Category: Oil and Gas Business

HOW TO START OIL AND GAS BUSINESS IN NIGERIA.

Post author By Gift Samuel
Post date February 27, 2023

In this post we will be looking at how to start oil and gas company in Nigeria and ways to Join Oil and Gas Business in Nigeria with minimal capital.

INTRODUCTION.

Many entrepreneurs know that the Oil and Gas business is very lucrative in Nigeria but they don’t have the money to start because they think it’s capital intensive. Business-Matter.com uncover some great and lucrative opportunities in the oil and gas industry in Nigeria that requires small or no capital to start. The oil and gas sector are one of the most strictly regulated industry, but probably the most profitable and risky. In fact, crude oil or petroleum and its derivatives are essential commodities that are consumed on daily basis. Despite the demands for the adoption of alternative renewable energy resources, oil still remains the number one because 99.99% of all vehicles and machines use either PMS (Petrol) or AGO (Diesel). So, the demand for petroleum products would still be on the increase even in the future except a different kind of renewable energy is invented. Starting a business in the oil and gas industry is a very profitable venture, many have made millions and others have even become billionaires. There isn’t any need of becoming a resident in Nigeria, USA, Saudi-Arabia or any other oil producing country to take advantage of this opportunity. You won’t need to have big capital before you can be an oil merchant, as there are many profitable but low startup capital services that you can render in the oil and gas industry. What you need is the desire for success, and the nitty-gritty of the business before starting. In Nigeria, you will have to scale the hurdles of getting licenses and approvals from NNPC, CAC (Corporate Affairs Commission), PPPRA (Petroleum Products Price Regulatory Agency), DPR (Department of Petroleum Resources), before you can venture into the oil and gas business.

The Business ideas and Opportunities in the Oil and Gas Industry

1. Oil Drilling and Exploration: Starting with oil and gas exploration is the most risky but lucrative business in the petroleum industry. To start, you will need a large amount of capital, heavy machinery, a highly competent technical team and an approval from the government. In Nigeria, such approval is called an “Oil Prospecting License (OPL).” Companies operating at this level include Exxon Mobil, Texaco, Chevron, Conoil, etc.

2. Equipment Leasing: If you don’t have large capital to venture into oil exploration, you can still make money by setting up an equipment leasing company to serve the petroleum sector specifically.

3. Petroleum Refining: Another lucrative business in the oil and gas industry is petroleum refining. It is possible to setup your own small private refinery and compete with the big players in the industry, since oil is a commodity that actually has no unique selling point. For instance, with the deregulation of the downstream sector in Nigeria, and the current upstream deregulation plus the planned subsidy removal; setting up a private refinery is the next business that will kick off in Nigeria.

4. Offshore Trading: Some oil shipping tankers don’t have the permission to sail through the waterways of certain countries, so what they do is to sell of their oil at the border to a merchant whose ship have the right to enter the country. If you have the capital and logistics to buy these products offshore at a bargain, you can make some profit from the deal.

5. Oil Farm / Depot: You can also setup a tank farm and sell petroleum products to distributors and retailers. In this case, you will need to build massive tank farms or reservoirs to store your products as you will either import your own products, or source your products from the local refineries or buying from the oil tankers.

6. Fuel Haulage and Logistics: If you want to avoid the stress of getting a license and the strict compliance associated with starting an oil company, then you can purchase trucks and haul petroleum products for marketers from the depots to their desired destinations.

7. Filling Stations: You can also setup a fuel station and retail petroleum products such as PMS (Petrol Motor Spirit), AGO (Diesel), DPK (Kerosene) to domestic and commercial users.

10. Petrochemicals refining: You can start the production of petrochemicals such as Benzene, Ethylene, Ammonia, Toluene, etc.

11. Domestic DPK Retailing: This mini fuel stations are simply retailing Kerosene to households and domestic users. If you don’t have the funds to purchase motorized pump-machines, you can start by using big barrels. But remember that you must be licensed before you can start this business.

12. Gas Wholesaling and Retailing: You can also setup a gas plant, or a wholesaling point. Or better still, you can retail domestic gas like ethane and butane, etc.

13. Petroleum Supply on Contract Basis: You can also supply AGO (Diesel) to companies that run heavy duty power generators like banks, manufacturing firms, telecom companies, etc. You can also supply aviation fuel to airlines on demand-and-supply basis.

14. Oil and Gas Consulting: You can become a consultant with expertise in the oil and gas industry. Your duty here is to offer advice and guidance to entrepreneurs and investors seeking to venture into the oil and gas industry. You can also help them scale the hurdles of the oil industry.

15. Oil and Gas Brokerage Services: Even if you have no money to venture into the oil and gas business, you can still profit from the industry by offering brokerage services between buyers and sellers of petroleum products.

16. Oil and Gas services: You can also start an oil and gas services company. Your company can choose to offer services such as safety, hazard control, pipeline installation, other installations, pipeline monitoring and security, etc.

17. Invest in Oil and Gas companies: Now if you lack the capital or the entrepreneurial prowess to venture into the oil and gas business, you can still make money off the industry by investing in a reputable oil and gas company with proven track record. Just ensure you do your due diligence before you invest a dime. One can also venture into: Crude Oil Exportation Fuel Importation.

WAYS TO JOIN OIL AND GAS BUSINESS IN NIGERIA WITH MINIMAL CAPITAL.

It is no secret that Nigeria as a country receives most of its revenue from the oil and gas sector. Wikipedia cites Nigeria as the 12th largest producer of petroleum in the world, the 8th largest exporter, and having the 10th largest proven reserves. (The country joined OPEC in 1971). Petroleum plays a large role in the Nigerian economy, accounting for 40% of GDP and 80% of Government earnings. With the oil and gas sectors being what it is, creating job opportunities and even enriching individuals into multi-millionaires and billionaires. It is no surprise it gathers so much attention with people constantly trying to break into the market. Joining the oil and gas business be quite capital intensive, but for those that may be short on capital, here are a couple of opportunities that can help you start an oil and gas business with limited capital.

join Oil and Gas Business by Starting a Filling Station Business.
join Oil and Gas Business starting Retailing of Cooking Gas.
join Oil and Gas Business as a Servicing Company.
join Oil and Gas Business as a Petroleum Products Haulage Company.
join Oil and Gas Business as Oil Spillage Cleaning Company.
join Oil and Gas Business as Lubricant Production Company.
Invest in the Oil and Gas Industry via Shares.
join Oil and Gas Business by Starting Diesel Supply Business.
Lubrication Oil Retail Shop.

