Success in Local Content is all about effective, efficient, and productive collaboration among actors. Collaboration and sharing are not common attributes of successful oilmen or oil companies – though interestingly, oil producing countries have long struck a cooperative tone in the form of what economists term a cartel – namely, OPEC. Now, we are moving into an era of new entrants as technology advances and scarcity in known markets drives the industry to explore and then develop projects in new contexts. The “resource curse” has motivated civil society and citizens in these countries to strive to ensure they are able to realize economic benefits from their resource discoveries. All look to the success of other countries to guide their own entry into the oil and gas marketplace.
The problem: Mozambique is not much like Brazil beyond the language and the beautiful beaches; Sierra Leone can’t achieve in 3 years what it took Nigeria 50 years to achieve; Tanzania is different from Norway in a few key aspects relevant to developing a local supplier base.
The key right now is to seize on the realization across the industry that local content is not a fad – it’s not a passing fancy, nor a Marxist remnant. It is, instead, a true desire to see a traditionally non-manpower-intense extractive industry generate value for host country economies. The beauty is, the inefficiencies presented by favoring local content early can be shared across multiple cost bases courtesy of the rise of NOCs.
This course is going to focus squarely on the need to tackle local content early. Doing so isn’t easy – and it requires collaboration. It will slow the realization of royalties and tax revenues. It will require IOC expertise and then cost-recovery from host governments in one form or another.