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35

New oil challenges for ExxonMobil in Nigeria

ExxonMobil Nigeria weekend listed the major challenges to be faced by operators in the oil and gas industry in the implementation of the Nigerian Content Development Act.

 

ExxonMobil Nigeria weekend listed the major challenges to be faced by operators in the oil and gas industry in the implementation of the Nigerian Content Development Act. The company’s manager in charge of the Nigerian Content Development, Pekun Oyeleke, listed the challenges during a workshop for energy correspondents. Oyeleke said that access to funds, inadequate human capacity, poor energy supply and the dearth of basic infrastructure, among others, would be the major setback to the Act. The manager pointed out that the company was committed to the success of the Nigerian Content Act sealed by President Goodluck Jonathan in April.

 

He also said that ExxonMobil had consistently grown its Nigerian content value by more than 45 percent value retention in-country while its business to Nigerian registered companies represented more than 84 percent. He explained that the company’s global practice included a policy which mandated ExxonMobil to assist in boosting capacity in countries where it had operations, adding that in the last 10 years the policy had been faithfully implemented in Nigeria. Although largely seen as an American company, he disclosed that indigenous workforce of ExxonMobil had grown to 87 percent, while about 84 percent of budgetary expenditure on projects went to Nigerian registered companies. “At ExxonMobil, we are fully in support of the local content law; building capacity in the countries that we operate is something that forms part of our core policy and in Nigeria we have been doing just that.

 

“For now, 87 percent of our workforce is Nigerian and even our deepwater operation is managed by a Nigerian and has about 85 percent Nigerian workforce. The day-to-day field operations are managed mainly by Nigerians and four out of six Area Operations Managers are Nigerians,” he said. According to him, between 2002 and now, 58 percent of contracts above one million dollars had been awarded to Nigerian firms just to boost their capacity. Oyeleke said that for the company, building indigenous capacity meant workforce development, vendor/supplier development and strategic community investments. He said this had translated into a conscious purchase of local goods and services as well as investment in health, education and infrastructure that would assist in the development of the local capacities of host communities. He, however, said that for local firms seeking to tap into the new law, access to cheap funds to execute projects and remain competitive might pose a major challenge, considering the high interest rates in Nigerian banks.

 

Poor supply of electricity, Oyeleke said, had also remained a big hurdle for local manufacturers and fabricators who would compete for projects in the industry as generating power independently would shoot up the cost of such projects with obvious implications on profit margins. 

Source : Business Day