Naice 2006 full paper building local capability (case study of agbami project)

BUILDING LOCAL CAPABILITY: A CASE STUDY OF AGBAMI PROJECT
Daniel F. ADEBOLA, Justina O. OKORO, Engr. Obi T. NWASIKE – Chester Mead Associates
Limited
This paper was prepared for presentation at the 30th
SPE Annual International Conference and
Exhibition (NAICE 2006) held in Abuja, Nigeria 31st
July – 2nd
August 2006. The views expressed
therein are entirely those of the authors.
ABSTRACT
Agbami Field, which lies in block OPL 216, ranks among the largest single deepwater
discoveries in the West Africa sub-region. The field was discovered in 1998 with reserves
estimated at over 800 million barrels. Agbami is due on stream in 2008. Chevron's
partners in the project include Petrobras, Statoil and the Nigerian National Petroleum
Corporation (NNPC).
Daewoo Shipping and Mari-time Engineering (DSME) was awarded the contract for the
construction of the floating, production, storage and offloading (FPSO) vessel for the
Agbami deepwater offshore field. About 40% (approximately 300,000 man-hours) of the
total man-hours that will be spent in constructing the vessel have been allocated to
Nigerian companies. The Nigerian content for the Agbami FPSO Topside Engineering and
Services at 300,000 man-hours is a significant increase compared with previous
deepwater projects that recorded between 40,000-50,000 man-hours in country
In line with the Federal Government’s aspiration to build local capability in
Engineering Design, a minimum of 175,000 man-hours of the total man-hours reserved for
locals have been earmarked for Indigenous design outfits under a consortium led by the
Nigerian Engineering and Technical Company (NETCO) a subsidiary of the NNPC.
Chester Mead Associates Limited is one of the local design outfits presently involved in
the Topside Design of the FPSO.
This paper addresses assessment of the true value of Agbami local content development
on Engineering Design Capabilities and the challenges involved in achieving the Federal
Government set target of 45 percent local content in the oil sector by 2006 and 70 percent
by 2010.
INTRODUCTION
The subject of local content development in the oil and gas industry received a major
boost with the guidelines released December 2005 by the Nigerian National Petroleum
Corporation (NNPC). The Federal Government commitment to the implementation of the
said guidelines and the enforcement of the policies are issues that most be given topmost
priority to ensure full local capacity development in the oil and gas industry.
The Agbami deepwater project is expected to set a local-content participation standard
with an astonishing 6,400 tons of fabrication and 300,000 man-hours of engineering
services performed by Nigerians on this FPSO contract.
Agbami Deepwater Project
Agbami Field, which lies in block OPL 216, ranks among the largest single deepwater
discoveries in the West Africa sub-region. The field was discovered in 1998 with reserves
Chester Mead Associates Limited/NAICE 2006 Abuja Page 1 of 24

estimated at over 800 million barrels. Agbami is due on stream in 2008. Chevron's
partners in the project include Petrobras, Statoil and the Nigerian National Petroleum
Corporation (NNPC).
Daewoo Shipping and Mari-time Engineering (DSME) was awarded the contract for the
construction of the floating, production, storage and offloading (FPSO) vessel for the
Agbami deepwater offshore field. Chevron had earlier obtained and evaluated bids from
Engineering, Procurement, Installation and Commissioning (EPIC) Contractors for the
supply of the facility. Hyundai Heavy Industries, Daewoo Shipbuilding & Marine
Engineering, and Technip are some of the companies that bidded for the work.
The Agbami FPSO will be moored in about 4,700 feet water depth, and at least 40 subsea
wells will most likely be necessary to fully exploit the field. The FPSO will be designed to
handle 250,000 barrels of oil per day, 450 million cubic feet of gas production per day and
450,000 barrels of injected water per day. Approximately 415 million cubic feet of gas per
day will be re-injected. Designed to store approximately 2.2 million barrels of oil, the
Agbami vessel is set to be on location for more than twenty (20) years.
The Agbami FPSO will have thirteen topside modules, which contain the main process
and utility systems. Weighing approximately 30,000 tons, the vessel topsides will generate
75 megawatts of power and have living quarters for 100 personnel.
Figure 1.1: Agbami Deepwater Map

ssociates Limited/NAICE 2006 Abuja Page 3 of 24
Figure 1.2: Agbami FPSO Module Arrangement
Chester Mead A

