The chairman of the house committee on local content in Nigeria’s National Assembly, Emmanuel Ekon, said February 23 that the country’s oil and gas sector is struggling with higher financing costs than other countries. But industry chiefs say that developing local content can offset such disadvantages.
“In terms of cost, we cannot really compete with those outside the country. This is due to the fact that our banking interest rates are higher than those of other countries,” he told NGW during the second day of the West African International Petroleum Exhibition and Conference (Waipec) in Lagos.
As a lawmaker, Ekon believes policy makers need to tackle existing banking rates as well as custom duties, so as to make it possible for industry practitioners to reduce cost in the execution of their business.
Ekon also said that, although the government seems not to be interested in growing local capacity, lawmakers will continue to try to amend existing laws to favour local content.
Chevron Nigeria managing director Olusoga Oduselu told a panel at the Lagos event that local content is a way to break even in the industry, and that Chevron supports growing local content because it is cost-efficient. He cited Marine Platforms Limited as a local content success story, which Chevron helped to bring to life.
Uzoka Austin, Shell Nigeria (Snepco)’s manager for local content development, said his firm as put in place a price agreement that enables vendors to supply to them. Other participants suggested how proper information flow between operators and service providers, policy consistency, and a more stable dollar-naira exchange rate, among others can help the Nigerian industry to grow.
But Mobil Producing Nigeria executive director for business Development, Seyi Afolabi, said February 22 that oil and gas producers need to cut costs and refine their strategies. Nigerian independent Conoil Producing’s former managing director Moses Omatsola backed Afolabi’s viewpoint, saying that firms should use the fall in global oil prices to “think outside the box.”