The Great Debate – What is the Reality of Local Content Development Globally?We posed a number of questions to an audience at this year’s NOCs & Governments Summit, where participants fed back anonymously to form a general consensus on what Local Content really is. Included are the statistics from the votes cast as well as some key quotes on what matters for the future of Local Content.

1. Are Local Content objectives meeting reality?

68%

68%

26%

6% 0%

“Some countries don’t have the technology, infrastructure etc. so they need more joint ventures to study countries that are more technologically advanced, so that they can meet expectations.”

“The reality is that there are unlimited definitions of national or local content, but we need to know the reality before setting the parameters.”

“If you speak with members of the public, they would say local content objectives are not meeting with reality. The reality is that there is no understanding of the timing it takes.”Yes but only partially

No, they are far from meeting expectations

Don’t know

Yes

2. Is the Local Content price premium worth investing in?“The success of local content depends on collaboration between stakeholders to ensure the transfer of technical know-how.”

“In O&G, the government, locals, private sectors and IOCs all have an interest and expectations, but none of them understand what each other’s expectations are. We need to understand this first. It is worth investing in local content but it needs to be realistic and understood.

“What do we need to do and what is the responsibility of each stakeholder?”

Don't know

Yes, but Governments, IOCs and institutions should jointly inves-

tigate for more value

Yes we should go further

No, free market should be the norm

0 10 20 30 40 50 60 70 80

5%

76%

16%

3%

3. Which phrase best describes national/ local industry development policies?

“The definition ‘In-Country Value’ best describes its meaning because it is the value addition to a country’s development programme, and all about sustainability. O&G is a finite resource; what is the sustainability plan?”

“The phrase ‘In-Country Value’ broadens the concept.”

“It doesn’t matter what you call it, as long as you do it.”“Local means that the content has to be local,

but does that actually mean indigenous? Is it only the oil-producing state that will reap the benefits? Therefore should we use ‘national’ to bring in the citizens of a country?”

Local Content6%

In-Country Value64%

National Content

21%

Don't Know9%

4. Should IOCs be a force of proposition for government set country development policies?

“There is a conflict of interest – the role of the government is to fix where they want to go, and the role of setting policies fundamentally belongs to the government.”

“Governments work for their country whereas an IOC’s drive is its profits. IOCs need their knowledge and ideas, but governments should not base everything on the IOCs.”

“It is down to the government to get involvement from society.”

“During the drafting of any government policy, all stakeholders should gather around the table to make their contributions. The IOC is an important stakeholder.”

17%

19%

61%

3% No that is not their role

Yes but marginally

Yes, more than what they are doing today

Don't know

5. Should an IOC propose substituting one Local Content requirement with an alternative offering more value to a government?

“The state policy is driven by the government, therefore IOCs shouldn’t be involved in determining how a country’s capacity can grow. IOCs can apply for a waiver to fill the skills gap so they can offer their contribution through a separate avenue.”

“The IOC is an important partner in this business and they have specialist knowledge, why shouldn’t they make a rational proposition to a rational government?”

“We need more flexibility as the things a company can offer can change.”

18% 18%

38%

21%

5%

6. When should local content targets be set? “Once you have primary legislation, you have a broad initial framework in which to set targets.”

“It is between the NOC and the contractor, so you can make amendments at this stage. You need to write them at the initial stage.”

“You need to look at combinations. There isn’t a large choice of contractors and many are non-local. If you lock yourself into a target, it is then very difficult to track.”

“It depends as some agreements are between the IOC and government, and others are between the NOCs and contractors.”

34%

28%

24%

13%Primary Legisla-tionConcessions/ PSAAnnual work planAward of major contracts

The Great Debate was a session at NOCs and Governments, a prestigious annual summit which brings together governments and regulators to debate real in-country value.

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