Oil and Gas Business

A FOREIGNER SHAREHOLDING IN NIGERIAN LOCAL CONTENT ACT.

Post author By Gift Samuel
Post date February 16, 2023

In this post we will be looking at the meaning of Nigerian Local Content Acts, Why Nigerian local content policies must be harmonized, its implications and impacts.

INTRODUCTION

In 2010, the Nigerian Oil and Gas Industry Content Act, or the Local Content Act as it is commonly called, became law. The act had been 10 years in the making and prescribes minimum thresholds for the use of local services and materials with the overarching objectives of ensuring on-going job creation and improving skills of the local labor force as well as participation and ownership for local Nigerians in the country’s developing oil and gas industry. In this way it will ensure investment and growth in an industry crucial to Nigeria’s ongoing economic growth. Since the act came into force its impact has been striking. The Nigerian Content Development and Monitoring Board (NCDMB) reports that from 2009 to the end of 2013 the act’s implementation generated $5 billion of investments for the Nigerian economy, and led to the creation of 38,000 jobs in the country’s oil and gas industry. The board indicates that billions of dollars which otherwise would have been invested in foreign markets is being invested in Nigeria. This is generating significant new revenue for the economy and offers the chance for the Nigerian market to expand and develop. It also has an impact on Nigeria’s GDP growth, and if this continues, Nigeria looks set to follow Brazil’s pattern of economic success and will join the G20 within the next two decades. April 2021 marked the 11th year since the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, otherwise known as the local content law was enacted. It was one of the most dreaded days in the offices of the managers of the nation’s economy; the letter contained the information stating that the NNPC would not be contributing to the FAAC for the months of April and May. This is due to the shortfall of N111, 966,456,903.74, the national oil company recorded in February 2021. This present predicament arose from the fact that NNPC, the country’s apex fuel importer-supplier, was recording a shortage of N56 for every liter of PMS being imported into Nigeria currently. According to the memo, as the federal government and labor were still negotiating the pump price of fuel, the shortfall came from the landing cost of fuel that skyrocketed by “.

WHAT IS NIGERIAN LOCAL CONTENT ACT?

The Local Content Act is a pivotal mechanism that enables Nigerian Companies to contribute enormously towards the growth of the Nigerian economy by encouraging value addition, job opportunities, and also the award of various oil contracts and projects. It can also be seen as policy measures, implemented at the state, sub-state or regional level, but assert that they require foreign or domestic investors to source a certain percentage of intermediate goods from local manufacturers or producers. Local content policies usually target (local) industrial and technological development, value creation or addition, wealth increase, employment creation and the development of backward, forward and sideways linkages along the value chain.

ITS IMPLICATIONS.

As policymakers usually implement such policies to purse economic and socio-political objectives and to enhance linkages with the domestic economy, the following seven local content policy targets are the most common which a foreign shareholding must agree to:

Local employment, domestic labour market development and transfer of skills/know how.
Local value creation or addition, increased local linkages and domestic industry development.
Economic diversification.
Promotion of innovation, technology, research and development, enhancement of technology transfer and creation/increase of local technological capabilities.
Ensure local ownership of important industries
Revenue from minerals
Local community projects

The Act states that Nigerian independent operators shall be given first consideration in the award of oil blocks, oil field licenses, oil-lifting licenses and in all projects for which contract is to be awarded in the Nigerian oil and gas industry subject to the fulfilment of such conditions as may be specified. “There shall be exclusive consideration to Nigerian indigenous service companies which demonstrate ownership of equipment, Nigerian personnel and capacity to execute such work…,” it states. In essence, it is estimated that before attention shifted to the need to encourage in-country participation, the glaring lack of technical know-how led to importation of expats who dominated the oil and gas landscape.

IMPACT.

As expected, these foreigners are usually remunerated in hard currency and it has been estimated that this could have led to the loss of as much as $380 capital in flight, with a paltry 5 per cent Nigerian participation and loss of at least 2 million jobs. This manifestly led to less revenue accruing to the government; job losses; lack of skills/ technological know-how transfer; high cost of products; long project cycle and over-dependency on foreign countries, which also translated to national security challenges. It is said that this conscious effort in the last 11 years has saved the country from unwarranted embarrassment on several occasions when there were emergencies. For instance, there was no noticeable disruptions in the operations of the oil and gas industry during the coronavirus-induced lockdown last year, which could have raised national security issues, even with a large percentage of expatriates having left Nigeria for their home countries. Although the NCDMB, which is the implementing body of the local content act, took off on a slow note, with the usual teething issues in the early years, it appears to have since fully throttled, especially under the current management led by Wabote, described as very focused and a competent hand. From 5 per cent when the implementation of the NOGICD Act commenced, in 2017, the number hit 28 per cent in 2017, and as at 2020 was put at 31 per cent. Taking advantage of the local content act, in the upstream sub-sector, many Nigerian oil and gas players have now bought over stakes in multinational oil companies, further deepening the local content ecosystem. The following are some of the impact of local content policy:

Economic benefits
Infant industry.
Market power
Social impact.
Environmental benefits/green industry
Technology transfer.

WHY NIGERIAN LOCAL CONTENT POLICIES MUST BE HARMONIZED.

