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Local Content Development

In 1999, Chevron Nigeria Limited (CNL) and the Nigerian National Petroleum Corporation (NNPC) established the Local Business Development/Global Procurement Unit to help implement a local Content Development (LCD) policy. The overall aim of the policy – and the creation of the unit – is to promote indigenous businesses, and to facilitate CNL’s purchase of local goods and services.

The success of these efforts is shown in the change in CNL spending patterns. In 1997, some 25 percent of company purchase went for goods and services sold by Nigerian firms. By 2001,that figure had reached 82 percent.

Recent steps to boost local content: awarding of contracts worth millions of Naira to Nigerian oil service companies; farming out oil fields to Nigerian-owned companies; providing technology transfer and training to Nigerians; heightening awareness and creating opportunities for Nigerian companies through LCD fairs.

As part of its efforts, the company categorizes potential contractors into five groups, ranging from Category “A” – Nigerian-registered companies with 100 percent local shareholding – down to those with no in-country shareholders or registration. CNL’s policy is to favor companies in Category A.

On Aug. 7, 2000 – in the first agreement of its kind – CNL and NNPC officially farmed out the Ogbelle Field to Niger Petroleum Resources Limited, an indigenous oil company. In 2001, CNL awarded $24 million in drilling jobs to eight indigenous companies. Also in 2001, the company awarded a three-year, $12 million contract to Transcoastal Nigeria Ltd. for fabrication and load-out of offshore platforms. In all three cases, the contracts were awarded through competitive bidding based on technical competence. In a 2002 partnering, CNL joined with the local firm Vision Reservoir Management Technologies International (VRMT) to set up Nigeria’s first Advanced Technology Centre for Subsurface Studies.

CNL subsequently awarded a $540,000 contract to the center. CNL also sponsored a Local Content Development Fair – the first such event in the history of Nigeria’s petroleum industry.