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 2016, more than 3,400 people were employed at Shell Companies in Nigeria, 96% of whom are Nigerians. This is reflected throughout the local value chain, with Shell Companies in Nigeria awarding 94% of their total number of contracts to Nigerian companies in 2016, the total value amounting to $0.74 billion.
Nigerian local content development is not a discretionary consideration. Legislation sets rules and regulations governing local content requirement and sets targets for the level of Nigerian content that must be achieved in various categories. These targets can prove challenging in a technical industry in which skills and capacity usually take time to acquire.
Shell Companies in Nigeria have a commitment to local content, which is not hinged on legislation alone but also aligns with our business strategy. 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 competition, quality and delivery.
Asset Ownership, Funding and Supplier Development
Nigerian ownership of key assets such as rigs, helicopters and marine vessels is a focus for many of our successful local content initiatives.
We have provided technical and financial support to companies across a range of sectors including transportation, manufacturing and research and development. Lack of access to capital hinders many Nigerian companies from being able to compete and execute contracts effectively. In order to support local contractors, the Shell Contractor Funding initiative was expandedwith eight participating banks committing about $2.2 billion 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 (OECD) plenary session on “Shared Value creation and local content” included in the compendium of global best practices. Since the programme’s creation in 2011, loans worth approximately $1 billion have been awarded to 220 small and mediumsized Nigerian enterprises with no recorded defaults on the loans. It was also recognised by the IPIECA Local Content Guideline released in 2016 among the best practices of the industry. IPIECA is a global oil and gas industry association for environmental and social issues.
Training and Education
Among the key challenges in meeting local content targets is a scarcity of world-class research and development institutions in Nigeria and limited access to technology. Shell Companies in Nigeria therefore focus on building local capacity in key technical skills through training and educational support. For example, SPDC JV donated and commissioned an ultra-modern subsurface research centre at the University of Ibadan in March 2016.
Shell Companies in Nigeria also run training programmes which include the award of post graduate scholarships in engineering and related fields.
Since its inception in 2010, 60 Niger Delta indigenes have benefited from the Shell Niger Delta Post Graduate scholarship programme. The programme was established to grow the Nigerian talent pipeline for the oil and gas industry through oversees scholarships at three UK universities (Imperial College London, University College London and University of Leeds) under a joint co-funding arrangement between the SPDC JV and the universities.
Through Shell Companies in Nigeria internship programmes, in collaboration with Petroleum Technology Association of Nigeria (PETAN), a total of 80 graduates have to date been equipped with experience for employment in the industry. Another batch of 30 graduates are currently undergoing the one-year internship programme.
Shell Nigeria Exploration and Production Company Limited (SNEPCo) donated facilities including a modern test laboratory to The Nigerian Institute of Welding in 2016 to promote welding technology in Nigeria. The centre is expected to enhance the development of welding technology in Nigeria. It has the potential to build and retain the much-needed welding capacity for the oil and gas industry in Nigeria. The laboratory facilitates testing of materials, enabling users to obtain computerised information on materials tested.
In Country Manufacturing
Shell Companies in Nigeria continue to support qualification and utilisation of “Made-in-Nigeria” products in their operations including the deployment of locally manufactured products/materials for offshore application. Some of these were discovered at the annual Nigerian Content Development supplier exhibition organised to identify available local capacity. Nigeria Machine Tools Limited attended the Nigerian Content Exhibition having successfully introduced some of its products, such as stud bolts and nuts, for use in offshore oil and gas exploration and production, after SNEPCo supported the company with testing and certification.
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. Today, 96% of Bonga’s core offshore staff are Nigerians. SNEPCo has also led the way in providing financial empowerment and facilitating the transfer of knowledge and competences from global offshore service providers to local firms in exploration and production activities.
Bonga also stimulated the growth of support industries vital to deepwater projects. SNEPCo awarded the major engineering andconstruction 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 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.
Shell Companies in Nigeria continue to be recognised as key contributors to Nigerian Content Development. For example, in December 2016, SPDC received the 2016 PETAN Distinguished Achievements Award (Corporate). PETAN also handed out a Professional Award to Bayo Ojulari, Managing Director of SNEPCo, for his notable contributions to the development of Nigerian content in the oil and gas sector.
Overall, in 2016 much progress was made in key focus areas such as:
- In-Country Manufacturing: maximising the use of Nigerian manufactured goods and services;
- Human Capacity Development: driving structured training and skills development to create employment for Nigerians;
- Supplier Development: funding to promote the growth of indigenous contractors through access to credit at more favourable terms; and
- Infrastructure Development: developing the infrastructure base that supports growth of local content.