Amidst the clamor for increased indigenous participation across all sectors of the Nigerian economy, there is need to harmonize all policies geared towards protecting local contents. Experts had also emphasized the role of a strong and pragmatic local content policy in value creation. While the idea of local content policy originated from the oil and gas industry, there have been calls for its application across the economy, this will help in building capacity to attract foreign earnings and Foreign Direct Investment (FDI) to Nigeria. Stakeholders should focus on developing indigenous capacity at various levels so Nigeria would not look up to other countries for vaccination. Another aspect where local content will be of immense benefit is defense”, this speaks to our need for defense hardware and infrastructure.

CONCLUTION.

It is quite a glaring fact that government policymakers must adopt a more dynamic approach to ensuring the sustainability of local content development, to further ensure the security of a better future for the country’s Oil and Gas industry. It is however expected that with sound economic management, policy re-engineering, good governance, and a social value system that rewards hard work and creativity, there will be a significant number of companies committed to Nigerian content and pursuing local content programs.

Oil and Gas Business

Nigerians Participation in the Local Content

Post author By admin
Post date November 21, 2020

Nigerians Participation and creating value in the Nigeria business has increase as a result of Local Content act.

Despite the pressure of globalization, the Nigerian Government is responsible of ensuring that businesses in Nigeria remain competitive. This informed the need for the Government to put in place frameworks to enhance the ability of local companies to exploit local opportunities while staying competitive globally. The local content provisions in some sectors include;

Oil and Gas

The Nigerian Oil and Gas Industry Content Development Act (“NOGICDA”) which established the Nigerian Content Development and Monitoring Board (“the Board”) was enacted in 2010. The purpose of the Act is to create the framework for growth of Nigerian content in respect of all operations and transactions in Nigeria’s Oil and Gas Sector (“the sector”).

The Act which defines a Nigerian Company to mean a Company registered in Nigeria in accordance with the provisions of the CAMA with not less than 51% (fifty-one percent) equity shares owned by Nigerians mandates investors in the sector to consider Nigerian content as an important element in their project development and management philosophy.

The Act provides that subject to fulfillment of the conditions that may be specified, Nigerian operators and indigenous service companies shall be given first consideration in award of oil blocks, licenses and works in the sector. Consequently, the Board is empowered to execute its duties under the Act as well as ensure that the provisions of the Act are compiled with by stakeholders in the sector.

Shipping

It is only vessels wholly owned and operated by Nigerians, built and registered in Nigeria that can engage in domestic coastal carriage of cargo and passenger within the coastal territorial inland waters or any point with the exclusive economic zone of Nigeria restricts the use of foreign-owned or manned vessels for coastal trade in Nigeria.

Consequently, a vessel which is not owned by a Nigerian citizen shall not carry any substance whatsoever or dredge any material within Nigerian waters. However, a foreign vessel may render assistance to persons, vessels or aircraft in danger or distress in Nigerian waters.

Lottery

In Lagos at least 15% (fifteen) of shares in predominantly foreign owned gaming licence applicants must be held by Nigerians.

Banks

No person can carry on any banking business in Nigeria except it is duly incorporated in Nigeria and holds a valid banking licence. Again, no foreign bank can operate a branch in Nigeria without prior approval of the CBN. However, CBN may grant licence to Nigerian and foreign banks to undertake off-shore banking business from Nigeria.

Information and Communications Technology

The National Information Technology Development Agency (“NITDA“) in 2013 released guidelines on Nigerian content development in information and communication technology. According to the guidelines, ICT companies in Nigeria are to maintain 50% (fifty percent) local content either directly or by outsourcing to local businesses to encourage Nigerian representation and participation in the sector.

Aviation

The Civil Aviation Authority shall not grant an aviation permit, certificate or other authorization to a person who is not a Nigerian citizen or a company registered in Nigeria.

Broadcasting

The Broadcasting Commission shall only grant a licence if it is satisfied that the applicant is a company registered in Nigeria with majority shares owned by Nigerians. The applicant must also demonstrate that it is not applying on behalf of any foreign interest.

Pharmacists

A person shall be registered and practice as a Pharmacist if he is a Nigerian citizen. Nevertheless, a person who is not a citizen of Nigeria may be registered as a Pharmacist if he is a citizen of a country with reciprocal registration facilities to Nigerian citizens.

Engineering

A non-Nigerian who satisfies the Council for Regulation of Engineering in Nigeria that he has been employed for a specific period in a capacity as an engineer and will be in Nigeria temporarily for the purpose of the employment or that he has qualification outside Nigeria which is acceptable to the Council may be registered as an engineer in Nigeria.

A company engaged in engineering services must be registered with the Council for Regulation of Engineering in Nigeria. To do engineering business, the company must have Nigerian directors that are registered with the council and who hold at least 53% (fifty-three percent) of the shares in the company.

Private security

A foreigner cannot acquire an equity interest in, or sit on the board of, a Nigerian private security guard company in Nigeria.

Advertising

Only a national agency (that is, an agency in which Nigerians own not less than 74.9% of the equity) can advertise in the Nigeria market.

Legal Practitioner

A person can only be entitled to practice as a barrister or solicitor in Nigeria if his name is on the roll of the Supreme Court of Nigeria. Nevertheless, the Chief Justice of the Federation may grant any legal practitioner who is entitled to practice in a legal system similar to Nigeria, licence to practice in Nigeria. Again, if it is expedient for a person to practice as a barrister for the purpose of specific proceedings, the Chief Justice may grant the person the licence to practice as a barrister in relation to the specific proceedings stipulated.

The above are some of the few businesses which insist on local content participation. There is greater awareness on the need for Nigerians to participate in major sector of the Nigerian economy. For instance in the telecommunications sector, stakeholders have frowned at the absence of clear local content policy in the industry which has resulted in massive loss of jobs meant for Nigerians and poor remuneration of Nigerian workers employed by foreign owned telecommunications companies in the wake of outsourcing business model.

There is a clamor for the National Assembly to enact a local content law in other non-oil sectors to improve the capacity of Nigerian businesses and protect the employment of Nigerian employees.

