1. 1
Jessica Kyeyune

2. Africa’s Oil & Gas Industry is on the Spotlight
51 of 54 on-
going or planned
exploration
operations
Home to 6 of the
10 fastest
Growing world
Economies
New Frontiers in
Oil & Gas
16 Oil Exporting
Countries
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3. Resource Rich Countries with Poor People
Resource rich countries around the world tend not to
score well on Governance
 Lack of clear and stable laws and regulations
 Limited capacity and skills in government
 Poor fiscal, monetary and budgetary discipline
These are basic errors to be avoided by EEs
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4. What is Capacity building?
A process to develop & strengthen skills, instincts,
abilities, processes and resources needed to survive
and thrive (UNDP)
 Includes:
 Human resource development & upgrading
 Organizational Development
 Institutional & legal framework Development
 Building capacities to enable support to decision making
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5. Emerging Economies are on the right track
Laws and policies that govern and maximise in-country
benefits from the Oil & Gas sector
 State Participation in Petroleum activities
 Procure goods and services from local entrepreneurs,
and technology transfer
 Employment and training plans, capacity building and
succession plans where there is no immediate local
capacity
The question is: if the policies will be effectively achieved
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6. Industry Challenges faced by EEs
 Skill-gap between local supply capacity and required
oil & gas standards
 O&G industry is highly capital intensive with limited
direct employment opportunities
 Highly technological & specialized goods and
services demanded by industry are typically
supplied by competitive international markets
These challenges not readily understood by communities.
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7. Universities and
Technical
Institutions
Petroleum Industry
E&P
Refining
Transportation
Distribution
Governmental
Agencies
Supply Chain of
Goods and
Services
Financial
Institutions
Environmental Protection
Health and safety assurance
Social and economic
development
Technological innovation
Key objective: Promote Sustainable Development
Where is Capacity Building required?
Boarder Control, Passport Control,
INTERPOL,
Security & Law enforcement
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8. Sustainable Development is a State responsibility
EEs must have a strong incentive to:
 Manage their country’s newfound oil wealth well
 Eradicate mechanisms that allow oil wealth to be
siphon off
 Desist from poor economic & resource management
 Manage expectations from citizens and IOCs
Those factors work against capacity building success
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9. Building domestic capacity is a critical step
 Capacity to negotiate with oil companies
 Capacity to manage the oil industry
 Skills to support industries & non-oil economy
 Technology transfer requires skilled workers to
absorb it.
TT is a key component of developing local content.
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10. CB is a precondition for local content success
 Build a strong and attractive business environment
with appropriate institutions and laws
 Sufficient infrastructure to create thriving business
environment.
 Capacity to reduce the barriers to entry, improving
local skills and developing local capabilities
 Capacity to reduce transaction costs – including
hurdles to enterprise development.
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11. CB a Precondition for local content Success…..
 Capacity to understand factors that matter for creating an
industrial base (manufacturing, fabrication and services) is
pertinent.
 Any protection should be temporary and transparent.
 Key obstacles to keep in mind include:
 Limited experience of local entrepreneurs with goods
and services required in oil & gas sector
 Limited size and access to local financing
 Limited track record of local firm borrowing
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12. Avenues to support capacity building
 Technical assistance from development partners
 Bi-lateral assistance from other countries with
experience in the oil sector
 From the oil companies themselves
 Revenue from oil exports can be used to develop
capacity
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13. Way Forward
 A well-defined, holistic and effective capacity building
strategy can help maximize local content
 Such strategies must respond to questions along two
(2) fundamental dimensions:
○ Optimization of local content targets
○ Definition of local content strategic enablers
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14. Optimization of local content targets
 Analyze the national capacity to supply the oil & gas
industry with skills and goods
 Identify the gaps and CB strategies to close the gaps
 Prioritize CBs to produce measurable annual results
Analysis to take into account impact on:
 Overall costs/Project schedule
 Investor profitability/Government revenues
 Job creation & Impact on foreign direct investment
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15. Local Content Strategic Enablers
Require effective capacity building strategies:
1. Education and training: Skills to assume more
value-added roles.
2. Technology transfer: R&D centres to produce
intellectual capital
3. Procurement process: Upgrade suppliers skills to
meet the O&G standards
4. Infrastructure: Serviced parks for local industries to
benefit from cluster infrastructure
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16. Wrapping up
EEs address gaps that impede local competitiveness
 Place technology acquisition and technological
capability on top of the Capacity building agenda
 Develop the skills & personnel to manage the Sector
………………………………………………………………
 If Capacity building looks at building local capability
 Local Content looks at maximizing local participation
Focused Capacity building Successful Local Content
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17. Security and how Revenues are
spent
Direct
Effect
• Value of oil and
gas production
(IOCs & GoU)
Indirect
Effect
• Purchase of
materials, services
and supplies
locally Private
Sector
Induced
Effect
• Spending by
employees of both
oil Companies and
suppliers
• Private Sector &
GoU
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Oil and
Gas Sector
Government
gets revenue
from oil and
taxes from Oil
Companies,
Suppliers
And
Employees
And reinvests
the proceeds
to develop the
Country’s
Economy
Thank You