Overview of Niger Delta Area
The Niger Delta extends over an area of about 70,000 square kilometers and accounts for
7.5% of Nigeria’s land mass. Extending from Apoi to Bakassi, from Mashin creek to the
Bight of Benin, it covers a coastline of 560 km, about two-thirds of the entire coast line of
Nigeria. The Niger Delta is world's third largest wetland, coming after Holland and
Mississipi. It consists of relatively small upland with the rest being riverine fresh and
brackfish water mangrove swamp hemmed in by sandy coastal ridge barriers.
The Niger Delta region traverses nine out of the 36 States making up the Federal republic
of Nigeria. These are Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and
Rivers States. The estimated population of the region is about 20million comprising over
forty different ethnic groups speaking 250 different dialects across about 3000
communities. The predominant occupation in the area are farming and fishing. Except for
the oil sector, the industrial base is virtually none existent; the further one goes into the
wetland. The people are mainly engaged in farming and fishing activities.
Since oil was first struck more than forty years ago, the area has grown to become the
main source of foreign exchange earnings for the whole country. Over the period 1975 to
date, more than 90 per cent of the nation's export earnings have, on the average, been
generated from the region’s oil resources.
The core producing area covers some 60% of the total acreage of about 31,105 km2
. The
outlying area remains a significant asset yet to be exploited. The concessions are mainly
held by joint venture with government participation.
Some examples of major fields in the Niger Delta with their ultimate recoverable reserves
are shown in Table 1.1.

Table 1.1 Major Oil Fields in the Niger Delta
Operator Fields
Reserves
(mmbbls)
Shell Bonga 600
Bonga South West 600
Bomu 875
Cawthorne Channel 750
Forcados-Yokri 1,235
Imo River 875
Jones Creek 900
Nembe Creek 950
Mobil Edop 733
Erha 1,200
Ubit 945
ChevronTexaco Agbami 1,000
Delta 300
Meren 1,100
Apoi-North-Funiwa 500
Okan 800
Agip Ebegoro 160
Total Amenam-Kpono 500
Akpo 200
Obagi 670
National Engineering & Technical Company Limited (NETCO)
NETCO was established in 1989 to acquire Engineering Technology through direct
involvement in all aspects of Engineering in the Oil and Gas and non-oil sectors of the
economy. NETCO is Nigeria's premier indigenous Engineering Company with the strategic
vision of providing Basic/Detailed Engineering, Procurement, construction Supervision and
Project Management services, using state-of-the-art Technology. It was a JV between
Nigerian National Petroleum Corporation (NNPC) and American Bechtel, Inc.
The main object was to fulfill NNPC's strategic vision of developing in-country engineering
capability which will enable Nigerians to design and build plants and facilities for the
nation's oil and gas industry, and other allied industries.
NETCO started commercial operations in August 1990. From 1990 to 1996, NETCO
worked alongside Bechtel staff and executed more than 50 engineering projects. These
include CHEVRON's Onshore Gas Plant of the Escravos Gas Project Phase 1, a project
that involved more than 143,000 engineering manhours and is still the most
technologically advanced engineering effort ever undertaken in Nigeria by Nigerians.
The NNPC/Bechtel joint venture lasted until April 30, 1997 when Bechtel exercised its
options under the Shareholders' Agreement and formally withdrew. NNPC purchased
Bechtel's shares, thereby making NETCO a wholly- owned NNPC subsidiary.
Since the exit of Bechtel, NETCO has executed many significant projects and was
awarded the prestigious ISO 9001 Quality Certificate in May 2000 by Bureau Veritas

Quality International (BVQI). This achievement is the first by any indigenous engineering
company in Nigeria
NETCO played a principal role in the Nigerian content for the Agbami FPSO Topside
Engineering. The minimum of 175,000 man-hours of the total man-hours reserved for
locals was earmarked for Indigenous design outfits under a consortium led by NETCO.
Overview of NETCO-OGDEN Partnership
NETCO displayed its leadership role with the Agbami FPSO Project, when it agreed to
provide and train engineers as past of its statutory obligation towards the development of
in-country capacity in Nigeria content and a way of bridging skills gap in the multi discipline
and extremely technical Oil and Gas Industry.
NETCO in collaboration with the Oil & Gas Engineering Design of Nigeria (OGDEN)
carried out a screening which pre-qualified 63 out of about 500 engineers from about
eighteen (18) indigenous Engineering companies. Some of the participating companies
are Chester Mead, Sigma, DeltaAfrik, Amazon, Linkso, Terra, Paragon, Atlas, Titan,
Cakasa and many others. These engineers are expected to participate in various intensive
training in Deepwater Technology i.e. Naval Architecture and Marine Engineering for a
period of three (3) to eight (8) months. Deepwater Operations required specialized skills,
knowledge and complexities in terms of technology and it was a realization of this fact that
has propelled the initiatives to train young Nigeria Engineers to acquire the technical
capabilities and expertise in these areas.
In all NETCO has mobilized about thirty-five (35) Engineers to Daewoo Shipping & Marine
Engineering (DSME) office at Okpo in South Korea, while another twelve (12) Engineers
were assigned to KBR offices in Houston, Texas, U.S.A. and three (3) Engineers had been
identified with a scope in NETCO.

