Local firms face skill gap as oil majors consider abandoning troubled assets

Local firms in Nigeria’s oil and gas sector are urging the government to enforce provisions in the local content law that mandates technical skill transfer, raising concerns about their ability to manage assets abandoned by oil majors.

The Nigerian government had drawn up a local content policy enshrined in the Nigerian Oil and Gas Industry Content Development (NOGIC) Act by the Nigerian Content Development Monitoring Board (NCDMB) to compel foreign players to pass on technical skills to local players.

While the NCDMB and local players often say that the goals of the local content law have been largely realised, pointing to huge projects managed by local players to validate the law, however, among themselves operators frankly admit huge gaps still exist.

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“Even though progress has been recorded in achieving the provision of the Local Content Act towards human capital development and knowledge transfer in the country, a lot still needs to be done in the areas of aggressive monitoring and enforcement by relevant authorities,” said Chinedu Maduakoh, managing director of Topline Ltd, a local oil firm, at the recent NOG conference.

Maduakoh canvassed for areas where Nigerians are to understudy expatriate personnel in oil and gas service operations need to be strictly implemented by the NCDMB to ensure successful succession as encapsulated in the Local Content Act.

He said there was a need to address capacity barriers that prevent Nigerian entities from meeting the technical requirements and knowledge to compete favourably in the oil and gas industry.

The import of these concerns is that it raises the possibility of acute skill gaps when oil majors who are keen on turning over troubled onshore assets to local players, finally do so.

Onshore assets in the oil-rich Delta region are plagued by rampant criminal sabotage and agitations by host communities for more share in companies profits demanded with an intensity that borders on entitlement.

While local players have become more adept at quelling discontent by oil-producing communities in Nigeria, often through measures that would violate international companies’ best practice ethos, but they are now forced to confront the reality of some of the technical skills to operate these assets may be lacking.

Local oil producers under PETAN, an association comprising over 90 oil and gas service companies say that they offer over 250 technical services including capabilities in drilling and completion, health, safety, security, environment, and social responsibility, management and information, project management among others.

However, the organisation at every oil and gas event in the country mounts advocacy for deepening local participation in Nigeria’s oil and gas sector. No, oil and gas events are complete without addressing local content challenges. At the recently concluded NOG, an entire day’s programme was devoted to discussing this on the first day of the conference.

The reality of energy transitioning is setting off fresh concerns among local players. The workforce of the future will require skills in digitalisation of energy technology, automation and artificial intelligence and advanced technologies in oil field exploration which are currently few and far between.

“The changing face of the energy sector means that to become competitive, we need to attract new workers and retain the best people to build a supply chain of talent, create entirely new skillsets and roles of workers and invest in learning and training workers to acquire new skills,” said Chidinma Obi, CEO of Dindu Energy Services & Resources Limited at the recent Nigerian International Petroleum Summit.

There are concerns about the future of work. A 2017 McKinsey report estimates that half of the current work activities can be replaced with technical automation which could displace about 15 percent of the global workforce.

That fear is palpable in the oil and gas sector where energy transition could displace millions of jobs and decimate business projections. Local operators are betting on gas.

“So what we are going to do is that we will become a much more gas oriented company, that’s the transition step. The next step is the energy transition involving renewables and the technologies that come with it, we will be well-positioned as an energy provider to ride the wave of the energy transition,” said Eberechukwu Orji, the CEO of ND Western, a local oil and gas company.

To prepare for an uncertain future, the NCDMB is ramping up investment into research and development. It announced the setting up of a $50 million Nigerian Content, Research and Development Fund to finance research, commercialise it, and endow academic studies.

The trouble it has to overcome first is getting the younger generation interested enough in studying petroleum engineering or geology.