Local content stagnates at 54% amid $25b oil investment, divestment

• NCDMB fears gloomy outlook, decries compliance from IOCs, other companies

Nigeria’s local content across the oil and gas sector stagnated at 54 per cent this year to create serious concerns after a 13-year upward outlook amid rising divestment by international oil companies and over $25 billion investment by indigenous organisations.

The Nigerian Content Development Monitoring Board (NCDMB), which champions the Nigerian Oil and Gas Industry Content Development Act, introduced in 2010, is already raising fears that the content level in the industry may peak unless urgent and collaborative efforts are taken.

Speaking in Yenegoa, Bayelsa State at the 12th Practical Nigerian Content (PCN) Forum, Executive Secretary of NCDMB, Simbi Wabote, said compliance with remittances to the board remains challenging. He said urgent measures are needed to ensure that the content level does not stagnate.

Coming at a time when international oil companies are moving rapidly out of the country with over $21 billion divestments in the recent year, the local content initiative is praised as one of the most strategic initiatives that enable Nigerians to lead the oil and gas sector instead of importing skills and wasting hard earned foreign exchange.

Wabote said this is now facing onslaught from operators. Recall that Nigeria’s yearly capital expenditure in the upstream arm of the oil sector dropped by over 70 per cent from $27 billion in 2014 to less than $6 billion in 2022, a development which has further worsened yearly budget implementation and drastically increased borrowing rate amid rising inflation and foreign exchange crisis.

Wabote, whose tenure is running out as Executive Secretary of the board, said: “While the 54 per cent Nigerian content level achieved in 2023 is commendable, it calls for industry stakeholders to reflect if this is a sign of stagnation or the reflection points leading to decline in Nigerian content level in the oil and gas industry.

“Where I sit, I see some disturbing signs pointing in that direction. I believe we can counter this emerging dynamic as this is not the first time we are faced with such an onslaught on local content practice.”

“I believe all the stakeholders in the industry will play their part to prevent us from going back to the dark days of implementing Nigerian content as a token of consolation. The nexus between high Nigeria content levels and the related peace in the industry must not be lost.”