Promoting local content in the oil sector

Dec 09, 2003 01:00 AM

by Oseloka Zikora

The news recently from Shell was that "what could easily pass as the first made-in-Nigeria flow station for the company has been constructed in Warri, Delta State" by an indigenous company. Could have easily passed but not quite!
Reason? Although the entire fabrication and construction of the 2,100-ton facility was done locally, the engineering design and procurement of materials and other key components were exported from the constructing company's foreign technical partner. In other words, what the company did could be termed as just assembling the flow station.

Though a plus for local content participation, but it is not yet Uhuru. Meanwhile, the quest to increase local content in material and technical resources from the current less than 5 % level to maybe between 40 to 50 %, continues to generate debate among major stakeholders in the industry. In an interactive session recently with the PDP caucus of the House of Representatives, the Minister of Finance, Dr Ngozi Okonjo-Iweala spoke of the federal government's resolve to tackle the issue through a proposed legislation compelling multinational oil companies to increase local content in their operations.
Reasons for the intensified demand for enhanced local content in the sector are not farfetched. The fall-out of the heavy foreign technical input for our mono-product economy largely dependent on oil proceeds, is that Nigeria has continued to lose vital foreign exchange earnings. Correspondingly, the multinational technical partners have been reaping bountifully from this shortfall, often resulting in heavy foreign currency outflow from our country.

Take for instance the expatriate manpower that will, out of necessity, and in their own interests, often repatriate a large chunk of their earnings back home thereby boosting their countries' economies. This same scenario is replicated in the importation of the over 90 % technical and material resources used in the sector, to the detriment of local content components.
The clamour to reverse the trend has often yielded little dividends. Several reasons account for this, one of which is that our technological base is poor especially in the areas of steel production and mechanical engineering as to provide a meaningful plank for local fabrication of needed equipment in this highly technical field.

Again, although some notable researches in chemical engineering have identified certain local alternatives to some of the raw materials sourced abroad for refining, petrochemicals and polymer technology, nothing much has changed as to increase local content in these areas. Perhaps, the explanation has been the absence of needed investments to boost mass production of such local alternatives. Even the areas of environmental/safety control and/or electrical/information technology, have not fared better despite tremendous successful research and experimentation in local content substitutes.
Equally alarming is the complaint by most of the multinational oil companies operating in the country that locals who man middle level technical positions barely meet their highly demanding competencies. Some of these companies have gone ahead to set up training schools to re-train graduates of our local higher institutions.

To meet this challenge, the Nigerian government recently approved the upgrading of facilities and manpower at the Petroleum Training Institute, Effurun, an institute set up to train middle level specialized manpower for the oil and gas industry. In the words of PTI's Principal/CEO, Dr S.E. Ovuru, the institute has been striving to meet the objectives for setting it up and has been involved in training technical staff for several of the sector's organizations including NNPC, Chevron, Joint Development Authority, Agip, etc.
He asserted that since inception, PTI graduates in the ND and HND programmes have shown quality mettle in their fields of study and have been in high demand in the oil industry. Dr Ovuru however expressed regret that that confidence in PTI graduates is gradually being threatened because of the past neglect of the institute and commended the federal government's recent decision to upgrade facilities and manpower at the institute.

Speaking in the same vein, the Registrar, Dr Isah Abbass disclosed that the PTI upgrade project funded through the Petroleum Technology Development Fund (PTDF) is being executed under the technical supervision of UNIVATION, a consultancy arm of the highly rated United Kingdom-based technologically driven Robert Gordon University. It is expected that under the upgrade scheme, advanced learning equipment and laboratories will be installed at the Effurun campus while academic and non-academic staff will undergo strenuous training and re-training and undergo systematic industrial attachment to improve skills and knowledge.
Already, a group of sixteen staff led by Dr Abbass have undergone a pilot training programme at the Aberdeen campus of Robert Gordon University while fifteen others are currently undergoing anothertraining there. No doubt, PTI can become the bulwark for meeting the challenges confronting Nigeria in increasing local content in the oil and gas sector. A research group in the institute, Petrosearch, sought to push the contending issues to the front burner in a seminar that it organized recently at the PTI's conference centre.