Recent Development

On 5^th February 2018, President Buhari signed Presidential executive order 5 for “planning and execution of projects, promotion of Nigerian content in contracts and science, engineering and technology”. Under the executive order, procuring authorities shall give preference to Nigerian companies and firms in the award of contracts in line with the Public Procurement Act, 2007. The executive order prohibits the Ministry of Interior from giving visas to foreign workers whose skills are readily available in Nigeria. The order also directs ministries, department and agencies to engage indigenous professionals in the planning, design and execution of national security projects.

Nevertheless, consideration shall only be given to a foreign professional where it is certified by the appropriate authority that such expertise is not available in Nigeria. In such an instance, the authority will give preference to foreign companies with a demonstrable and verifiable plan for indigenous development prior to award of such contracts.

Tags Local Content Act, Nigerians Participation In Nigeria Local Content

Oil and Gas Business

Nigerian Content Intervention Fund (NCIF)

Post author By admin
Post date November 20, 2020

What is Nigerian Content Intervention Fund (NCIF)?

The Nigerian Content Intervention (NCI) Fund is a pool of funds made available by the Nigeria Content Development and Monitoring Board (NCDMB) to be managed by the Bank of Industry to meet the funding needs of indigenous manufacturers, service providers and other key players in the Nigerian Oil and gas Industry. It is sourced from the Nigerian Content Development Fund (NCDF) created by section 104 of the Nigerian Oil and Gas Content Development Act (NOGICD) Act.

The Nigerian Content Intervention Fund (NCIF) was motivated by the desire to re-engineer the operations of the NCDF, increase access to funding and grow indigenous participation in the oil and gas industry.

Read: NOGIC JQS Registration Requirements (Local Content)

To increase access to Nigerian Content Development Fund (NCDF).
- To provide single digit interest loan.
- To enhance competitiveness of indigenous companies servicing the oil and gas industry.

The Purpose for Nigerian Content Intervention Fund (NCIF)

The Nigerian Content Intervention (NCI) Fund is a Nigerian Content Development & Monitoring Board (NCDMB) fund managed by Bank of Industry Limited (BOI).

The NCI fund was motivated by the desire to re-engineer the operations of the NCDF, increase access to funding and grow indigenous participation in the oil and gas industry.

The NCI fund is designed to achieve the following strategic objectives:

To increase indigenous participation in the oil and gas industry, build local capacity and competencies.
To promote the growth and development of Nigerian Content in activities connected with sectors of the Nigerian oil and gas Industry.
To deepen the creation of linkages to other sectors of the national economy and boost industry contributions to the growth of Nigeria’s National Gross Domestic Product.
To address persistent funding challenges that have hindered capacity and growth of local service providers in oil and gas.
To facilitate the growth of community based companies in the upstream oil and gas sector.
To spur productivity and job creation in the Oil and Gas Industry.
To attract investment capital into the sector and boost contribution of the sector to Nigeria’s economic growth.

Benefits of NCI Fund Oil and Gas Industry in Nigeria.

The Nigeria Content Intervention Fund is meant for Oil and Gas Manufacturing Loan, Asset acquisition financing, Loan re-financing, Community contractor finance schemeand Contract Finance.

The facility type are Term loans, Working Capital, Invoice Discounting and Leasing facility. The NCI Funding are for maximum of 5 years tenor.

The benefits are many to local economy, host communities and players in the Nigerian oil and gas industry. Some of the benefits are:

Read: How to apply for DPR Permit

i) It will promote the production and utilization of locally manufactured goods and services in the Nigerian oil and gas industry.

ii) It will address the persistent funding challenges that has hindered capacity and growth of local service providers in oil and gas industry.

iii) It will spur productivity and job creation in the oil and gas industry.

Amount to Access Under Nigerian Content Intervention (NCI) Fund

Applicants who are eligible to apply for the Nigerian Content Intervention (NCI) Fund have maximum amount they can apply for in one application (a single obligor limit) under each loan type. The single obligor limit for the available types of funding is detailed below:

i)Manufacturing Loan – US$10million
ii)Asset acquisition Loan – US$10million
iii)Contract finance Loan – US$5million
iv)Community Contractor Finance Scheme – N20million
v)Loan Re-financing – US$10million

NCI Funding Interest Rate

i) Manufacturing Loan – 8%

ii) Asset acquisition Loan – 8%

iii) Contract finance Loan – 8%

iv) Community Contractor Finance Scheme – 5%

v) Loan Re-financing – 8%

Note:
The 10% equity contribution will only apply to manufacturing and asset acquisition facility types. Applicant will be required to provide a minimum of 10% equity contribution.

Aziza Nigeria is your No. 1 Oil & Gas and Marine Business Support Firm in Nigeria.
We partner with you in Nigerian Local Content program.

Tags Local Content Fund, NCIF, Nigerian Content Intervention Fund

Oil and Gas Business Uncategorized

How to Access Nigeria Content Intervention (NCI) Fund

Post author By admin
Post date November 20, 2020

How to access Nigerian Content Intervention (NCI) Fund, who is eligible to access the NCI Fund, how to prepare your Feasibility Study Report so as to access the Nigerian Content Intervention (NCI) Fund and many more.

Read: NCEC Registration Requirements

Nigerian Content Intervention (NCI) Fund Facility Types

The Nigeria Content Development and Monitoring Board (NCDMB) will use the NCI Fund to finance the following facilities:

Term loans,
Working Capital,
Invoice Discounting
Leasing facility

Eligibility to Access the NCI Fund

You must be registered with NCDMB. Read requirements to NCDMB registration.

Read: How to apply for DPR Permit, Requirements & Cost

The Nigerian Content Intervention (NCI) Fund will be accessible to contributors to the NCDF as well as community contractors of any of the oil producing communities.

Amount to Access Under Nigerian Content Intervention (NCI) Fund

i)Manufacturing Loan – US$10million
ii)Asset acquisition Loan – US$10million
iii)Contract finance Loan – US$5million
iv)Community Contractor Finance Scheme – N20million
v)Loan Re-financing – US$10million

How to Apply For Nigerian Content Intervention (NCI) Fund

All applications can only be made through the Bank Of Industry (BOI) Nigerian Content Intervention (NCI) Fund portal (www.boi.ng/ncifund).

