Definition

Nigerian Content is the quantum of composite value added or created in the Nigerian
economy through the utilization of Nigerian human and material resources for the
provision of goods and services to the petroleum industry within acceptable quality,
health, safety and environment standards in order to stimulate the development of
indigenous capabilities.

Despite huge investments made by the Federal Government of Nigeria in the oil and
gas sector of the economy, an average of $10 billion USD per annum, its contribution
to GDP growth has been minimal. This is largely due to low Nigerian Content in the
industry, evident from the over 80% of work value carried out abroad. This has led to a
dearth in jobs, skills development, capacity building / utilization and lack of sustained
national economic development.

To address the situation, the Federal government has set Nigerian Content targets for
the oil and gas industry of 45% by 2006 and 70% by 2010 respectively. In addition,
presidential directives have been issued with the aim of domesticating a significant
portion of economic derivatives from the oil and gas industry. To deliver on these
directives and targets, the Nigerian National Petroleum Corporation (NNPC) has put in
place a comprehensive Nigerian Content development strategy currently being rolled
out in the industry.

NNPC’s Vision for Nigerian Content

NNPC’s “Nigerian Content” vision is to transform the oil and gas industry into the
economic engine for job creation and national growth by developing in-country
capacity and indigenous capabilities. In this way a greater proportion of the work will
be done in Nigeria with active participation of all sectors of the economy and ultimately
Nigeria will be positioned as the hub for service delivery within the West African sub-
region and beyond.

The Thrust of the Nigerian Content Policy

The Nigerian Content Policy seeks to promote a framework that guarantees active
participation of Nigerians in oil and gas activities without compromising standards. The
policy also focuses on the promotion of value addition in Nigeria through the utilization
of local raw materials, products and services in order to stimulate growth of indigenous
capacity. The Federal Government is optimistic that its policy will result in steady
measurable and sustainable growth of Nigerian Content throughout the oil and gas
industry.

Key Levels for Successful Nigerian Content Implementation

Short term directives have been issued by the NNPC to all stakeholders in the industry
indicating the scope of work on all E&P projects that must be executed in Nigeria.

These are as follows:

