNEPCo awarded the major engineering and construction contracts for the Bonga North West project to companies that were either indigenous, have local staff, or possess domestic capabilities in the country.
- These companies were involved in the installation of a number of new production manifolds, subsea umbilical systems, oil production and water injection flowlines and subsea tree systems on the seabed around 1,000 metres below the surface.
OUR COMMITMENT TO LOCAL CONTENT
Building local capacity
- Our approach to developing local skills and capacity has evolved over the years as the challenges facing the industry and our businesses have changed.
- Recent acquisitions of onshore blocks by indigenous Nigerian operating companies and the development of world-class deep water and liquefied natural gas industries where previously there was no local skills base is testament to what can be achieved through a long-term commitment to building local capacity.
Recognition by Nigerian industry associations
- Shell Companies in Nigeria continue to be recognised as key contributors to Nigerian Content Development by PETAN. For example;
- In 2013 and 2015: Local Content Operator of the Year awarded to Shell Companies in Nigeria;
- In 2016: Distinguished Achievements Award (Corporate) was given to SPDC and a Professional Award was given to Bayo Ojulari, Managing Director of SNEPCo, for his notable contributions to the development of Nigerian content in the oil and gas sector;
- In 2017: Aret Adams Award for Excellence was bestowed upon Shell Companies in Nigeria in recognition of their “outstanding contributions to the development of local content in the Nigerian oil and gas sector”;
- In 2018: Local Content Operator of the Year Award was given to SPDC and the PETAN Chairman Outstanding Achievement Recognition Award for promoting the course of Nigerian oil service companies was presented to the General Manager, Contracting and Procurement.
- Also, Shell Companies in Nigeria were awarded the Best Performing International Company in Technology and Innovation at the first Nigeria International Petroleum Summit, Abuja in early 2018, which included recognition of their pioneering role in local capacity development and Nigerian content.
21 – Based on 2017 exchange rate.