LOCAL CONTENT DEVELOPMENT
Nigerian Content can be defined as the quantum of composite value added or created in
the Nigerian economy through the utilisation of Nigerian human and material resources for
the provision of goods and services to the petroleum industry within acceptable quality,
health, safety and environmental standards in order to stimulate the development of
indigenous capabilities.
The Nigerian National Petroleum Corporation (NNPC) vision for local content development
is to transform the oil and gas industry into the economic engine for job creation and
national growth by developing in-country capacity and indigenous capabilities. In this way,
greater proportion of the work will be done in Nigeria with active participation of all sectors
of the economy and ultimately Nigeria will be positioned as the hub for service delivery
within the West African sub region and beyond.
Local Content development is an initiative on the part of the Nigerian Government to help
develop local capacity building in the Nigerian Oil & Gas Industry and to enable Nigerians
as well as indigenous companies participate actively. It can be seen as the utilization of
the Nigerian human and material resources in the exploitation and exploration of the
Nigerian hydrocarbon resources.
The Oil and Gas industry worldwide plays a dominant role in technology development
advancement of the use of local inputs as a way of reducing production costs and
improvement of economic base of the respective oil producing countries. In Nigeria, the Oil
and Gas sector plays a very dominant role to the economy in that 90 percent of the total
revenue is from Oil and Gas production while over 90 percent of the nation foreign
exchange earnings comes from the sales of crude oil. Nigerians have very little share of
the oil and gas business, local participation is very low. It is estimated in the oil industry
that Nigerian content presently accounts for less than 5% of the yearly $8billion used for
technical services and goods.
The objectives of the local the content development is to significantly increase the
contribution of the expenditures in the upstream sector to the Gross Domestic product
over a defined period of time. It is hopeful that local content development would ensure
that the quantum or percentage of locally produced materials, personnel, goods and
services rendered to the industry are increased, thereby generating more employment and
economic empowerment
Local Content Bill
During the stakeholders seminar held in Abuja March 2003 on Nigerian content
development in the upstream sector of the petroleum industry, the local content bill
sponsored by Hon. Chudi Offodile was extensively discussed. The content of the bill are
as listed below.
(Section 1) Application of the Bill
Not withstanding anything to the contrary contained in any other enactment or law, the
provisions of this Act shall apply in respect of all operations and or transactions carried out
in or connected with the upstream sector of the Nigerian Petroleum Industry.
(Section 2) Responsibility of DPR and NNPC
1. The Director of Petroleum Resources shall or ensure compliance of all
provisions of this act.

2. The Nigerian National Petroleum Corporation (NNPC) shall monitor the
performance of all her joint operations partners, contractors and service
providers with a view to bringing their activities in line with the provisions of this
Act.
(Section 3) Categorization of Operating, Service Companies and Jobs
1. To ensure the systematic tracking of the progress in the development of
Nigerian content of the upstream petroleum industry, oil and gas service
companies and oil and gas exploration and production services are hereby
categorized as provided in the First and Second Schedules to this Act
respectively.
2. All available jobs and competences shall, be categorized according to
technology impact as provided in the Third Schedule to this Act, which
schedule shall be updated from time to time by the Department of Petroleum
Resources (DPR) to reflect current realities.
(Section 4) Joint Qualification System
1. There shall be established a National Databank of available capabilities and a
system for joint qualification of contractors through a body of industry
stakeholders approved by DPR.
2. The body under subsection 1 shall be known as the Joint Qualification
Committee and shall administer the joint qualification system and continuously
update the National Data Bank.
(Section 5) Set Targets
The DPR and NNPC shall implement the provisions of this Act with a view to ensuring:
a) A measurable and continuous increase in market share of the
Petroleum Industry in the director of “Category A” Service Companies in
the First Schedule to this Act.
b) A measurable increase in contribution to the National Oil and Gas
productions in the direction of “Category A” Exploration and Production
Companies in the Second Schedule to this Act.
c) A measurable in the market share of “Category A” Oil Service
Companies in the First Schedule to this Act in the direction of high
technology impact jobs categories in the Third Schedule to this Act.
d) For low technology impact jobs as shown in the 4th
column of the
Schedule “C”, “Category N” Oil Service Companies shall be given the
first consideration for inclusion in a bid list elating thereto.
e) Non- “Category A” Oil Service Companies shall however be considered
for inclusion in the bid list where NNPC is satisfied that “Category A” Oil
Service Companies’ capacity had been exhausted.
f) Specific targets shall be set for the industry from time to time by DPR.
(Section 6) Implementation Procedure
The Nigerian National Petroleum Corporation and its respective joint venture partners shall
implement the “Uniform Project Implementation Procedure” of their Joint Operating
Agreement (JOA) with necessary modifications to bring it into conformity with this Act.
(Section 7) Price Premium on Bids
There shall be allowed a price premium of up to 10% for “Category X” Oil Service
Companies when bidding against non- “Category A” Oil Service Companies.
(Section 8) Offence and Penalty

