While oil majors flocking to Africa is a good sign in terms of increased revenue for the continent, securing the interests of the local community is of utmost importance under such circumstances
And many African nations from Libya, Nigeria and Equatorial Guinea to Uganda and Angola, among others have taken commendable steps in crafting equitable local content policies. At the 2023 Libya Energy and Economic Summit, stressing on the importance of utilising local skills, Ahmed Gaddah, partner at Eltumi Partners, said, “Libya has...local capacity with Libyan insurers and contractors." Assad Riyany, head of Libya Business Desk at Bank ABC, addressed banking challenges, saying, "As a local bank, we face restrictions. Resolving security restrictions will uplift the banking sector. The challenge is how to assess risks; government or banking intervention can expedite progress."
In a recent spill control and waste management agreement signed between Ambipar and Kini Energias, at the Angola Oil & Gas (AOG) 2023 conference, special emphasis was laid on the recruitment and professional development of Angolan technicians as well as the possibility of providing a door-to-door service to some of the main players in the oil and gas sector in Angola.
Commenting on a recent, extensive oil and gas partnership between Kontinental Energy Services (KES) and corporation Gulfstream Services Inc, defining an US-Africa collaboration, KES executive director Rae Tanyi said, "This partnership underscores the instrumental role that global collaboration plays in supporting the development of local firms. With the support of GSI, KES is committed to providing cost-effective services to the Namibian and African oil and gas industry. We look forward to working with additional service companies to support our broader ambitions to drive economic growth, create jobs and develop local content in Africa.”
While ExxonMobil's upstream affiliate in Equatorial Guinea, Mobil Equatorial Guinea Inc. (MEGI), is the largest oil producer in the country, Sociedad Nacional de Gas de Guinea Ecuatorial (Sonagas)—Equatorial Guinea’s state-owned hydrocarbon company—manages the distribution, marketing, and exploration of the nation's natural gas assets, including the industrial and residential natural gas markets. According to its Hydrocarbons Law, petroleum contracts are negotiated using a model contract developed by the Ministry in charge of petroleum operations. These contracts usually take the form of production sharing contracts (PSCs).
While these examples give an idea of how the region is serious about safeguarding individual interests, the most notable among them has been Uganda which has seen local participation in a wide range for two of its most anticipated oil projects, namely Tilenga and Kingfisher. Of the 35 well pads required for drilling more than 450 wells, Mota Engil Uganda Ltd is in charge of constructing 31 well pads sites, including other activities such as conductor pipes installation and well cellars construction. Starting from bush clearing, fencing, construction of drainage and internal roads to preparation of the ground to host different facilities, Mota Engil Uganda is tackling over 700 acres of industrial zone. Among other installations, it is to include a central processing facility (CPF), construction camps, drilling support bases, and operation support bases.
While Mota Engil Uganda Ltd is associated with the developments of the Tilenga project, the Kingfisher is being handled by another Ugandan company, Excel Construction Limited. Excel's activities range from civil works and the making of in-field access roads to 1, 2 and 3 well pads construction. In Tilenga, ZPEB Uganda Limited won the contract for the construction of drilling rigs. Confirming these contracts, Ernest Rubondo, the executive director of the Petroleum Authority of Uganda, pointed out that local companies such as ICS New Plan and MSL, among others have made it to Tier 1 level, whereby multi-million/billion dollar contracts (US$40bn and above) are given to major companies. They enjoy the power to sub-contract several companies in Tier 2, who can further make a similar move with Tier 3 companies or enter into a joint venture with international organisations. In Kingfisher Drilling Area, more than 15 major contracts are in Tier 1 across various areas from EPC construction supervisor, rig integrated services, drilling waste management, downhole pressure gauge to coring cutting and fishing services, ESP and heat tracking, wellhead and Xmas tree, casing and tubing, to mention a few. Mota Engil Uganda has sub-contracted other local bodies, including Gauff Consultants, Prand Engineering, Civtec and Fabrication Systems.
Uganda National Oil Company (UNOC) holds a 15% stake in both Tilenga and Kingfisher Development Areas, besides TotalEnergies and China National Offshore Oil Corporation. According to Herbert Ssempogo, head of corporate affairs at UNOC, the company plays a pivotal role in the Joint Venture activities including participating in the joint venture meetings, reviewing, and approving/recommending proposed work programmes and budgets and reviewing bidder lists and recommended contract awards, hence ensuring value retention for Uganda (national content).
Organised by the PAU, the fourth National Content Conference celebrated Uganda's promising oil and gas sector which is drawing multiple investments, and generating thousands of jobs as a result. Laying out impressive statistics after two years of foreign direct investments (FDI) in the country, Sidronius Okaasai Opolot, Minister of State for Energy and also holding the Portfolio of Minister for Energy and Mineral Development, said, "Priority for employment is given to Ugandans at all levels, with positive discrimination for the communities hosting the operations. At the peak it is expected that about 160,000 people will be employed. Out of these 14,000 persons will be directly employed in the oil and gas sector, 42,000 indirectly, and at least 100,000 induced. Following the announcement of FID, work on the projects have intensified and to date, 94% of the close to 11,000 employees engaged in the oil and gas projects are Ugandans.”
Ernest Rubondo, executive director at the PAU, said, “One of the key areas of focus for the Petroleum Authority of Uganda in regulation of the country’s oil and gas sector is the extent to which Ugandans and Ugandan entities are participating in the sector through employment and provision of goods and services.
“The objective is for Ugandan entities to secure 40% of this investment, so that it is domiciled in the country. The contracts approved by the Authority since 2021 amount to US$7,086,256,491. Out of these, US$1,762,758,844 went to Ugandan companies. It is important to note that these approvals have been for the first-tier contracts. As the companies which have won the first tier contracts also contract at the second and even sub-contract at the third tier, Ugandan content is increasing and we should achieve the 40%.".