Upon submission of the application, it takes forty-five (45) working days to access the loan. This is subject to fulfillment of all terms and conditions and contract confirmation from an International Oil Company (IOC), where applicable.

Requirements & Application Contents

Different documents are required for the different types of loan available (this can the accessed on the website) but a major requirement for all loan types is a detailed Feasibility Report containing the following:

Introduction & Background: This shows information on the company’s activities since incorporation, biographies of shareholders of the company and their percentage shareholding, project concept which is the need for the project and the detailed project description.

List Of Information Expected In The NCIF Feasibility Study Report

1) Information on the company’s activities since incorporation.

2) Biographies of shareholders of the company and their percentage shareholding.

3) Projects concept, the need for the project and detail project description

4) Details of the project cost as well as the proposed financing plan with realistic assessment and evidence of availability of funds from each source.

5) Details of existing assets and the value as well as cost incurred on the proposed project till date.

6) Installed capacity and a detailed analysis of the annual cost of production and cash flow and balance sheet projections for at least the first five years with relevant assumptions.

7) Detailed technical information covering technology, production process etc.

8) Information on Technical Partners, if any.

9) Comprehensive list of machinery required, giving detailed specifications, source(s) and prices.

10) Details of utility requirements and availability of essential services such as water, power, transport around the project site.

11) Detailed information on raw material requirements, their sources and unit cost.

12) Comprehensive list of manpower requirements broken down into categories and salaries.

13) List, qualification and position and annual salary of existing management and staff (for expansion projects only).

14)       Detailed market study report, covering the following areas:
(a)        Supply analysis with information/data on names, location and installed capacities of existing and known potential competitors, import data for the products(s) Trend of future supply (local + import).
(b)        Demand analysis comprising factors influencing demand, estimate of domestic demand, export potentials – all based on current and future trend.
(c )       Market prospects with information on existing planned marketing arrangements, distribution strategies, current and proposed selling prices vis-à-vis competitors, prices (local and import prices).

15) For on-going projects, give the existing, Expansion/Diversification and Consolidated projections covering Profit and Loss Accounts, Cash Flow Analysis and Balance Sheets for the period of five (5) years. Also provide the detailed information/data and assumptions used in the above projections.

Tags Local Content Fund, NCIF, Nigerian Content Intervention Fund

Oil and Gas Business

Nigerian Local Content Achievements so far

Post author By admin
Post date November 17, 2020

There have been some notable and measurable achievements recorded in the Nigerian Oil and Gas Industry since the inception of the Nigerian Oil and Gas Industry Content Development Act 2010. Some of what we called “recorded achievements” ordinarily should not would not be seen as achievements if players has obeyed some of rules of engagements prior to the Act.

Thank God for the Act that came some how late to regulate the industry. Prior to the Act, the Nigerian Oil and Gas Industry business both offstream and downstream was free for all for the players that are majorly foreign International Oil Companies.

Read: Nigeria Oil & Gas Business Support Services

Below are Some of the Major Achievements in Nigerian Oil & Gas since the inception Local Content Development Act 2010.

Prohibition of Importation of Welded Products

On e of the key achievements Local Content development has to to Nigerians is Prohibition of Importation of Welded Products. All operators, project promoters, contractors and any other entity engaged in the Nigerian oil and gas industry shall carry out all fabrication and welding activities in – country.

For example, during the construction of NLNG Train 1 to Train 6, foreigners where all over the project. Foreign contractors who where handling the projects were hiring all kids of labors from their country. Unskilled labors, most welded products were imported and many more.

Nigerian Local Contractor Development

Another key achievements of local content act is the NOGICD Act has led to a sizeable portion of the goods, services and equipment vital for the every-day running of operations to be sourced locally. The number of contracts awarded to indigenous contractors and sub-contractors has increased over the years, thereby guaranteeing increased local employment and ensuring the emergence of more local companies.

Indigenous companies are increasingly providing programmes specifically designed to support local contractors and businesses. Seplat operates their annual flagship Community Contractors’ Capacity Building programme which equips local contractors with the necessary skills to help them develop their business processes to an international standard.

Since 2014, over 300 contractors from the Delta and Imo states have benefitted from this programme. This has enabled up to 40% of host community contractors to gain technical skills which were lacking at the time they originally registered as contractors. In addition, 98% of Seplat’s contractor are Nigerian companies – in line with the provisions of the NOGICD Act. Since 2013, contracts worth up to US$1bn have been awarded to Nigerian companies.

Bidding Process for Contracts

The Act requires project promoters and operators to consider Nigerian content when evaluating any bid. Where bids are within one percent (1%) of each other at commercial stage, the bid containing the highest level of Nigerian content shall be selected provided the Nigerian content is at least five percent (5%) higher than its closest competitors.

This initiative is also emphasized through ensuring that award of contracts are not solely based on the principle of lowest bidder and allows a Nigerian indigenous company who has capacity to execute a job not to be disqualified exclusively on the basis that it is not the lowest financial bidder, provided the value does not exceed the lowest bid price by ten percent (10%).

Oil & Gas Company Ownership

Other achievements of Oil & Gas content Act is the NOGICD Act has led to a sizeable portion of 51% Ownership to Nigerian to Oil & Gas Company. This means, an Oil and Gas company is deemed to be a Nigerian company if the Equity Share Capital of company is owned by Nigerian indigenes.

Addressing Militancy and Youth Unemployment

Militancy in the Niger Delta has long been a key issue facing the oil and gas sector in Nigeria and these policies have created opportunities which has reduced levels of unrest in the region. Communities are now actively engaged through community development programmes to support local stakeholders. Seplat’s annual ‘Eye Can See’ and ‘Safe Motherhood’ programmes deliver comprehensive eye care and medical care for expectant mothers.

