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BUSINESS A.M. FEBRUARY, MONDAY <strong>12</strong> - SUNDAY 18, <strong>2018</strong><br />

ENERGY, POWER & RENEWABLE<br />

25<br />

Conference report: WAPIEC <strong>2018</strong><br />

Regional local content seen to drive growth<br />

in West African, but integration is key<br />

Bukola Odufade<br />

AFTER NIGERIA IM-<br />

PLEMENTED its local<br />

content act in 2010,<br />

other African oil producing<br />

countries have<br />

followed suit and some, like Ghana<br />

and Uganda, even modeled their<br />

local content act, using Nigeria’s<br />

loacl content act as a framework.<br />

However, there is little to no<br />

regional local content integration<br />

across the West African region.<br />

This was one of the concerns<br />

raised at the second annual West<br />

African International Petroleum<br />

Exhibition and Conference<br />

(WAIPEC) held for two days last<br />

week in Lagos, Nigeria.<br />

“With so much focus given<br />

to national local content, we are<br />

gradually realising that as West African<br />

countries, we can’t go on this<br />

journey on our own,” said Juliette<br />

Twumasi-Anokye, managing partner,<br />

Anojul Afriyie & Company.<br />

Although many at the conference<br />

generally agreed that regional<br />

integration of local content is the<br />

next step to take, in reality, they<br />

said, this continues to be farfetched.<br />

Olusoga Odusela, general manager,<br />

Nigerian Content Development,<br />

Chevron Nigeria asked:<br />

“What is the business structure<br />

of Nigerian contractor? Are we<br />

focused on Nigeria alone or are<br />

we regionally ready? Are our work<br />

processes and ethnics globally<br />

competitive and can they be audited<br />

to global standards? Because<br />

if you want to go beyond the shores<br />

of Nigeria, that means you’re now<br />

going international.”<br />

Odesela said the price structure<br />

of local companies makes<br />

them uncompetitive outside of<br />

the country, asking pointedly, “Is<br />

our price structure competitive?”<br />

He noted that in some cases, “our<br />

pricing makes it challenging for<br />

us to compete in the West African<br />

region.”<br />

The reluctance of Nigerian contractors<br />

to willingly develop local<br />

community contractors, he said<br />

represents another challenge, adding<br />

that in order to reduce the cost<br />

of doing business, developing local<br />

capabilities will go a long way.<br />

According to him, the Nigerian<br />

business environment is mature<br />

enough to compete favourably<br />

in the West African region, but<br />

that local companies need to<br />

build themselves up to be able<br />

to overcome the barriers. “There<br />

is nothing to be done in terms of<br />

exploration and development in<br />

oil and gas industries in Ghana<br />

or Togo that has not been done in<br />

Nigeria,” he said.<br />

Austin Uzoka, Nigerian content<br />

manager at Shell Petroleum<br />

Development Company (SPDC)<br />

cited three barriers for the non-integration<br />

and non-standardization<br />

of local content in the region, one<br />

being cultural barrier.<br />

“Nigeria being surrounded by<br />

Francophone countries means<br />

there is a big cultural gulf that we<br />

West Africans need to overcome<br />

particular in terms of collaboration,”<br />

he said.<br />

Regional integration is still<br />

non-existent because of the cultural<br />

diversity that the region has,<br />

Uzoka said. He drew example from,<br />

“Nigerians preferring to fly to Accra<br />

to do trainings, which is an<br />

Anglophone country but further,<br />

rather than Lomé, where French<br />

is the primary language but closer.”<br />

With so much focus<br />

given to national<br />

local content, we are<br />

gradually realising<br />

that as West African<br />

countries, we can’t<br />

go on this journey<br />

on our own<br />

Another fact hindering integration<br />

is what he called the ‘reality<br />

phenomenon’, which is the fact that<br />

West African countries don’t have<br />

bilateral and multilateral treaties<br />

that can sustain cross-integration<br />

or intra-country integration across<br />

the West African terrain.<br />

However, this is a deliberate<br />

act on the part of government of<br />

the various countries who haven’t<br />

encouraged the transfer of knowledge,<br />

technology and skills across<br />

the region, he explained.<br />

He also noted that the ease of<br />

doing business is higher in other<br />

West African countries than in Nigeria,<br />

because certain restrictions<br />

are not faced in those countries<br />

and incentives have been put in<br />

place for them, he said.<br />

For instance, Uzoka spoke<br />

about drilling pipes that are imported<br />

into Nigeria but the company<br />

had no use for them, so it was<br />

