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THE NIGERIAN CONTENT LAW:
OPTIMIZING OPPORTUNITIES FORTHE PROFESSIONAL QUANTITY
SURVEYOR.REQUIRED COMPETENCES OF QUANTITY
SURVEYORS FOR EFFECTIVE PARTICIPATION
IN OIL AND GAS INDUSTRYStan Onyeador
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Objectives of the PresentationTo provide an understanding of:
the Nigerian Oil and Gas Industry
the Nigerian Oil and Gas Industry ContentDevelopment Act 2010
areas of competence required for effectiveparticipation of quantity surveyors in Nigerian Oiland Gas Industry
the strategic objectives of effective participationsand,
how these strategic objectives can be attained.
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OIL AND GAS INDUSTRY
Oil and Gas is a unique industry.
It is very Capital Intensive
The life cycle takes several years to decades
Returns on investment high but takes long Secretive and controlled by cabals
Similar to drug business a sellers market Mega Money are involved
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OIL AND GAS INDUSTRY just as dope prices are set by dope dealers
(not by dope addicts), oil importing nationsmust buy their oil at prices set by competition
between oil exporting countries, not by
importing nations consumers, planners, or
politicians- Ivanhoe, (1990) in his article in the OIL and GAS JOURNALOct.29, 1990
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THE NIGERIAN OIL AND GAS INDUSTRY
Oil was first produced in Nigeria in Olobiri, Rivers
State in 1948, by Shell Controlled and dominated by foreigners
Almost all manpower, plant and equipment,
manufacturing, repairs, maintenance,engineering and designs are done abroad or inNigeria by foreigners
A major drain to the Nigerian economy thatdepends on Oil with contribution to nationalrevenue exceeding 90%.
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THE NIGERIAN OIL AND GAS INDUSTRY The turning point came in October 1996 when
the then minister for petroleum, Chief Dan Etete,
made his landmark speech, he asserted:
From now, foreign suppliers will have to bid andsupply through a local subsidiary or agent
Followed by government directive on mandatory40% and 70% local content by end 2006 and 2010respectively
Today, local fabrication yards and localindependent producing companies are beginningto emerge
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WHAT IS THE NIGERIAN CONTENT?:
the quantum of composite value added to,or created in the Nigerian economy through a
deliberate utilization of Nigerian human andmaterial resources and services . . withoutcompromising quality, health, safety and
environmental standards in order to stimulatethe development of indigenous capabilities
the development of local skills, technology
transfer, use of local manpower and localmanufacturing
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THE NIGERIAN OIL AND GAS INDUSTRY
CONTENT DEVELOPMENT ACT, 2010
Signed into law on 22nd April 2010
The Act provides for the development of
Nigerian content in the Nigerian oil and gas
industry, Nigeria content plan, supervision,coordination, monitoring and implementation
of the Nigerian content.
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THE NIGERIAN OIL AND GAS INDUSTRY
CONTENT DEVELOPMENT ACT, 2010 The NOGICD Act is divided into three parts:
Part I Nigerian Content Development in Oil &Gas Industry containing 68 clauses on theprovisions and applications of the Law
Part II Establishment of the Nigerian ContentDevelopment & Monitoring Board (NCDMB) with42 clauses on the structure, roles and activities ofthe NCDMB
Schedule Minimum percentage NigerianContent (NC) targets expected to be achieved percategory of activity in the oil and gas industry
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NOGICD ACT 2010:
TWO CRITICAL QUESTIONS
Having gone through the Act, two critical
questions came to mind:How can we measure effectively & efficiently:
the value of Nigerian Human resourcesemployed?
the value of Nigerian materials, assets and
services utilized?
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REQUIRED COMPETENCES OF QUANTITY
SURVEYORS FOR EFFECTIVE PARTICIPATIONIN OIL AND GAS INDUSTRY Knowledge is the key to effective participation of
quantity surveyors in the Nigerian oil and gasindustry.
