Chasing local content

A key area of emphasis at the recent Namibia International Energy Conference (NIEC) 2023 was the development of local content and the significance of utilising local expertise to enhance employment prospects.

“I want jobs,” said NJ Ayuk, the executive chairman of the African Energy Chamber (AEC), who led a strategic industry intelligence session advocating for greater inclusion, employment opportunities and skill building within Namibia’s – and Africa’s – extractive industries.

“We still have a country where a lot of young people don’t necessarily have experience in enterprise development or building joint ventures. How can we get young people and businesses involved beyond logistics?” Ayuk said.

“Having been operators, leaders and advisors, we have a lot to share with young people about how to enter this industry,” he added.

In his opening statement, mines and energy minister Tom Alweeno said while local content policies have the potential to stimulate broad-based economic development, he was also aware that results have been mixed across the world.

“It is one thing to have a policy and another to have the policy implemented,” he said.

Alweendo added: “I am also equally aware that designing a local content policy is complex and that each local content policy must reflect the realities and priorities of the country in question.



Boosting local



The government of Namibia will require international oil companies to ensure that all services that can immediately be provided by local entrepreneurs are acquired from local entrepreneurs.

In cases where local entrepreneurs were not able to provide certain services, government would need to have a clear programme as to how to capacitate local entrepreneurs, Alweendo said. This can be done, for example, through joint ventures with experienced international service providers.

“I have no doubt that our recent oil discoveries can and must help unlock industrial activities through the transfer of technology, more value addition in domestic supply sectors, the generation of indirect jobs along the supply chain, and the creation of business opportunities for entrepreneurs from local procurement,” the minister said.

Dr Riverson Oppong, who serves as the commercial operations manager at Ghana National Gas Company Limited, emphasised the importance of establishing a local supply chain for emerging producers such as Namibia.

“Namibia needs to understand that there is much greater socioeconomic value and impact when you run a vertically integrated business,” said Oppong. “After we took over from the Chinese after three to four years, Gabon National Gas Company is now mostly run by indigenous workers.”



Promoting returns



Oluseyi Afolabi, CEO of Reservoir and Facilities Solution Nigeria, commented: “In the oil and gas industry, you’re building facilities to last for 20-40 years. You want to be able to ensure that the locals in that country are able to manage those assets, as in the long term, it becomes increasingly difficult to hire the necessary expats.”

“It is in your interest, as an international company, to train the people there. As soon as local governments see huge investment, you need to position your people in order to take over,” he said.

The Orange Basin's recent findings in offshore Namibia have brought attention to the possibility of commercial oil and gas ventures. Consequently, the country is well-positioned to gain from a comprehensive local content strategy that focuses on implementing effective policies and promoting economic diversification over the long term.

“We want to come in and invest, trade, and to promote returns with regards to our projects in Namibia,” stated Tarik Berair, business development manager at Technip, a global leader in energy projects, technologies, systems and services.

“What I see today are projects from the oil and gas sector, but also from the green hydrogen and green ammonia industries, that can all accumulate at the same time and provide opportunities in-country.

“We work closely with the local stakeholder so that when we come in, we can evaluate the baseline that is already based in the country, which lets us know what we need to bring in from our side in terms of quality and safety,” Berair said.



Transformation



Namibia's oil and gas sector is on the verge of significant transformation, offering the potential to enhance local content across the country's broader energy industry. With anticipated growth in the sector and participation from both regional and global players, new prospects are expected to emerge within the domestic market.

“Local content is diverse, and we need to pay attention to the social dynamics in the continent,” said Sergio Ferreira, local energy advisor for Sub-Saharan Africa at Norwegian Energy Partners.

“Before you actually look at how local people and businesses can benefit, you first have to look at demand and figure out what international oil companies need in order to promote local content development,” Ferreira stated.

According to panelists at the NIEC 2023, the Namibian government's focus on enhancing local content has the potential to expedite economic growth and social development. By striving to establish itself as a regional energy hub in Sub-Saharan Africa, Namibia can foster a competitive workforce, which will necessitate collaboration with key stakeholders to forge dependable local partnerships.

“When the oil and gas organisations prepare the roles available for their employees, they need to adequately determine and evaluate the competence required,” stated Jemma Langley, head of the permanent local content committee (PLCC) and secretariat at the ministry of energy and energy industries in Trinidad and Tobago.