A “Category A” Oil Service Company that wins a contract and engages another
company to execute the contract, commit an offence and is liable to fine of N1,
000,000.00 and in addition, the company’s license shall be withdrawn by the DPR
for a period of three years.
(Section 9) Execution of Contracts over $ 100 million
Without prejudice to existing laws on indigenous manpower requirement for oil
exploration and production companies, all contracts awarded in excess of USD
$100 million shall contain a “Labour Law” mandating
a) The use of minimum percentage (to be stipulated by DPR in each case)
of Nigerian Labour (on professional cadres) for listed projects in such
contracts.
b) The use of indigenous companies with minimum staff strength to be
determined by DPR.
(Section 10) Competency Certificate
1. DPR shall design a competency certificate, which shall be issued to indigenous
contractors by operators and major contractors after the completion of a
contract.
2. The original certificate, which shall be forwarded to the DPR by the operator
with a copy to indigenous contractor, shall form one of the assessment basis
for the renewal of licenses for indigenous contractors and their grading for
purposes of establishing a National Data Bank of available capabilities.
(Section 11) Middle Level Training and Specialized Skills Development
DPR with the assistance of Petroleum Training and development Fund (PTDF) shall take
all necessary steps to ensure that Petroleum Training Institute (PTI) becomes the industry
center for middle level training and specialized skills development.
(Section 12) Compliance with Nigerialisation
1. Multinational oil operating companies and oil service companies that have been
in existence in Nigeria for a period of ten years or more shall ensure that the
number of citizens of Nigerian employed by the company in Managerial,
Professional and supervisory grades or any other corresponding grades
designated by the company shall reach 95 percent of the total numbers of
persons employed by the company in those grades and further ensure that at
least 60 percent membership of the board of directors are Nigerian citizens.
2. DPR shall regularly compile the list of companies that have not complied with
the provision of subsection 1 and recommend revocation of their licenses or
leases.
(Section 13) Local Content Performance Monitoring Procedure
1. DPR shall establish a local content performance monitoring procedure to be
adhered to by NNPC and all the oil exploration and producing companies and
all the oil services companies.
2. The DPR shall cause all operating companies and their contractors to calculate
quarterly and annually and submit to it the value of the Nigerian Content of their
executed contracts, jobs and operations using a pre-approved value matrix as
in the Fourth Schedule to this Act.
(Section 14) Conditions and Targets for Multinational Oil Service Companies

DPR shall where necessary, impose conditions on, and set targets for multinational
oil service companies to form joint ventures or partnerships with indigenous oil
service companies for the purpose of achieving technology acquisition.
(Section 15) Approval from DPR
From the commencement of this Act, no expatriate quota shall be granted to any oil
producing company or oil service company without first obtaining the approval of DPR
which approval shall be through the recommendation of NNPC in case of her operating
partners to DPR.
(Section 16) Investment in Local Fabrication
1. DPR shall ensure that multinational oil service companies invest in local
fabrication, infrastructure and other facilities in Nigeria.
2. A company engaged in local fabrication of oil and gas facilities in Nigeria and a
company that sets up plants in Nigeria to exploit and process raw materials
available in the country and used in the industry such as Bentonite and Barite
shall be granted the following incentives
a) An initial tax-free period of three years, which may be subject to the
satisfactory performance of the business, be, renewed for an additional
period of two years
b) Tax free dividends during the tax-free period where the investment for
the business was a foreign currency, or the introduction of plant and
machinery during the period was not less than 30 percent of the equity
share capital of the company.
(Section 17) Enforcement of Sections 9 and 18 of Cap.279 LFN
The National Maritime Authority shall ensure the enforcement of the provisions of sections
9 and 18 of the National Shipping Policy Act, Cap. 279, Laws of the Federation of Nigeria,
1990 to facilitate the development of the Nigerian Shipping Industry. Provided that where
Nigerian crude oil is carried as a cargo, it shall be on C and F basis with title passing at the
port of loading.
(Section 18) Interpretation
In this Act, “Nigerian Content” means the quantum of composite value added to, or created
in, the Nigerian economy through a deliberate utilization of Nigerian human and material
resources and services in the upstream sector of the Nigerian petroleum industry which
includes all activities connected with the exploration, development, exploitation,
transportation and sale of Nigeria crude oil and gas resources, without comprising quality,
health, safety and environmental standards.
(Section 19) Citation
This Act may be cited as the Nigerian Content Development Bill, 2003.
Local Content Target
The new Nigerian federal guidelines issued December 2005 demand immediate project-
management team and procurement center relocation to Nigeria. NNPC joint-venture
partners Shell, ExxonMobil, Chevron, Total and Agip have been directed by the federal
government to immediately relocate project-management teams and procurement centers
for all local upstream oil-and-gas projects to Nigeria.
Also under the new guidelines, the Nigerian National Petroleum Corporation (NNPC) will
not approve projects without a binding agreement by the contractor with a Nigerian local