Overview Knowledge of the Technical,Economic/Financial, Commercial, Organizational,
and Political aspects of oil and gas industry,prospects and projects: the Businessenvironment, Subsurface, Surface, Development
(incl. Drilling) Operations, Infrastructuregenerally, with special emphasis to Nigerian Oiland Gas industry are prerequisites.
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Quantity Surveyors need to: Understand the overall Oil & Gas life cycle from
exploration, development, production andabandonment(upstream) and refining(downstream)
Understand oil & gas project life cycle fromproject initiation to commissioning/delivery
Understand the activities performed at each
stage of the life cycle. Understand Oil & Gas EP processes, plants and
equipment, terminologies, etc
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Prerequisites for Effective Participation The above knowledge are prerequisites for
successful development of costs and schedules ofactivities and operations. Since one cannot costor schedule or procure what you do not know or
understand! Cost engineers must understand what they are
costing, project planners must understand whatthey are planning and procurement specialists orbuyers must understand what they arecontracting to purchase. It is as simple as that!
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Process Industries A process facility, such as oil production and
refining, can be viewed as consisting of twoparts: the process component and the facilitycomponent.
The process component consists mainly ofprocess equipment, instruments, and piping.
The facility component consists mainly of
buildings and structures, Ventilation and Air-conditioning, lighting, roads, gantries, etc.
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Process Industries: Process or Facility
Dominance. Some process plants are dominated by facility
component, such as pharmaceutical, whilstothers are dominated by the processcomponent. Petroleum exploration,
development, production and refining aredominated by the process component
The knowledge of quantity surveyors is vest in
the area of facility and probably nil in theprocess area
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Lets Test Our Knowledge: Quiz 1Process Component Quiz
What is Process Flow Scheme (PFS)?
What is Process Engineering Flow Scheme(PEFS)?
What is Process Utility Flow Scheme (PFS)?
5000 Naira for each correct answer!
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Lets Test Our Knowledge: Quiz 2Facility Component Quiz
What is an Architectural plan?
What is a Structural plan? What is a Plumbing plan?
Prize: 0 Naira for each correct answer!
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MAIN COMPETENCE AREAS I
General knowledge of oil and gas industry
generally with special emphasis to the NigerianOil and Gas industry.
Working Knowledge of Oil and Gas Exploration
and Production (EP) life cycle from exploration toabandonment
Detailed knowledge of Oil and GAS PROJECT LIFE
cycle from project initiation to project closeout.
Typical Process Facilities Project Team
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MAIN COMPETENCE AREAS II
Working Knowledge of Process Construction technologyand schematic designs of oil and gas facilities
Understanding of Flow Sheet symbols Engineering/Construction Project Planning and Control
Cost Engineering Principles and Practices
Contract Management in Oil and Gas EPIC type contracts: Engineer-Procure-Install-Commission
Tendering in Oil and Gas: Separation of Technical withCommercial tender in tendering and evaluation
Procurement in Oil and Gas Material , Plant & Equipment
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TYPICAL OIL & GAS EP LIFE CYCLE
A typical Oil and Gas EP life cycle consists of the
following stages: Exploration
Appraisal Development
Production
Abandonment (Decommissioning and
Restoration)
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Oil and Gas Exploration: Critical
QuestionsFor any oil and gas prospect exploration some
critical questions needs to be answered, such asthe following:
Where are the hydrocarbons?
How much volume is present?
How much volume can be produced?
At what rates ($) can it be produced? And lastly,what are the risks and uncertainties?
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TYPICAL OIL & GAS PROJECT LIFE CYCLE
A typical Oil and Gas Project life cycle consists of the followingstages:
IDENTIFICATION PHASE-PROSPECTIVE PROJECT
project initiation feasibility study
DEFINITION PHASE-FRONT END ENGINEERING DESIGN(FEED) development plan-surface and subsurface
basis of design
project specification
EXECUTION PHASE
detailed design
materials procurement construction
commissioning, start-up & handover, close-out & project debrief
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TYPICAL PROCESS FACILITIES PROJECT TEAM
A typical building or facilities project team is largelymade up of Architects, Structural Engineers, QuantitySurveyors, Civil Engineers and Services Engineers (orElectrical and Mechanical Engineers).