1. FEED and detailed engineering design for all projects is to be domiciled in

Nigeria.
2. Project Management Teams and Procurement Centres for all projects in the
Nigerian Oil and Gas industry must be located in Nigeria.
3. .Henceforth, all operators and project promoters must forecast procurement
items required for projects and operational activities and forward the Materials
List NCD on or before 31st January of every year. Also, a Master Procurement
Plan (MPP) for ongoing and approved projects should be submitted to the
Nigerian Content Division of NNPC on or before 31st January of every year.
4. Fabrication and integration of all fixed (offshore and onshore) platforms
weighing up to 10,000 Tons are to be carried out in Nigeria. For the fixed
platforms (offshore and onshore) greater than 10,000 Tons, all items in directive
5, pressure vessels and integration of the topside modules are to be carried out
in Nigeria.
5. Henceforth, fabrication of all piles, decks, anchors, buoys, jackets, pipe racks,
bridges, flare booms and storage tanks including all galvanizing works for LNG
and process plants are to be done in Nigeria.
6. Henceforth, all flow-lines and risers must be fixed and must be fabricated in
Nigeria except for special cases to be demonstrated and approved by NCD.
7. Henceforth, Assembling, testing and commissioning of all Subsea valves,
Christmas trees, wellheads and system integration tests are to be carried out in
Nigeria.
8. All FPSO contract packages are to be bid on the basis of carrying out topside
integration in Nigeria. A minimum of 50% of the total tonnage of FPSO topside
modules must be fabricated in Nigeria.
9. All third party services relating to fabrication and construction including but not
limited to NDT, mechanical tests, PWHT as well as certification of welding
procedures and welders must be carried out in Nigeria. Nigerian Institute of
Welding must certify all such tests in collaboration with international
accreditation bodies.
10. All operators and project promoters must ensure that recommendations for
contract awards in respect of all major projects being forwarded to
NNPC/constituted boards of such oil and gas companies for approval must
include evidence of binding agreement by the main contractor with Nigerian
Content Subcontractor(s). Such agreements shall indicate the cost and detailed
scope including total man-hours for engineering, tonnage and man-hours of
fabrication and relevant defining parameters for materials to be procured locally
as well as other services.
11. Henceforth, all low voltage Earthing cables of 450/750 V grade and Control,
Power, Lighting Cables of 600/1000 V grade must be purchased from Nigerian
cable manufacturers.
12. Henceforth, all Line-pipes, sacrificial anodes, Electrical switchgear paints,
ropes, pigs, heat exchangers and any other locally manufactured material and
equipment must be sourced from in-country manufacturers.
13. All carbon steel pressure vessels shall be fabricated in Nigeria.
14. .All seismic data acquisition projects, all seismic data processing projects, all
reservoir management studies and all data management and storage services
are to be carried out in Nigeria.
15. Henceforth, all waste management, onshore and swamp integrated
completions, onshore and swamp well simulations, onshore fluid and mud solids
control, onshore measurement while drilling (MWD), logging while drilling (LWD)
and directional drilling (DD) activities are to be performed by indigenous or
indigenous companies having genuine alliances with multinational companies.
16. Henceforth, coating of all Line-pipes and threading of all oil country tubular
goods (OCTG) are to be carried out in Nigeria.
17. Henceforth, all concrete barges and concrete floating platforms are to be
fabricated in-country.
18. Henceforth, operation and maintenance of offshore production units, FPSO and
FSO in particular, are to be performed by Nigerian companies.
19. All international codes and standards used in the industry are to be harmonized
to support utilization of locally manufactured products such as paints, cables,
steel pipes, rods, sections, ropes etc and to improve capacity utilization in local
industries. Clauses that create impediments for/exclude participation of local
companies should not be included in any ITT
20. Operators and project promoters must ensure that recommendations for
contract award for all drilling contracts shall include a binding agreement at
Technical Evaluation stage for the sourcing of Barite and Bentonite form local
manufacturers.
 21. Henceforth, all projects and operations in the Oil and Gas industry must
demonstrate strict compliance with provisions in the insurance Act 2003 and
submit a certificate of compliance issued by NAICOM to NCD as part of
technical evaluation requirements for insurance or reinsurance Contracts.
22. In this respect, NAICOM verified Gross underwriting capacity of Nigerian
Registered Insurance companies must be fully utilized to maximize Nigerian
Content before ceding risk offshore.
23. Henceforth, all projects and operations in the Oil and Gas industry must
demonstrate strict compliance with provisions of the Cabotage Act.
24. All operators and service providers must make provisions for targeted training
and understudy programs to maximize utilization of Nigerian personnel in all
areas of their operations. All operators must therefore submit detailed training
plans for each project and their operations

Implementation Framework

A number of key initiatives have been put in place to coordinate national efforts to
achieve the Governments Nigerian Content targets and objectives, these include:

A draft Nigerian Content Development Bill has been submitted by NNPC to the Federal
government. The regulation which is the responsibility of the Directorate of Petroleum
Resources (DPR) will be in place once the bill is enacted.

An organizational framework that will ensure the implementation of the policy:

The Nigerian Content Division (NCD) is headed by a Group General Manager and was
set up in March 2005 under the NNPC Group Managing Director’s (GMD) office. The
division is sufficiently empowered to work with industry stakeholders and relevant arms
of government to develop strategies, drive implementation and ensure compliance with
directives by the oil companies.

The Nigerian Content Consultative Forum (NCCF) was also inaugurated with 8 sectoral
working committees covering the fabrication, engineering, manufacturing, petroleum
engineering & subsurface banking & insurance, and shipping & logistics, sub sectors.

The Joint Qualification System (JQS) is being introduced to facilitate the E&P
contracting process in the oil and gas industry. JQS will provide a databank of
available of goods and services suppliers to the Nigerian petroleum industry and
streamline the prequalification process. The system will be launched early 2006 and
open up genuine opportunities for qualified local contractors to participate in the oil
and gas sector.