Read: Oil & Gas Compliance (Permits & Licenses)

This two-way dialogue between Seplat and the local community alongside the Global Memorandum of Understanding (GMOU) signed in 2010 and jointly reviewed and renewed in 2016 has meant that, production downtime due to community unrest against Seplat-owned assets has been kept to a bare minimum.

The Company also has an additional graduate training programme which aims to help Nigerian graduates with no prior oil and gas industry experience to develop their knowledge of the sector and expose them to the technology used. Since 2014, the Company has spent over US$8m on employee training.

While there is still work to be done across the industry, existing data shows that pipeline vandalisation and human error related spillages have reduced in the Delta.

Employment and Training

The inclusion of Nigerians in oil operations provides a significant avenue through which skills can be acquired and subsequently the development of the industry and economy. This is substantiated through the Local Content Act which requires that for each of its operations, an operator or project promoter may retain a maximum of five percent (5%) of management positions as may be approved by the NCDMB as expatriate positions to take care of the interests of investors.

It is also made mandatory for operators in the industry to provide a viable succession plan whereby Nigerians will understudy each incumbent expatriate position for a maximum period of four (4) years, at the end of which the positions shall become Nigerianised.

Furthermore, the Act mandates that operators and companies operating in Nigeria shall only employ Nigerians in their junior and intermediate cadre or any other corresponding grades designated by the operator or company.

Another interesting provision is the requirement that all project or contracts with a budget of more than $100 million are required to contain a ‘Labour Clause” mandating a minimum % of Nigerian labour in specific cadres.

Increase In Infrastructure Development And Facility Upgrades

Until recently, activities such as engineering, welding and construction were done outside of Nigeria as there were no international standard dockyards or construction sites in place in-country. There have been huge strides in this area with industry leading construction yards built by companies such as Total, Aveon and Saipem to ensure projects can be completed in-country, providing thousands of local jobs.

Read: How to Start Oil & Gas Business in Nigeria

A key example of this is the recent construction of the Egina Floating Production Storage and Offloading Vessel (FPSO), the largest vessel of its kind ever installed in Nigeria. 77% of the construction was completed in-country, a ground-breaking achievement for the country. This confirmed that the Nigeria’s well-equipped construction yards met international standards and were successfully managed by competent local personnel.

Gas and Support to The Power Sector

Gas supply performance relative to Domestic Gas Supply Obligation (DGSO) has greatly improved across indigenous operators including Seplat, Frontier Oil and Gas, and Energia. These companies have been heavily investing in gas production in order to capitalize on the announcement made by the Ministry of Petroleum in 2014, that the DGSO prices were to increase from $0.3/Mscf to $2.5/ Mscf.

For example, Seplat’s average daily gas supply was above 230% of its DGSO in 2017, making it one of the leading domestic suppliers of gas in the country. In addition, it currently contributes 3.5% of the total gas production in Nigeria.

The aim of the 2014 price increase was to encourage investment in-country in order to deliver the envisaged 30GW generation, up from the current 5GW level. Ultimately this will guarantee access to reliable, affordable power for local Nigerians, a vital step to achieve accelerated economic growth.

Legal Services

Where legal services are required to engage in any operation, business or transaction in the Nigerian Oil and Gas industry, operators are obligated to only retain the services of a Nigerian legal practitioner or a firm(s) Nigerian legal practitioners with its office located within Nigeria. This is implemented through the provision of a Legal Service Plan (LSP) to the board every six (6) months which shall extensively provide a report on the legal services utilized in the last six (6) months by expenditure, a forecast of legal services required during the next six (6) months and the projected expenditure for the services. In addition to the above a list should be provided highlighting the external solicitors utilized for legal services in the past six (6) months, the nature of work done and the expenditure made by the operator.

Insurance

To engage in any form of business, operations or contract in the Nigerian Oil and Gas industry, operators and all interested parties must insure all insurable risks related to its oil and gas business with an insurance company, through an insurance broker registered in Nigeria under the provisions of the insurance Act as amended.

Financial Services

It is mandatory for operators to submit a Financial Services Plan (FSP), where financial services are required. Included in the FSP amongst others will be details of financial services utilized in the past six (6) months, a forecast of financial services required during the next six (6) months, projected expenditure; and the nature of financial services required.

It is also provided that operators, contractors and sub-contractors shall maintain bank accounts within Nigeria in where it shall retain a minimum of 10% of its total revenue accruing from its Nigerian operations.

Conclusion

Nigerian Oil and Gas Industry Content Development Act (NOGICD) 2010 and the management body Nigerian Content Development and Monitoring Board (NCDMB) has climbed a great hill but as Mandela said, “there are many more hills to climb” for the long walk is not ended.

Tags Local Content Act, Local Content Development in Nigeria Oil & Gas Sector, Oil and Gas Business Nigeria

Oil and Gas Business

Local Content Development in Nigeria Oil & Gas Sector

Post author By admin
Post date November 17, 2020
1 Comment on Local Content Development in Nigeria Oil & Gas Sector

In this post, we x-rayed Local content development in the Nigerian oil and gas industry, the objectives and some of the achievements in the Nigerian oil and gas industry since 2010. The history of Local content development in the Nigerian oil and gas industry, what lead to the Local Content Act and more.

Local Content is a means used in many countries to protect and develop indigenous employees, products and services from foreign experts. The definition is specific to each country and depends on its micro and macro-economic conditions.

Local Content in Nigeria Oil & Gas Sector gives a framework for the increase in Nigerian participation in the Oil and Gas Industry / sector. It prescribes minimum thresholds for Nigerian participation in activities within the industry through the utilization of Nigerian human and material resources and services in the industry. It’s activities, connection with the exploration, development, exploitation, transportation and sale of Nigerian crude oil and gas resources.

Contact us for Oil & Gas Business Support in Nigeria

local content development policy seeks to promote inclusiveness and integration of the sector with the rest of the economy to ensure that the country and its people benefit from the ownership of these significant reserves. It also seeks to promote local employment and the use of local goods and contractors so that a country’s citizens are involved throughout the entire supply chain. Other desired outcomes include the increase of domestic capabilities and competencies over time, improvement of national technological capacity and to manage the equal distribution of wealth across the country.