firm, and a minimum of 50% of the total tonnage for floating, production, storage and
offloading (FPSO) topsides must be fabricated in Nigeria starting January 2006.
The earlier directive stated FPSO topsides should be built in Nigeria beginning by mid-
2006, but that starting date has now been backed to January 2006. The measures are
aimed at quickly attaining the target for local-content input in the upstream oil sector.
Project management teams have traditionally been located in the home countries of
international oil companies (IOCs) operating in Nigeria and virtually all materials and
equipment needed for oil and gas projects were imported.
The directives are being implemented to halt the huge capital flight in the oil and gas
sector where only 10% of the average $8 billion spent annually benefits the Nigerian
economy.
A government memorandum directed the NNPC not to honor tenders that did not include
full participation of indigenous companies and that did not show sufficient patronage of
equipment and materials manufactured in Nigeria.
Other immediate directives included:
• front-end engineering design (FEED) and detailed engineering design for
all projects is to be domiciled in Nigeria by end of 2005;
• fabrication of all piles, decks, anchors, buoys, jackets, bridges, flare booms
and storage tanks are to be done in Nigeria immediately;
• all subsea-systems fabrication including riser/flowlines, subsea
assemblies/ancillary facilities and system integration tests are to be performed in
Nigeria;
• all FPSO contract packages are to be bid on the basis of carrying out
topside integration in Nigeria; and
• domestication of all seismic-data processing projects and all reservoir-
management studies effective end 2005.
LCD Target for Engineering in Nigeria
Front-end engineering design (FEED) and detailed engineering design for all projects is to
be domiciled in Nigeria by end of 2005.
Some of the strategies adopted by the Nigerian Government for achieving the local
content development target for engineering design are listed below:
• Survey of available capacity and identification of needs for competence
development
• Training of Nigerians in targeted areas of competency and acquisition of
Technological and Managerial capability
• Development of infrastructure and upgrade of facilities
• Project financing and funding of local businesses
• Identification of new opportunities for local companies
The Russian Approach
In many areas the Russian design industry has well established capabilities. This includes
civil and process plant design in general (i.e. refineries) and onshore oil and gas plant and
pipeline design. This capability has been used extensively in Shells Russian projects. An
example is the Salym project (see section 19.3). Also onshore topographical survey

capability exists. In the Salym project all surveys have been carried by a number of
Russian companies. In addition it is expected that Russian companies will be able to carry
out the offshore surveys (bathymetry, ice, environmental base lines, unexploded
ordnance, etc.).
Russian companies have obtained significant experience in designing offshore platforms,
parts of LNG plants and onshore reception facilities. Rubin has designed, for Sakhalin
Energy, the accommodations for the Sakhalin II Phase 2 platforms. Companies like
Nipigaspererabotka have participated in the LNG plant design. Some of the offshore
components (i.e. sub sea facilities) are new to Russia. However companies with related
experience exist in those areas. For example it is expected that a submarine designer like
Rubin could develop over time into a sub sea system designer.
Another key aspect of design is the approval of design. The knowledge of Russian
standards and approvals lies with Russian design institutes. Therefore the development of
the TEOC documentation and development of project specific standards would certainly
by carried out by a number of Russian design institutes.
The consortium can promote the development of design capability by stimulating a
structured process of knowledge transfer. Assuming no prior experience, the knowledge
transfer process could be as follows (see figure 2.1):
1. In the first phase (entry) the Russian design institute would work with an
international contractor on the design. This could for example be in a joint venture.
In this phase the design institutes involvement is envisaged to include development
of project specific standards, the TEOC documentation, secondment of staff into
the contractor organisation and liaison with authorities.
2. In the second phase of knowledge transfer (partial design), the Russian design
consultant would carry out part of design, in addition to the activities listed above.
Similarly to the entry phase, some form of cooperation with an international
contractor is envisaged.
3. In the third phase of the knowledge transfer (Design with support) the RDI would
carry out all design. In this stage the international contractor would still support the
RDI in areas of specialist engineering and project management. At this point all
design would be carried out in Russia. This would most likely involve seconding
international contractor staff into the Russian design institute. Alternatively the
operator could appoint a team of specialists to help the design institute with the
design. For this purpose Shell has a large pool of discipline specialists, which could
be made available to the consortium.
4. In the last phase the Russian design institute carries out the design independently.
The above staircase presents the worst case. Particularly for the onshore plant design the
established capability is far higher and knowledge transfer could start in phase 2 and 3.

