My Presentation in Trinidad (8/06/2017) on Indigenisation Policies in the Oil and Gas industry.

1. Training the Local Workforce: Indigenisation
Policies in the Oil and Gas Industry
Trinidad and Tobago, 8th June 2017
Dr. Flavio Inocencio
Lecturer in Law
Co-Director of the LLM in Oil, Gas and Energy
Email: flavio.inocencio@coventry.ac.uk

2. Recommended Reading on Local
Content and Indigenisation

3. Chatham House Guidelines
Objectives for the Petroleum Sector
1. Elaborate a strategic vision for the sector
2. Attract the most qualified investor for the long run
3. Maximize economic returns to the state through licensing
4. Earn and retain public trust and manage public expectations Objective
5. Increase local content and benefits to the broader economy
6. Build capable national organizations to participate in and oversee the
development of the resources
7. Increase accountability
8. Safeguard the environment

4. Local Content?

5. Local Content and Building Local
Capabilities
1. Increasing the participation of nationals in the oil and gas
industry (labour).
2. Increasing the participation of local businesses in the supply
chain of the oil and gas industry (goods and services).
Local content policies are protectionist in their nature. Hence,
some justification is needed (economic, social, environmental).

6. Goals of Local Content Policies (LCPs)
• Accelerate Industrialisation.
• Increase added domestic production to the oil and gas
industry.
• Increase the participation of different stakeholders into
the oil and gas activities.
• Create linkages to other sectors of the economy.
• Create a capable local workforce with the skills required
for the oil and gas industry and others.

7. Costs and Benefits of Local Content
Policies
• Local Content Policies are not neutral and increase costs
for the participants in the sector.
• Host States need to carefully consider their LCP against
their goals for the oil and gas industry because LCP can
significantly increase costs and discourage investment.
• LCP also need to be seen from the perspective of the
other goals for the sector (protection of the environment
and health and safety, accountability, transparency,
revenues, management of public expectations, etc.).

8. Indigenisation and Local Content
• Indigenisation is the overall goal of increase the
participation of the local workforce in the oil and gas
industry.
• Indigenisation policies are part of Local Content
policies and vary from country to country.
• Indigenisation policies need to be aligned with the
Competent Authority in the sector (Independent
Agency, Ministry or NOC).

9. Stakeholders in Indigenisation Policies
• In order to pursue indigenisation policies, Host States need to
carefully consider the participation of different stakeholders:
• International Oil Companies, National Oil Companies.
• Local communities
• Local government.
• Local businesses (Chambers of Commerce, Industry Bodies).
• Education providers (Universities, Technical Institutes and
others)
• International Organisations.
• NGOs and others.

10. The Case of Nigeria
• The Nigerian Content Development and Monitoring
Board (NCDMB) was created in 2010 to foster the
building of local capabilities in Nigeria following the
Nigerian Local Content Act 2010.
• The new Petroleum Governance Petroleum Bill passed
last month will create new entities in the sector:
National Petroleum Company (NPC), National
Petroleum Assets Management Commission (NPAMC)
and the Nigeria Petroleum Regulatory Commission
(NPRC).

11. Relevant Provisions in the Nigerian
Local Content Act
• Nigerians should be given preference in
employment or contract by operator or
promoter (s28).
• Operators need to submit an employment and
training plan for Nigerians (s29) and
succession plan for every position not held by
Nigerians (s31).
• NCDMB monitors indigenisation in the sector.

12. Brazil and Local Content
• In Brazil the National Petroleum Agency (ANP) is the
Competent Authority in the Oil and Gas industry and
Petrobras is the NOC.
• Since 1999 that ANP requires companies to abide by
local content requirements (particularly in terms of
goods ad services) in the bidding rounds and in the
concession agreements.
• A certifying entity accredited by ANP will verify the
local content percentage used by the operators.

13. Local Content and Local Companies
• Brazil has adopted the National Plan for
Mobilisation of the National Industry for Oil
and Gas (PROMINP).
• This platform allows for a measurement of
national content requirements in the
concession agreements.
• A powerful industry body, the National
Organisation of the Petroleum Industry
(ONIP).

14. Indigenisation Policies in Brazil
• The National Industry for Oil and Gas the National
Plan for Mobilisation of the National Industry for Oil
and Gas (PROMINP) also actively promotes training
of locals and Petrobras has also been instrumental in
the promotion of indigenisation policies in Brazil.
• Section 19 of the Model Concession Model contract
contains provisions for the local workforce.

15. Brazil and Petrobras

16. Training the Locals: Strategies
• Contract Clauses (Labour clause) in Host Government
contracts to promote indigenisation (Employment of nationals
and Succession Plans for expatriates).
• Establishment of Platforms (Agencies or PPPs) with
stakeholders to accelerate training and create common
professional standards (standard qualifications).
• Establish monitoring mechanisms to assess the results of LCPs
and indigenisation policies based on a global competitive
workforce.

17. Relevant Questions
• What is the best way to achieve LCPs and
indigenisation in particular?
• Enhancing the role of NOCs or Regulatory Entities?
• Promote a mobilisation of the existing capabilities
within a country? How?
• Using legal instruments (Hard Law) or Guidelines
(Soft Law) to promote Indigenisation and LCPs?
• Can we learn something from countries with
successful examples of indigenisation policies such as
Norway?

18. IPIECA Report
2016 on Local Content

19. Conclusions
• Indigenisation policies (and LCPs) need to be engage different
stakeholders in the host countries and countries should
create a platform or a body that can actively promote and
monitor them.
• Host States need to consider that LCPs are protectionist in
nature and need to carefully do a cost-benefit analysis of
their impact in the oil and gas industry, society and other
sectors.
• The result of local content policies is mixed and it is not
enough to follow the best practices without considering the
consequences.

20. Contact Details
Dr. Flavio Inocencio.
Lecturer in Law, Co-Director of the LLM in
Oil, Gas and Energy
Email: flavio.inocencio@coventry.ac.uk