The current climate of the industry has largely been influenced by the passage of various laws and regulations that are administered by local, national and other government organizations representing the interests of state and country. Through these bodies, the Nigerian Government regulates exploration and production of natural gas and crude oil as a result of the authority provided through the Nigerian Constitution and the Petroleum Act (“PA”), which vests the entire ownership and control of petroleum in the Nigerian Government on behalf of the people of Nigeria.

Amongst the most notable government institutions are the Ministry of Petroleum Resources (MPR), Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR) which ensure that operations within the industry are regulated to a specific standard.

It is with great input from these bodies that various laws and regulations that directly and indirectly regulate the Nigerian oil and gas industry are implemented and monitored. These laws and regulations vary from those applying to the operational aspects, to the fiscal aspects, such as the PA, the Petroleum Profits Tax Act (“PPTA”), the Deep Offshore and Inland Basin Production Sharing Contract Act (DIBPSA) and regulations which have been made pursuant to the PA, such as the Petroleum (Drilling & Production) Regulations (“PDPR”) which regulate operational aspects of the drilling and production of crude oil.

Prior to Nigerian Local Content Development

Traditionally, major International Oil Companies (IOCs) have dominated the oil and gas sector in Nigeria due to their technological and financial advantages, alongside a lack of proper regulation in the past. This has meant that local content development has been lacking due to the isolated bubble which the IOCs operated in and a critical lack of infrastructure to support processing and refining locally. For example, prior to 2010, nearly US$380 billion and 2 million jobs were estimated to have been lost as the majority of construction, engineering and procurement undertaken by the IOCs was carried out overseas.

Key Legislation/Regulatory Local Content bodies

Nigerian Oil and Gas Industry Content Development Act (NOGICD)
Nigerian Content Development and Monitoring Board (NCDMB)
Nigerian Content Development Fund (NCDF)

Read: How to Obtain Oil & Gas Permits and Certificates

What is the Nigerian Content Development Fund (NCDF)?

What is Nigerian Oil and Gas Industry Content Development Act (NOGICD)?

The Nigerian Oil and Gas Industry Content Development Act is an act to provide for the development of Nigerian content in the Nigerian oil and gas industry, Nigerian content plan, supervision, coordination, monitoring and implementation of Nigerian content; and for related matters.

What is Nigerian Content Development and Monitoring Board (NCDMB)?

The Nigerian Content Development and Monitoring Board (“the “Board”) established in accordance with this Act shall make procedure that will guide, monitor, coordinate and implement the provisions of this Act.

The NCDMB Board shall implement the provisions of this Act with a view to ensuring a measurable and continuous growth of Nigerian content in all oil and gas arrangements, projects, operations, activities or transactions in the Nigerian oil and gas industry.

The NCDMB Board shall review and assess the plan and, if satisfied that the plan complies with the provisions of this Act, issue a Certificate of Authorization (“the Certificate’) to the operator for that project.

Oil and Gas Local Content Objective

The Federal Government of Nigeria introduced the Nigerian Oil and Gas Industry Content Development Act 2010 (the “Local Content Act”). The main objective/ target is seventy percent (70%) utilization of indigenous labor, materials and resources in all oil and gas projects in country.

The act aims to achieve 70% local content by 2020 and there has been significant progress as can be seen by the increased number of independent and marginal producers.

Since inception, the Local Content Act has brought about a significant shift in ensuring an increase in indigenous participation within the industry.

Post the implementation of the NOGICD Act, the Federal Ministry of Petroleum Resources launched the Petroleum Industry Roadmap which set out the “7 Big Wins”, providing a set of aims for the industry to achieve between 2015-2019. Key elements of the new policy, its benefits and delivery status as at year-end 2018 are outlined below.

The Nigerian Local Content Development Road Map in Oil & Gas Sector

The ultimate objective of the above “7 Big Wins” is to capitalize on Nigeria’s status as the ninth-largest gas reserve holder in the world. These robust projects aim to support the growing ‘gas revolution’ in the country which looks to shift Nigeria away from being an oil-based economy to a gas-based one. This includes expanding Nigeria’s existing domestic refinery capacity, improving gas supply infrastructure across the country and maximising the use of gas powered generation in order to encourage economic development through access to a continuous, cheap and reliable power source.

Read: Local Opportunities in $7.6bn NLNG Train 7 Project

Nigerian Local Content Achievements so far

The Nigerian Oil and Gas Industry Content Development Act Achievements so far. Below are some of the notable achievements recorded in the Nigerian Oil and Gas Industry from the inception of the Act 2010.

Increased Indigenous Participation

More than 30,000 direct and indirect jobs have been created for local Nigerians in the sector since 2010. Some indigenous companies have been instrumental in maximizing opportunities for local content development at their operations. In 2018, 99% of the Company’s entire workforce is Nigerian and Nigerians account for nearly 80% of the Company’s top management positions. The Company also has a rigorous Workforce Capacity Development training programme to ensure its workforce has the necessary skills and knowledge required to operate to an international standard.

NLNG Train 7 Project, a Major Milestone

The $7.6bn NLNG Train 7 Project that just started clearly mapped out the fabrications, supplies, manpower, and others that must be for indigenous utilization.

Click to Nigerian Local Content Achievements

Tags Local Content Act, Local Content Development in Nigeria Oil & Gas Sector, LOCAL CONTENT POLICY IN NIGERIA

Oil and Gas Business Uncategorized

GAS (LPG) BUSINESS IN NIGERIA

Post author By Eme Cynthia
Post date November 16, 2020

This page tells us the procedures or steps on how we can embark on Gas Business in Nigeria.

Before one embarks on a gas business, you have to have a good knowledge about the business, have a solid plan and execute it effectively. You need to be knowledgeable about the number of gas pants in your area, their turn over, that will help you in your own plans and working strategies to advertise yourself and also know the dos and don’t of the experience of others in the business.