“This will allow these companies to evaluate the gaps that need to be filled and what steps need to be taken to address the development of local content building,” Langley said.



Strategy



Panel discussions at the conference highlighted the potential of a comprehensive and sustained local content development strategy to foster human, social and economic development, ultimately leading to tangible benefits for businesses operating in Namibia.

Prioritising the development of the workforce and suppliers, the upstream sector in Namibia has a favourable outlook for generating equitable and sustainable value creation.

“Today, local content is a topical issue. It has been a topical issue for the last five years. If you look at our laws, we basically enacted a law that placed conditions on license holders focused on creating in-country value,” said Carlo Mcleod, deputy director of petroleum affairs at the ministry of mines and energy in Namibia.

“We want local companies to become part of our strategies towards developing local content,” Mcleod added.

The panelists underscored the importance of Namibia collaborating with oil companies to promote investment in local communities as a crucial element for achieving sustainable development. They emphasised that the Namibian government should prioritise building a globally competitive workforce and supply chain as it advances the development of its oil, gas and wider energy industries.

“We want to make sure that the opportunities for employment are open. We would like the host country to ensure the participation and training of their workforce, because if you hire local personnel, it allows us to cut costs and bring value to the country where we are operating,” said Nillian Mulemi, the CEO of Petrofund in Namibia.



Investment



The NIEC 2023 also featured a panel discussion exploring the investment landscape in Namibia, with a slate of high-level energy players sharing their insights into how the emerging oil producer can foster long-term and diversified growth.

“We’ve got a flourishing exploration and appraisal industry, however, the development and production industry is still new to us,” stated Shiwana Ndeunyema, acting managing director for Namcor.

“We need to be able to understand where it is we want to participate and where we can add value, while creating value for service companies and local businesses to participate in exploration and production,” Ndeunyema.

The panelists emphasised the significance of financial institutions in optimising the flow of capital into Namibia's energy industry and highlighted the need for efficient management services and processes. They stressed that trusted financial partners, with strong local ties, are essential for driving future growth and development in the sector.

“When you look at investment in the sector, it is fundamental to acknowledge economic growth. We need to ask ourselves how we bring investment into the sector, not only towards fossil fuels, but also towards renewable opportunities,” said Baronice Hans, managing director of Bank Windhoek.

“We need to look at all our key stakeholders and how we can balance their interests. We need to think about how we approach these opportunities and how we diversify. We need to create confidence in our country and think about how capital will benefit the key stakeholders in this country,” Hans added.



Energy hub



Establishing Namibia as a potential energy hub in the region will demand substantial and diversified investment across the entire energy value chain, supported by international participation.

Therefore, the panelists explored possibilities for advancements within Namibia's investment landscape, which has the potential to unify the industry and instill confidence among investors, service providers, and local businesses.

“Companies have had confidence in Namibia, and this includes confidence in the future,” stated Dr. Klaus Endresen, chairman of the Namibia Petroleum Operators Association, adding that: “When we start moving into a new area, until we might get to the revenue, you will go through many phases, take many risks, and that is what we do in our industry.”

The speakers also highlighted that the extraction of hydrocarbons can accelerate the energy transition in Namibia and the broader Southern African region.

They emphasised the significance of establishing and sustaining an appealing investment environment in Namibia's extractive industry. Despite the risks involved in exploration, the panelists expressed optimism about the prospects for development in Namibia's energy sector.

“Namibia has maintained a very peaceful and significant investment environment that is attractive for participants and their interests,” said Kauna Ndilula, advisory board member for the Namibia Investment Promotion and Development Board (NIPDB).

“As we present these opportunities, it is important to ensure a stable environment, but also inclusive development. Namibia is a very progressive country and diversification is part of the issues we need to address,” Ndilula added.



Diversification



The panelists underscored the importance of preserving a stable environment that prioritises diversification and inclusivity for Namibia to participate in the future of energy development.

They also emphasised that the confidence in Namibia's investment landscape hinges on the country's collaborative efforts with international players and neighbouring nations.

“Angola and Namibia have a shared history that goes back many, many years, which has served to promote a longstanding relationship between our countries,” stated Osvaldo Inácio, the executive director of Angola’s Sonangol and chairman of Sonangol Integrated Logistic Services (Sonils).

“We need to open the door for young, talented people, and our progression with our friends in Namibia will incorporate shared experiences. It is my belief that we will benefit from what other countries can teach us and in essence, that is what we are dealing with here today,” Inácio said.