Entry
Partial
Design
Design
With Support
Full
Capability
Knowledge Transfer
Entry
Partial
Design
Design
With Support
Full
Capability
Knowledge Transfer
Figure 2.1: Knowledge Transfer Model for Design

AGBAMI DEEP WATER LCD ASSESSMENT
The LCD criteria considered in this paper presentation was based on the assessment of
inputs compiled from the appraisal forms completed by fifteen engineers (15) engineers on
training/secondment assignment specific to the Agbami project.
Local Content Capacity Development Appraisal Form
A template for review and appraisal of the true value of local content development on the
Agbami project was developed and forwarded to engineers on training/secondment
assignments on the Agbami project. The appraisal form however was tailored at extracting
relevant information from trainee engineers on engineering design capacity development.
The information received from this exercise was used to benchmark against the Nigerian
Government set target of 45 percent local content in the oil sector by 2006 and 70 percent
by 2010. A sample of the appraisal template developed for this purpose is shown below:
Name Job Title
Place of
Secondment/Training
Review
Period
Review Date
1. Secondment/Training Assignment
Job Responsibilities
Job responsibility one
Job responsibility two
Job responsibility three
Job responsibility four
Job responsibility five
Understanding of Job Responsibilities
Knowledge Transferred
One
Two
Three
Four
2. Engineering Capability Development
Engineering Design Goals
Training/ Secondment Goals Status
Goal one
Goal two
Goal three
Goal four
Goal five

Additional Achievements
One
Two
Marhours Earmarked for Training/Secondment
Actual Manhours Expended
Design Software Experience Acquired During Training/Secondment Period
Software one
Software two
Software three
Software four
3. Challenges and Recommendations
Challenges Encountered During Training/Secondment Period
One
Two
Three
Recommended Way Forward
One
Two
Three
Overall Assessment of Training/Secondment Programme
Name: ____________________________________________________
Company Name: ____________________________________________
E-mail Address: _____________________________________________
Date: ______________________________________________________
Table 3.1: LCD Appraisal Template
Manhours Earmarked for Engineering Design on the Agbami Project
A minimum of 175,000 man-hours of the total man-hours reserved for locals was
earmarked for Indigenous design outfits under a consortium led by the Nigerian
Engineering and Technical Company (NETCO).
NETCO in getting this due quota allocated to indigenous design outfits collaborated with
the Oil & Gas Engineering Design of Nigeria (OGDEN) to carry out a screening exercise
which pre-qualified 63 out of about 500 engineers from about eighteen (18) indigenous
Engineering companies for participation in the topsides design of Agbami FPSO.

Actual Manhours expended for Engineering Design Capacity Building
On the average about 98% of the manhours earmarked was expended for engineering
design capacity building. This figure was however based on the evaluation and
assessment of the questionnaires sampled from some of the engineers that participated in
the training/secondment programme arranged by NETCO in collaboration with OGDEN
members.
NETCO had earlier screened and shortlisted sixty-three (63) engineers for placement on
training/secondment assignments in Houston, USA; Okpo, South Korea and Lagos,
Nigeria. NETCO in collaboration with OGDEN have mobilized 50 engineers of various
engineering backgrounds to participate in the programme. This value represents about
79% of the original number of engineers shortlisted for the programme.
Assessment of Agbami Project LCD Value on Engineering Capability
The initiative of the Federal Government of Nigeria to increase participation of indigenous
design firms on the Agbami FPSO project is indeed a worthwhile development. The
evaluation and assessment of the appraisal forms completed by engineers that
participated in the training/secondment programme is an indication that substantial value
has been added to engineering design capacity development.
Some of the skills and competence developed during the training/secondment period are
indicated below:
Proficiency in the use of MSC PATRAN software for FPSO structures modeling
and stress analysis.
Proficiency in the use of AutoCAD software
PDMS 3D modeling of equipment and piping
Preparation of Process Flow Diagram and P&ID
Pumps selection
Basic fundamentals of Piping design
Proficiency in the use of PDMS for equipment and piping modelling
Design of Offshore Platform marine systems
Design of Offshore hydrocarbon storage systems
Development of SAFE chart for FPSO hydrocarbon storage systems
Design of FPSO loading and offloading systems
Development of Piping Isometrics
Preparation of MTOs
Review of PDMS model against Pipe Isometrics drawing
Pipe stress analysis using CAESAR II
Pipe support analysis using NAUTICUS
Engineering, Procurement and Construction of not only FPSOs, but other offshore
installations such as Drill Rigs, Drillships, Platforms, LNG Ships and Commercial
Vessels
Machinery Arrangement in the Hull
Mooring System Arrangement, Offshore Loading System Arrangement
Understanding & Interpreting P&IDS
Process Simulation using HYSYS
Hydraulic Calculations using PIPENET
Valve and Equipment sizing
Advanced use of Microsoft Excel and Primavera
Planning and scheduling techniques for EPCI projects
Risk Assessment as it affects budget and schedule of a project
Preparation of work procedures