The seminar, with the theme, "Promoting Local Content in the Oil Industry" had in attendance several leading eggheads in the field including Prof. E.N. Wami, Dean, Faculty of Engineering, Rivers State University of Science and Technology, Prof. F.M.A. Ukoli, Shell consultant and former Vice-Chancellor, Delta State University, Abraka, Prof. Ogbeide of the Chemical Engineering Department, University of Benin, PTI's Principal, Dr S.E. Ovuru and Dean of Studies, Dr R.E. Akpojivi.
In a keynote presentation at the seminar, Prof Wami called on multinationals in the operating and service oil companies to look beyond their limited scholarship awards and marginal contributions to PTDF and invest more in research in the tertiary institutions. The multinationals, he said, should also patronize the consultancy services of these institutions especially in such challenging areas as design and fabrication. He enumerated some of the research breakthroughs in local raw materials utilization and indigenous technological innovations.

These include:
-- Utilization of locally made cement in cementing oil wells - only imported cement was used in the past. Shell EA has successfully completed several wells in the last two years using special locally made cement.
-- Several oil well additives like barite, bentonite and econolite sourced from local raw materials,
-- Successful development by an indigenous company of an online relief valve testing technique which permits calibration and maintenance without shutting down a flow station, etc.

The Petrosearch seminar was in itself a revelation of new research works undertaken by academics at PTI and other sister institutions. Some of these researches include those by H.A. Adimula and O. Omaguwa of the PTI, S.T. Orumu of Rivers State University of Science and Technology and D.N. Olowoyo and M.M. Oghuvwa also of PTI.
According to the findings of the research by Adimula and Omaguwa, clay samples collected from Ubeji and Sapele (both in Delta State) and Okada (Edo State) were characterised and then subjected to analysis to investigate their suitability for use as drilling mud. Chemically treated to enhance their suitability, and further improved by adding polypropylene oxide, the samples were found to be comparable to those of commercially available drilling fluid.

Orumu in a paper entitled "Indigenous Technology, A Veritable Tool for Promoting Local Content in Oil and Gas Industry" identified the use of Chikoko clay (river/creek mud) as very useful in land reclamation, shore protection, coarse aggregate production and building materials. He stressed that the gains in monetary terms and in removal of such problems as pollution and ozone depletion associated with present mode of exploiting natural resources, should encourage indigenous entrepreneurship and public/corporate funding of the commercial development of the clay.
On the efficiency of some local activated carbon in treating water pollution, Olowoyo and Oghuvwa found that such carbons made from charcoal, clay, coconut and groundnut shells and coconut shafts, could be useful. Such carbons are effective in removing pollutants present in industrial effluent water especially pollutants that are of organic and inorganic origin. According to the two scientists, that, however, depends greatly on the source of the industrial effluent water, the nature/type and sizes of the activated carbons.

PTI's Director of Studies, Dr Akpojivi commended the serious strides undertaken by the researchers in the area of advancing local content in the industry. His cheering news was that the completion of the ongoing upgrade of the institute would provide a more conducive learning atmosphere and better equipped laboratories for future research in such challenging areas.
No doubt, the greatest beneficiary of the upgrade project at PTI will be ongoing research efforts on local content. Dr Kevin Idehen, a lecturer at PTI's Petroleum Processing Department and editor of Petrosearch journal stressed that quality infrastructure and standard procedures must be in place to support such research.
On that, he advocated the creation of a functional research and consultancy centre to co-ordinate activities in the institute. He, however, admitted that for PTI to become relevant in research consultancy, the institute should carry out a critical research needs analysis in the industry, encourage and put in place adequate facilities/structures for networking in research and scholarly activities between staff, external experts, sister institutions and the oil industry.

The researchers surmised that to actualise the dream of attaining about 50 % local content in the sector, what is needed will be greater and sustained government's interest with particular reference to the proposed legislation committing multinational oil companies to increased local content in operations and services.
Equally, there must be a political and determined will on the part of government to implement such an Act and other existing legislation plus a greater interest by the public and corporate organisations to invest in the sector.

Oseloka Zikora is of the Public Affairs Department of the Petroleum Training Institute, Effurun.

Source: Vanguard
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