decided that the pipes should be<br />

sold to Ghana. According to him,<br />

when calculations were done, it<br />

turned out that it would have been<br />

cheaper to import through Ghana<br />

rather than Nigeria.<br />

He said aspiration will drive reality<br />

as aspirations are impeded by<br />

the cost of business. “As the cost of<br />

business in Nigeria remains high,<br />

it begins to challenge our competitiveness<br />

with our West African<br />

counterparts, Uzoka also said.<br />

Opportunities are present, he<br />

said, but noted that in order to harness<br />

the opportunities and drive<br />

change, we have to be deliberate,<br />

focused and target-oriented.<br />

Oduselu also advised Nigerian<br />

entrepreneurs to make their business<br />

focus beyond the shores of<br />

Nigeria, noting that the country<br />

should be the hub in supporting<br />

other West African countries.<br />

Sylvester Iduseri, capacity development<br />

manager, Total Nigeria<br />

also noted that, “local content is<br />

survival for the sustainability of<br />

any country,” citing Egina FPSO as<br />

an example.<br />

The representative from the<br />

Ghana Petroleum Commission<br />

advised that the focus should be<br />

on creating synergies within the<br />

region rather than duplicating<br />

capabilities as West African countries<br />

keep working separately with<br />

no integration or standardization<br />

approach.<br />

The governments of West African<br />

countries were also advised to<br />

offer incentives and tax waivers to<br />

stimulate the growth of the economies<br />

and regional local content.<br />

The regional economic organisation,<br />

Economic Community of<br />

West African States should be used<br />

as a platform for harmonizing<br />

standards to facilitate the integration<br />

growth, it was also suggested.<br />

The example was cited of the<br />

West African gas pipeline, which<br />

runs from Nigeria to Benin, then<br />

Togo and finally Ghana, where the<br />

governments of these nations let<br />

go certain restrictions to make it<br />

happen, because benefits were to<br />

be gained.<br />

PETAN and its other West African<br />

counterparts were also advised<br />

to start a dialogue on creating a<br />

path for the free movement of<br />

technical and engineering skills<br />

and not just leaving it to the government<br />

alone.<br />

US oil flood markets worldwide, taking share from OPEC nations in Asia, Europe<br />

In the two years since Washington<br />

lifted a 40-year ban<br />

on oil exports, tankers filled<br />

with US crude have landed<br />

in more than 30 countries,<br />

ranging from massive economies<br />

like China and India to tiny Togo.<br />

The repeal has unleashed a flood<br />

of US shale oil, undercutting global<br />

crude prices, eroding the clout of<br />

the Organisation of Petroleum Exporting<br />

Countries (Opec) and seizing<br />

market share from many of its<br />

member countries.<br />

In 2005, before the shale revolution,<br />

the United States had net imports<br />

of <strong>12</strong>.5 million barrels per day<br />

(bpd) of crude and fuels — compared<br />

to just 4 million bpd today.<br />

US producers are making new<br />

customers out of some of the world’s<br />

biggest oil-importing nations in Asia<br />

and Europe, posing a serious competitive<br />

threat to the only other countries<br />

that produce as much crude:<br />

Saudi Arabia and Russia. At home,<br />

the export boom has filled pipelines<br />

and sparked a surge of investment in<br />

new shipping infrastructure on the<br />

Gulf Coast.<br />

US producers now export between<br />

1.5 million and 2 million<br />

barrels of crude a day, which could<br />

rise to about 4 million by 2<strong>02</strong>2. The<br />

nation’s output is expected to account<br />

for more than 80 per cent of<br />

global supply growth in the next<br />

decade, according to Paris-based<br />

International Energy Agency.<br />

Much of the increased flow will go<br />

to China, the world’s top importer and,<br />

since November, the largest buyer of<br />

US crude other than Canada.<br />

Chen Bo, president of Unipec —<br />

China’s largest buyer of US crude —<br />

told Reuters that the firm expects<br />

to double US imports this year to<br />

300,000 bpd as it seeks to expand<br />

sales in Asia and find new customers<br />

for US exports in other regions,<br />

including Europe.<br />

Unipec — the trading arm of<br />

Asia’s largest refiner, state-owned<br />

Sinopec — is also considering<br />

long-term crude supply deals with<br />

US pipeline and terminal operators.<br />

The firm may also partner with<br />

such firms to expand and improve<br />

US export infrastructure, Chen said<br />

in an interview.<br />

“US crude flowing to Asia is a<br />

major trend in global oil trading,”<br />

Chen told Reuters.

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