September 1, 2004 was a Wednesday like any other in the Niger Delta. But it was surprisingly different for a man and his company. The man walked into his office in Port Harcourt and took a seat, and Nigerians rose to their feet to celebrate the story. Mr. Basil Omiyi had just spent his first minutes in office as the pioneering Nigerian Managing Director of The Shell Petroleum Development Company of Nigeria Ltd (SPDC). It was the first time that a Nigerian would assume the leadership of a Nigerian subsidiary of an international oil company. and the gas company and the media and other industry observers hailed the appointment as boding well for the development of Nigerian muscle in the industry.
The significance of the moment was also not lost on Mr. Omiyi, an industry veteran who joined SPDC in 1970 as a trainee petroleum engineer. “I am honored to be the first of what I hope will be many Nigerians to serve in the role,” he said. He and other Nigerians asking for more of the same have not been disappointed. Some 18 years after he entered the C-Suite, the third Nigerian holds the position of CEO of Nigeria’s largest oil and gas company. Not only that, Shell’s other two companies in Nigeria, Shell Nigeria Exploration and Production Company (SNEPCo) and Shell Nigeria Gas (SNG) are also run by Nigerians.
The appointment of Nigerians to key positions is just one aspect of a deliberate effort by Shell to encourage the development of Nigerian content, which during Shell’s more than 60 years of operations in Nigeria, has ranged from developing talent and supporting contractors and suppliers to the provision of services in critical areas of upstream business. Socioeconomic benefits include job creation, business development in the Niger Delta and Nigeria as a whole. In May last year, Shell companies were named the International Oil Company with the Most Impactful Local Content Initiatives at the Nigerian Oil & Gas Opportunity Fair.
The Petroleum Technology Association of Nigeria (PETAN) honored Shell companies in Nigeria as the best local content operators at its 2022 industry dinner and awards ceremony held in Port Harcourt, the capital of Rivers State, on last month. SNEPCo’s Managing Director, Ms. Elohor Aiboni, was also named the sole recipient of the PETAN President’s Outstanding Achievement Award, while her predecessor, Mr. Bayo Ojulari, won the PETAN Distinguished Achievement Award.
PETAN should know. Based in Port Harcourt, this association of more than 80 indigenous oilfield technical services companies in the upstream and downstream sectors with a combined annual revenue of more than $500 million, promotes the development of the oil and gas industry in Nigeria. through their services and contributions to ideas and policy formulation. “Shell companies have always supported local service companies, and have been part of our local content journey from the beginning, and have been consistent,” said PETAN Chairman Nicholas Odinuwe as he presented the award to the Shell representatives. Mr. Odinuwe described Shell companies as an important pillar for the growth of local content in Nigeria by driving pre-legislation initiatives and providing financial intervention to give even start-ups in the service sector the opportunity to participate in the oil and gas supply chain. .
Efforts by Shell companies to develop Nigerian content in their operations predate the establishment of the Nigerian Content Development and Monitoring Board (NCDMB) in 2010. These efforts have facilitated the growth of Nigerian companies in tool manufacturing and technical kits, operation of helicopter flights in the Niger Delta, and strategic partnerships between foreign and local companies to stimulate technology transfer and capacity building. Therefore, the Shell companies Nigerian content development strategy is consistent with the NCDMB framework with a strong emphasis on research and development, promotion of local manufacturing, ownership of indigenous assets and development of human capacity. Among other achievements, Shell Nigeria implemented a contractor support fund to enable indigenous entrepreneurs to access credit and sponsor research at Nigerian universities to create local alternatives to imported fluids and additives.
In 2021, Shell Companies in Nigeria awarded contracts worth $800 million (the same as in 2020) to Nigerian-registered companies, of which 92% were to companies at least 51% Nigerian-owned . Also in 2021, more than 8,500 contractors supported the companies’ operations last year. Recognizing the global nature and standards of oil and gas production, Shell is not just awarding contracts to Nigerians and leaving them on their own to fight for the necessary certifications and upskilling. It works with these companies to improve management systems and technical capacity and achieve the necessary certification for their products and services so that they can qualify for tenders and contracts to provide goods and services not only in Shell operations and the Nigerian oil and gas, but also in sub-Saharan Africa. For example, Caverton Nigeria Ltd, which operates in West Africa, benefited from Shell’s support in developing global standards when it began providing helicopter services for Shell Nigeria. In addition to technical support, Shell companies in Nigeria have helped solve the challenge of contract financing by establishing the Shell Contractor Support Fund in 2012. Nearly $1.6 billion has been provided in loans to 901 Nigerian suppliers since the start of the Fund.
But it is in deep water that Shell’s efforts in developing Nigerian content have been most pronounced. The development of the Bonga field by SNEPCo in 2005 spawned the first generation of Nigerian deepwater oil and gas engineers. SNEPCo recruited Nigerian engineers who got started on this project, developing knowledge and skills that would boost the country’s oil and gas exploration and production capacity. The company awarded major engineering and construction contracts to indigenous companies involved in the installation of new production manifolds, subsea umbilical systems, oil production, and water injection flow lines. In 2019, a local company refurbished one of Bonga’s subsea wellhead control systems, known as a Christmas tree. Today, fully indigenous companies manufacture and rebuild Hydraulic Flying Cables (HFLs) in the country in a technical breakthrough. A Nigerian company is also continuing to restore old underwater Christmas trees. Nigerian companies also played a key role in sustaining the seventh reclamation of the Bonga field, which was successfully completed in October 2022.
In recognition of these efforts, NCDMB Executive Secretary Mr. Simbi Wabote commended Shell for being the first international oil company in Nigeria to demonstrate confidence in the capabilities of Nigerian companies and give them the opportunity to fully participate in the oil industry. and the gas industry. He was speaking at a local content workshop for the judiciary in Bayelsa state. Undoubtedly, Shell’s pioneering efforts have helped the NCDMB achieve nearly 50 per cent local content in the Nigerian oil and gas industry. This translates to retaining more than $8 billion of the $20 billion annual spend in the industry. The NCDMB is aiming to achieve 70% local content penetration by 2027. The Board and indeed Nigerians can continue to count on Shell’s historic progress in developing Nigerian content. This is a guarantee of more Mr. Omiyi moments.