OIL AND GAS 2.5 TRANSFER OF PETROLEUM TECHNOLOGY)
TRANSFER OF PETROLEUM TECHNOLOGY.
Technology transfer has been defined as the process of sharing skills, knowledge, and methods as regards science and technologies among governments and other institutions[1].
The Local content development is an initiative on the part of the Nigerian government to develop local capacity in the oil and gas industry to enable Nigerians participate actively. It is seen as the utilisation of the Nigerian human and material resources in the exploitation and exploration of the Nigeria hydrocarbon resources[2].
The Nigerian content development is one of the most complex issues. Nigerian Content development has been defined by the NNPC as, “The quantum of composite value added or created in the Nigerian economy through the utilisation of human and material resources for the provision of goods and services to the petroleum industry within acceptable quality, health, safety and environmental standards in order to stimulate the development of indigenous capabilities”.
It can be done through adequate training and exposure.
IMPORTANCE OF TRANSFER OF PETROLEUM TECHNOLOGY:
- The host state manages its resources and derives the maximum revenue.
- Further independence of the host countries.
INHIBITING FACTORS TO THE TRANSFER OF PETROLEUM TECHNOLOGY.
- Reluctance of the IOCs: According to Prof Turner, oil companies resist transfer of technology to avoid displacement. They try to frustrate transfer because their main concern is to remain in the host countries and continue to make profits through exploration thereby making the host countries technologically dependent on them.
- The capital intensive nature of the industry: The host nations find it difficult to purchase or acquire oil equipment. This explains the absence of technological base in Nigeria.
- The changing nature of the industry: the equipment, skill and knowledge in the oil industry keeps evolving and the host countries may find it difficult to keep up.
- The government concentrates more on short-term benefits of collecting tax from petroleum operations rather than focusing on acquisition of petroleum technology.
- Nigeria has been relying solely on the IOCs to transfer technology to them rather than training and exposing their indigenes by themselves. We should realize that the IOCs would not injure their interest.
We move on to the legal aspect.
The Nigerian (Oil and Gas Industry) Content Development Act 2010 was established to encourage indigenous content in the Nigerian oil and gas industry by promoting the utilisation of Nigerian human and material resources and services[3].
Section 1 NCDA professes its supremacy.
The Act gives priority to Nigerian Independent Operators in the award of oil and gas contracts. Indigenous companies are also to be given preference in contract bidding.
A summary of some relevant provisions of the Act as it applies to this topic are as follows (not verbatim):
- All fabrication and integration of fixed platforms weighing up to 10,000 tons, piles, decks, pipe, storage tanks and process plants are to be done in Nigeria[4].
- All carbon steel pressure vessels, low voltage earthing cables and so on are to be fabricated in Nigeria.
- All operators must make provisions for the employment and training of Nigerians[5]. Section 28 provides that the training of Nigerians must be given first consideration in any project executed by the operator (of the oil company). The Act provides that Nigerians shall be given prior consideration for employment and training in any project or work to be executed by any operator. Nigerians are also to be considered for management positions[6], junior and intermediate cadres[7].
- Waste management simulations are to be carried out by indigenous companies.
- Insurance must be conducted through an insurance broker registered in Nigeria.
- The operator must retain the legal services of a Nigerian law firm with offices located in Nigeria.[8]
- Operators must maintain at least one bank account within Nigeria[9].
- Certain minimum Nigerian Content are required under Section 11.
- The Nigerian Content Development Fund is established under the Act. It is funded by one (1) percent of the contract value awarded to the operator/contractor for the execution of any project in the upstream sector. The fund is to be managed by the board (NCDMB)-Section 104. Revenue from the fund should be used in promoting local content.
- Section 37 requires operators to carry out programmes aimed at promoting education and research in Nigeria. A Research and Development (RandD) Plan should be submitted to the NCDMB once every 6 months in this regard.
- Section 44 The operator must annually submit a plan detailing how the Foreign Oil and Gas Company plans to transfer technology to Nigerian entities. `Such arrangements can be by collaboration with the indigenous company, forming a joint venture or partnering with a Nigerian company under terms which are satisfactory to the NCDMB [10].
- Section 7 of the Act provides that in the bidding for any licence, permit or interest and before carrying out any project in the Nigerian oil and gas industry, an operator must submit a Nigerian Content Plan (which contains a detailed plan, setting out how the operator and their contractors will give first consideration to Nigerian goods and services and how they would comply with the provisions of the act) to the Board[11]. The NCDMB is to review and approve if satisfied-Sections 8 and 9. From Section 10, we can see that the plan should embody an intention that first consideration would be given to locally provided goods, manpower and services.
Section 4 of the Act establishes the Nigerian Content Monitoring Board to monitor, coordinate and implement the provisions of the Act with a view to ensuring a measurable and continuous growth of Nigerian content in all oil and gas arrangements.
In summary/Conclusion: The Activities of the Oil Companies operating in Nigeria should have some local content. Activities like; fabrication and welding activities[12], Insurance Services[13], Legal Services[14], Financial Services[15], and so on are to be carried out by indigenous (Nigerian) individuals or entities. The companies are also to make arrangements for the training of indigenous persons/entities and transfer of technology to indigenes. It is hoped that by doing all these, the needed theoretical, objective and technical expertise would be transferred to Nigerians so that we can take greater control of our natural resources (oil).
[1] Mohamed. M.M. Barjoyai Bardai – The Effect of Technology Transfer on Human Recourse Development in Oil and Gas Industry
[2] Nathaniel C. Ozigbo, Technological Capacity Building in the Nigeria’s Oil and Gas Industry University of Abuja, Nigeria. Proceedings of the 19th Annual International Information Management Association at page 8.
[3] See the Preamble of the Act.
[4] See Section 53, 58 and 40 of the NCDA.
[5] Section 43.
[6] Section 34.
[7] Section 35
[8] Section 49.
[9] Section 52(2f)
[10] Section 45
[11] Section 12
[12] Section 53
[13] Section 49 and 50.
[14] Section 51.
[15] Section 52.