Production Design Process Control
Procurement Engineering Process Schedule Control
Material Resource Planning and Control
Development of HAZID table and systematic approach to risk assessment
Knowledge of OSHA safety standards and monitoring of the compliance
Preparation of inspection reports and monitoring of corrective measures
Incident investigation and coordinating of Root cause analysis meeting
Commissioning work activities procedures and how to handle interface operations
Development of safety procedures and plan

Tables 3.2: Tabulation of Information Compiled from Some of the Candidates Appraised

ssociates Limited/NAICE 2006 Abuja Page 20 of 24Chester Mead A

CONCLUSION AND RECOMMENDATIONS
Following the uproar that trailed foreign domination in earlier deepwater projects, the
Federal Government designated the Agbami field as a test case for its objective of raising
the local content in the oil sector. Over all, the government wants at least 45 percent
Nigerian input in the project.
The Nigerian content of the Agbami FPSO Topsides contracts is in the region of 6400 tons
- a significant increase in FPSO Topsides over previous deepwater FPSO projects by
other operators. Similarly, Chevron has prescribed the Nigerian content for the Agbami
FPSO Topside engineering and services at 300,000 man-hours compared with previous
deepwater projects that recorded between 40,000-50,000 man-hours in country.
Challenges Involved
1. There were significant delays in the deployment of OGDEN engineers on
training/secondment assignments. Most of the engineers that benefited from the
programme were not there at the early stages of the FEED and detailed
engineering scopes.
2. Some of the engineers earlier listed for training programme could not participate
due to visa and other logistic problems. A situation where availability of valid US
visa was used as a criterion for participation is outrageous and should be
corrected.
3. Communication gap is another major challenge faced by engineers seconded to
South Korea. Some materials essential to trainees/secondees were written in
Korean language. This places a big limitation on competent development and skill
acquisition.
4. Delays in payment of allowances and other entitlements of the trainees/secondees.
5. Significant knowledge transfer on engineering design capability was lost because
of the late participation of design engineers on the Agbami training programme.
For instance HSE in design competence could not be fully delivered to the HSE
engineers that participated in the training programme because HSE design team
were not available at DSME yard in South Korea.
Recommended Way Forward
1. In line with the federal Government set target of executing front-end engineering
design (FEED) and detailed engineering design for all projects in Nigeria by end of
2005, local design engineers should be given the opportunity to fully participate in
subsequent design of deepwater projects.
2. The major players in the oil industry should be mandated to set up design centers
of international standards in Nigeria to train and groom local engineers.
3. Subsequent deepwater projects should be structured to involve the participation of
local engineers from inception to completion of the design phase. A well structured
schedule should be put in place and meticulously implemented to allow for the
participation of at least 100 local design engineers in subsequent deepwater
projects of Agbami capacity.
4. Local design firms should be assisted in the areas of skill acquisition, infrastructure
development and funding when necessary to enhance their full participation in
offshore design projects.
5. The Russian approach to local content development in engineering design referred
to earlier in this paper should be imported and implemented in Nigerian content
development.

The recommendations listed below are expressed by some of the engineers that benefited
from the FG training initiatives on Agbami project.
Future trainees/secondees should be given a clear picture of what is expected of
them at the end of the training programme.
An orientation programme should be organised for prospective trainees in-country
before their departure to get them acquainted with the project they are going to
work on.
The trainees should be challenged with a similar project on their return to the
country as a way of assessing their capabilities and consolidation of experience
gained.
The programme is worthwhile and should be maintained by the stakeholders.
A training coordinator to be stationed at training place to monitor progress
Supervisor’s years of experience should be emphasized before trainees will be
assigned to them.
A clear schedule should be drawn for the trainees.
A defined KPI should be defined for the training program.
The trained engineers should be engage in future project, to enable them develop
their skills.
A program like this should be structured such that the engineers participate from
the design phase to the construction stage.
Training programmes like this should be sustained and repeated periodical.
Trainee/secondees should be involved in similar projects in-country.
The program should be structured in a way to clearly defined what each discipline
is expected to pass through while on training.
The sponsors should work out ways to allow for prompt and regular payment of
allowances.
Opportunities should be created to allow the beneficiaries (particularly the
competent ones) to be involved in similar projects. If beneficiaries of this kind of
training initiative do not have the opportunity to work on similar or related projects,
then the purpose of the training programs might be defeated.
A detailed schedule covering the entire training period and scope should be
prepared and agreed on prior to commencement of training.
Trainees’ rights and privileges should be clearly defined.
After the training programme, engineers should be made to participate in projects
where the knowledge acquired can be useful.
Any such training in the future should be properly timed so as to have a thorough
understanding of the entire project.
The responsibilities of the trainee(s) should be outlined at the commencement of
the training.
Relevant agency should appoint a representative who will monitor company
training system and progress.
Government agency and training Partners should put up well articulated
programmes to engage trainees immediately after the training.
There should be continuous re-training of trainees and training of new engineers.
Conclusion
The local content achievement so far on the FG aspirations on the Agbami project is quite
commendable. Substantial knowledge has been transferred to Nigerian engineers.
However, there is room for improvement in subsequent deepwater projects.