NCD Structure & Objective

The Nigerian Content Division comprises of three (3) Departments:

1. Capacity Building
2. Planning
3. Monitoring

These departments collectively are charged with the following responsibilities:

Study best practices and advise NNPC Management on Nigerian Content.

Obtain applicable data from industry and plan for new opportunities.
Develop strategies for Capacity building, skill competency and supplier
enhancement.
Drive Nigerian Content implementation and monitor compliance.
Coordinate sectoral working committees.

These primary objectives are achieved through:

Capacity building through intervention projects

The NCD is gathering data and developing interventions in consultation with the NCCF
and Operators to achieve Federal government targets of 45% by 2006 and 70% by
2010. Currently the NCD has developed over 20 intervention projects to bridge local
capacity gaps in the industry. These projects range from infrastructure upgrades,
resource training and certification, information management and financing.

Compliance monitoring of all activities

A coordination procedure which governs Nigerian content activities of stakeholders in

the industry has been put in place. In addition, the Nigerian Content Division will be
actively involved in the review of ITTs, evaluation of bids, and monitoring of projects
during implementation to ensure NC compliance. Provisions are also made in the draft
bill for sanctions against defaulters.

Alignment of key industry stakeholders

Expectedly, the NNPC has achieved buy-in and support for the Nigerian Content
programme from Operators and other stakeholders:

Oil companies are of the NCCF and actively participate in monthly meetings of the
committees to discuss and review capacity building programs.

In accordance with the industry coordination procedures, dedicated Nigerian Content

offices have been set up in all operator companies and managers appointed to
coordinate company NC activities.
NCD action plans undertaken to build capacity include:

Training of 1000 engineers in basic engineering design in 2006 in collaboration

with PTDF.
Current status: 300 engineers to be trained per quarter
Facilitating certification and training of over 1000 welders.
Current status: National welder database being set up; collaboration with PTI
and global certifying bodies is ongoing.
Working with industry stakeholders to enable local manufacture of steel plate
and pipes
Current status: A business case has been drawn up and is being presented to
prospective investors
Working with PTDF and INTSOK to commence upgrade of selected fabrication
yards in readiness for increased local fabrication.
NCD is driving the launch of the Nigerian Content Support Fund (NCSF) to make
available to local service providers funds for execution of contracts at low and
competitive interest rates.
NCD is developing a Nigerian Content capacity database.

Goals & Aspirations

Expectations from the Nigerian Content Programme

In the short term, the industry directives and intervention projects are expected to
create several thousand jobs for engineers, welders and other professionals as well as
artisans in the Engineering, Procurement and Construction phase of projects.

With requirements for utilization of locally manufactured goods and equipment, major
investments in infrastructure are expected and local manufacturing industry will be
reinvigorated.

Plans for building the required capacity for the Nigerian companies in the industry

Capacity building is one of the key plans for achieving government targets and this is
being pursued through:

A survey of available capacity and identification of needs for new projects and
operations;
 Identifying new opportunities for local suppliers;
Training of Nigerians in targeted areas of competency and acquisition of
technological and managerial capability;
Development of infrastructure and upgrade of facilities;
Local business and supplier enhancement
Project financing and funding of local businesses

Goals of the Nigerian Content Division are;

To achieve 45% local content in oil and gas spend by 2006

To achieve 70% local content value in the provision of materials, services and
equipment to the local oil and gas industry by 2010
To create an economic engine for growth, driving employment, wealth creation
and improved linkage between the Oil and Gas industry and other sectors of the
Nigerian economy
The division is working to enable a transformed Oil and Gas industry with well-
developed in-country capacity and local capabilities, a competitive supply and
services sector and ultimately, the hub for energy service delivery in Africa

NCCF Groups

The Nigerian Content Consultative Forum (NCCF) comprises of representation from Oil
and Gas industry, organized private sector, (MAN), Bankers Committee and Nigerian
Society of Engineers amongst others.

Each forum holds monthly working sessions for respective industry sectors to obtain
input and feedback for planning and implementing the Nigerian Content agenda

The sectoral committees also Interface with Nigerian companies and International Oil
companies for early identification of opportunities, capacity gaps and required
competencies for upcoming projects

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