A typical Process facilities project team, is made upgeologists and geophysicists, petroleum and chemical
engineers, reservoir engineers, process engineers,piping engineers, Mechanical (Vessels and Machinery)engineers, Instrumentation engineers and Productiontechnologists.
Their influence or participation depends upon theprocess facility design in question. The processengineer prepares the process flow diagrams (PFDs).
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CONSTRUCTION TECHNOLOGY AND SCHEMATIC
DESIGNS OF OIL AND GAS FACILITIES, SUCH AS: Flow stations
Low Pressure Compression/ Booster Stations Central Processing Facilities
Oil and Gas Gathering Flow-lines
Oil and Gas Gathering pipelines
Major Oil and Gas Pipelines
Civil Infrastructure and PowerGeneration/Distribution
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ENGINEERING/CONSTRUCTION PROJECT
PLANNING AND CONTROL
Good understanding of the theory of Critical Path
Method and Project Evaluation and ReviewTechnique
Understand and use tools of CPM/PERT Planning
and Scheduling such as Primavera, MicrosoftProject, SAP Project Management, etc (PrimaveraProject Planner is the tool of choice in theindustry)
The Practice of Planning
The Practice of Scheduling
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COST ENGINEERING PRINCIPLES & PRACTICES
Elements of Cost: Cost dimensions, classifications, types, purchasecosts, materials, plant and equipment, labour/salary, overheads and
profit, subcontract, pricing, etc Elements of Analysis: Statistics and Probability, Economic and
Financial Analysis, Optimization,
Enabling Knowledge: Enterprise in Society, People and Organization,Organization Structure, Information Management, Quality
Management, Value Management and Environment, Health andSafety and Security.
Total Cost Management Process, Planning, Cost Estimating andBudgeting, Resource Management, Value Analysis and Engineering,
Risk Management, Procurement Planning and ContractManagement, Investment Decision Making, Project Implementationand Performance Management and Assessment
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STRATEGIC OBJECTIVES
The objectives of the strategy are:
To contribute our quota as quantity surveyorstowards the growth of the economy through thesuccessful implementation of the NigerianContent Development Act, 2010.
To ensure steady supply of qualified manpower inareas project management and planning,
contract and procurement management and totalcost management throughout the life cycle of oiland gas investment.
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STRATEGIC OBJECTIVES (contd)
To be seem by all the stakeholders and the Nigerianpublic as a key player in the Nigerian Oil and Gassector.
To contribute in devising a consistent, objective way ofmeasuring and reporting the value of Nigerian Human
resources employed and Nigerian materials, assets andservices utilized.
To provide the relevant statistics and data required by
the Act to ensure that the minimum Nigerian contentstated in schedule is enforced.
To create jobs and future for the younger generation.
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STRATEGY FOR BRIDGING THE
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STRATEGY FOR BRIDGING THE
CONPETENCE GAP NIQS/QSRBN should develop a measurable plan
and provide sustainable training/development forNigerian Quantity Surveyors.
Short term strategies NIQS/QSRBN to set up a team made up of mainly QSs
experienced in Oil and Gas operations to drive theimplementation of NCDOGI as it affects the QS
Training Programmes by NIQS, QSRBN, and privatetraining outfits Formal
Informal: On-the-job training
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STRATEGY FOR BRIDGING THE
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STRATEGY FOR BRIDGING THE
CONPETENCE GAP (contd) Medium Term Strategies
Professional Diploma or Certificate Programmes
Long term strategies
Comprehensive review of QS course content to
deemphasize building construction and emphasis
engineering construction (Oil, Gas, Power,
Telecoms, etc)
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