Read: LPG Plant Construction Approval & Licensing

– Opening a gas plant business is really money consuming, you need hug money in order to acquire equipment’s and machines in running your gas business

– Land, environmental and health implication, should be considered, because DPR(Department of Petroleum Resources) directives passed a bill that the location for a gas plant should at least be 15meters away from residential buildings or any building that has flammable materials.

– Before your license is given to you or application been approved, the DPR officials will come for inspection if been satisfied your license will be issued to you.

– DPR will come and investigate, Certificate of ownership of property, land survey, application letter for DPR, certificate of corporation (CAC) and tax certificate.

Read: LPG Business Opportunities & How to Start

– After the DPR has been given go ahead order to set up your plant, the next thing you do is to prepare and submit these documents, police Report, Town Planning Permit, Fire Planning Approval, State Land and Physical Planning permit Layout drawing of proposed plant and you carry out an Environment Impact Analysis.

-After the approval of first and second stages, the last stage is to certify the installation and materials used to build the establishment. Documents required are: Pressure Test Report, Fire Responds Report and SON certification for the pressured vessel.

Insurance, it is very important but not mandatory, is highly recommended because it deals with flammable and there could be unforeseen occurrences. Despite the safety and precautions measures, one cannot be too confident of safety.

Tags GAS (LPG) BUSINESS IN NIGERIA

Oil and Gas Business

LOCAL CONTENT IN NIGERIA OIL & GAS SECTOR

Post author By Eme Cynthia
Post date November 16, 2020

This page talks about the Local Content of Oil and Gas Business with its Development in Nigeria.

Local content gives a framework, for the increase in Nigerian participation in the Oil and Gas Industry or sector. It prescribes minimum thresholds for Nigerian participation in activities within the industry through the utilization of Nigerian human and material resources and services in the industry. It’s activities, connection with the exploration, development, exploitation, transportation and sale of Nigerian crude oil and gas resources.

Local content gives opportunity to Nigerian independent operators to be given first consideration in the award of oil blocks, oil field licenses, oil lifting licenses and in all projects for which a contract is to be awarded in the Nigerian oil and Gas industry.

Local content also gives consideration to Nigerian indigenous services companies which demonstrate ownership of equipment, Nigerian personnel and capacity to execute such work to bid on land and swamp operating areas of the Nigerian oil and gas industry for contracts and services.

GAS (LPG) BUSINESS IN NIGERIA

– Opening a gas plant business is really money consuming, you need hug money in order to acquire equipment’s and machines in running your gas business

– Before your license is given to you or application been approved, the DPR officials will come for inspection if been satisfied your license will be issued to you.

– DPR will come and investigate, Certificate of ownership of property, land survey, application letter for DPR, certificate of corporation (CAC) and tax certificate

LOCAL CONTENT DEVELOPMENT MEAN IN NIGERIA

Local content development boost local participation in the oil and gas projects and creating more employment opportunities for the locals, the federal government of Nigeria in 2010, enacted the Local Content Act in recognition of the inadequacy of the indigenous human capital development in the oil and gas industry in Nigeria. In order words, the Local Content development policy of the federal government is without some problems which have affected the effective and efficient implementation of the policy.

Tags LOCAL CONTENT IN NIGERIA OIL & GAS SECTOR

Oil and Gas Business

Definition of Local Content, Important & Benefit

Post author By Eme Cynthia
Post date November 16, 2020

This page talks about the Meaning of Local Content, Important and Development, Benefit to the indigenous in Nigeria.

Local Content is a means used in many countries, there is no universally agreed definition of it. The definition is specific to each country and depends on its micro and macro-economic conditions

Local Content is where a country’s fundamentals are used to attain a significant level of socio-economic progressiveness and sustainability.

local content as “the quantum of composite value added in Nigeria through utilization of Nigerian goods and services in the petroleum industry resulting in the development of indigenous capability without compromising quality, health, safety and environmental standard.

IMPORTANCE OF LOCAL CONTENT REGISTRATION IN NIGERIA

The major importance of getting registered with the board are stipulated is consideration in the award of oil blocks, oil field licenses, oil lifting licenses and in all projects for which contract is been awarded in the Nigerian oil and gas industry subject to the fulfillment of specified conditions.

it has being made compulsory for all regulatory authorities, operators, contractors, subcontractors, alliance partners and other entities involved in any project, operation, activity or transaction in the Nigerian oil and gas industry to consider Nigerian content as an important element of their overall project development and management philosophy for project execution.

The Nigeria local content registration is supervised and administered by the federal government through the NCDMB. The Nigerian Content Development and Monitoring Board (NCDMB) is a federal government agency that was established by the virtue of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, which came into effect on the 22nd of April, 2010. The NCDMB is empowered to supervise and administer the local content in the Nigerian oil and gas industry.

Local content is providing direct and indirect opportunities for employment and procurement to home nationals, and also fostering the development of local skills, technology transfer, and use of local manpower and local manufacturing in capital projects.

BENEFIT OF LOCAL CONTENT TO INDIGENOUS IN NIGERIA

– The indigenous companies are advised to continue to invest in improving the quality of their products and services.

– Benefit agreement or a community development agreement is when indigenous of the communities have a right to negotiate with companies based on the principal agreement which include commitments to local indigenous content, training and enterprise development opportunities.

– The Benefits-Impacts Agreement was viewed as an important instrument of economic change for people who traditionally had been left out of the mainstream economy.

Local content emphasized the need for collaboration among Nigerian companies as a reliable way to harness the different skills that will grow the industry.

Nigerian Content to other industries, for example, mines, power and information technology are very potential for success in these industries if the teachings from the pioneering are applied.

Local content commitments essentially represent benefits that oil, gas and mining can bring to the local economy and host communities that are unrelated to tax or royalties.

Local Contents benefit, higher priority is given to the employment of locals and locally based firms.

Local content targets at changing the mix or timing of royalties and taxes in exchange in oil, gas and mining industries’ financial support for developing the local private sector.

Tags Definition of Local Content, Important & Benefit in Nig.