ACKNOWLEDGEMENTS
The authors would like to specially thank the management and staff of Chester Mead
Associates Limited for the useful advice and suggestions while writing this paper. We also
acknowledge the support of the team of engineers on Agbami training/secondment
assignments for their support and information while writing this paper.
NOMENCLATURE
CMA Chester Mead Associates Limited
DPR Department of Petroleum Resources
DSME Daewoo Shipping and Mari-time Engineering
E&P Exploration and Production
EPIC Engineer, Procure, Install & Commission
FG Federal Government
FPSO Floating Production Storage & Offloading vessel
HAZID Hazard Identification
HAZOP Hazard Operability
HSE Health Safety & Environment
IOCs International Oil Companies
ISO International Standards Organization
KPI Key Performance Indicator
LCD Local Content Development
LNG Liquefied Natural Gas
LPG Liquefied Petroleum Gas
MTO Material Take Off List
NA Not Applicable/Available
NAG Non Associate Gas
NAPIMS National Petroleum Investment Management Services
NEPA National Electric Power Authority
NETCO National Engineering & Technical Company Limited
NNPC Nigerian National Petroleum Corporation
OGDEN Oil & Gas Design Engineers of Nigeria
OML Oil Mining Lease/License
OPL Oil Production Lease/License
P&ID Piping & Instrument Diagram
RDI Russian Design Institutes
SPDC Shell Petroleum Development Company of Nigeria Limited
REFERENCES
1. Afolabi O.R Oladele “ Opportunities for Indigenous Participation in upstream Industries” August
2001 pg 4-20
2. NNPC Official Website
3. Thisday Newspaper November 21, 2005 “Local Content Boost for Agbami FPSO”
4. National Engineering & Technical Company Limited Bulletin – Quarter 3, 2005
5. http://www.lcrpt.com
6. http://www.rigzone.com/news/article
7. Local Content Development Seminar “Abuja Stakeholders Seminar Brochure” March 2003
8. Article on Russian Content Perspectives
9. G.E. Omene “Definition of the Scope of Local Content and Indigenous Company in the
Upstream Sector of the Petroleum Industry” August 2001, pg 1-50
10. The Nigerian Oil and Gas Outlook – 2004 Edition published by Chez Associates
ABOUT THE AUTHORS
ADEBOLA Daniel Folorunso holds a bachelor’s degree in Chemical Engineering from Federal
University of Technology Minna. He has over seven (7) years experience in different areas of
engineering professional practice but majority in the Project Management and Process Design of
Oil and Gas facilities for indigenous and multinational oil companies. He co-authored and presented

a technical paper published at Offshore West Africa Conference, Windhoek, Namibia, March 2003
titled “Technology Options and challenges of Marginal Field Development”. He participated in the
Technical audit and evaluation of capacity and capabilities of Nigerian fabrication companies for
Total upstream deep water project in September 2003. He also led the team that carried out the
Technical evaluation and analysis of Shell Nigeria Exploration Company (SNEPCO) local content
performance for the year 2003. He is a member of the Nigeria Society of Engineers.
OKORO Justina Ode holds a bachelor’s degree in Chemical Engineering from Enugu State
University, Enugu. She has over seven years experience with expertise in HSE engineering and
process engineering design of oil and gas facilities for indigenous and multinational oil companies.
She participated in the Agbami deepwater topsides design as an HSE engineer at the DSME yard
in Okpo South Korea. She is a member of SPE.
NWASIKE Obi Timothy has degrees in Mechanical Engineering from University of Wales,
Swansea and in Environmental Engineering Science from CALTECH, Pasadena.
He has over 28 years career in the oil industry, including working for Shell Nigeria and Shell Expro
UK. He served in Field Engineering, Human Resource Management, Appraisal & Process
Engineering and Hydrocarbon Asset Management. Over a ten-year period he gained experience in
the development of new technologies & methods for low cost development of so-called marginal
fields in Shell Nigeria’s portfolio. Engr Nwasike has written and presented over 15 articles in
international journals and conferences. He is listed in World’s Who is Who in Science &
Technology for process engineering and change management contributions to the oil industry. He
was the Deputy Engineering manager in Shell Petroleum Development Company Nigeria before
leaving to set up an oil, gas and technology consultancy, Chester Mead Associates where he is
currently the Managing Director. He is a keen crusader and apostle of local content. He is a
member of SPE, PMI, ASME and the Nigerian Society of Engineers.

Naice 2006 full paper building local capability (case study of agbami project)

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