Local content (Benchmarking)

Latest news and contribution from the Oil and Gas Group of professionals from the Senegalese diaspora (GPSOG): For a better Local Content in the Oil and Gas sector in Senegal. Local Content in Senegal from oil & gas Diaspora GPS OG May 2021

 

Introduction :

For several years, the ACP has positioned itself with national companies as a facilitator for the development of Local Content, especially in countries

with a long history in mining, which are facing today major opportunities to develop Oil & Gas resources, counting on their limited mining industry resources, for the next generation of oil opportunies (employment-industry).

Some presentations during working workshops with representatives of the French oil industry (Saudi Arabi, Algeria, Senegal et Mauritania)

Vision of the situation and challenges of Local Content in Mauritania

1/ Human Resources  : challenge and opportunity

The development of the energy sector in Mauritania is mainly driven by the sharp increase of the electricity demand, by the increase in the share of renewable energies and by the development of the oil &gas sector starting with the Greater Tortue project (GTA Project shared with Senegal) currently in Engineering and construction phase. The operation phase should start early 2022.

Thousands of technical jobs (few engineers, many senior technicians and skilled workers) will be created in the coming years, in addition to the renewal of existing staff.

The similarities between the 2 sectors (mining and O&G sectors), with a strong prospect of growth, are an opportunity to ensure the sustainability of jobs, including  job creation, in particular in the field of construction and maintenance.

The GTA Project of BP / KOSMOS (Operators) consists of a set of underwater wells connected to a FPSO production and storage vessel (contracted to TechnipFMC), itself connected to a FLNG   contracted to Golar for 20 years.

Beyond the services and equipment that can be provided by local companies (Mauritanian and Senegalese), it is mainly the operating staff that presents an opportunity (and challenge).

Regarding the FPSO, the positioning of BP (in-house operation, subcontracted maintenance) and that of TechnipFMC (construction, no maintenance activity) will lead to offer:

1/ qualified operators to BP and its local Mauritanian partner SMHPM which has planned to hire for this purpose (note: the situation is identical for Senegal with Petrosen, his local partner, which also has to face the simultaneous demand for the SNE project)

2/ Maintenance technicians for the contracted Maintenance company (such as Saipem for example)

For the FLNG, supplied and operated for 20 years by Golar (Singapore), the most realistic scenario will be to plan a nationalization plan for operating personnel, covering a few years.

Given the need, mentioned above, for the FPSO operators trained and operational at the very beginning of 2022, and to be provided by Mauritania for half, it could be envisaged to assign about twenty DUT industrial engineering graduates of the ISMM Institute, who would be brought after their diploma to follow a qualifying training FPSO Operations. This is a certifying training that would start in September 2020 with the following steps:

1/ upgrading of basic subjects / foundation courses  (from 2 to 10 weeks depending on the level)

2/ immersion course that could be envisaged in production and refining (e.g. Congo or Chad) (duration of 2 weeks)

3/ generic operator training with maintenance work and use of offshore production simulator (Apave / ACP curriculum) (around 10 weeks duration)

4/ FPSO specific training (curriculum “FPSO productor operator training”) which should be provided by IFP-training at the Institut de l’Energie de l’Ecole Polytechnique (PADG project)

5/ On the Job Orientation internship on the FPSO during its docking at the pier off Saint Louis (duration of 2 weeks)

6/ participation in the commissioning of the FPSO and the start up of production.

In order to meet the needs identified above, consideration could be given to the creation of professional diplomas (FPSO and FLNG operator). PEC (www.pro-educ-consultants.com) could provide assistance to the Project Management with the support of its experts in the French education system (IUT Industrial Engineering of Toulouse for example) and in the oil sector (ACP members, Apave Sahel in Dakar, Apave Congo and Apave CFL, oil and gas training centre developed by Total in Lacq before its transfer to the Apave).

2/ Local Content philosophy :  another way without dreams or frustation 

For twenty years (from the Total Girassol Project in Angola), operators and their contractors have agreed to execute their projects with a strong local content. The main reasons for this are the high price of Oil and Gas, resulting in many offshore projects with high costs and concentrated in a very limited number of countries (Angola, Nigeria, Congo, Gabon, Equatorial Guinea).   In other words, these projects can integrate an additional cost related to Local Content, with the vision of its reduction for future projects through on the job training (OJT).

Thus the Egina project (Total Nigeria), launched in 2013 with a very high barrel, was realized in subsets to leave a greater place for Local Content (manpower and fabrication / construction). This project led to the creation of fabrication sites and workshops. The sharp drop in crude oil in 2015 called into question the profitability of the project without being able to reduce the amount of contracts or minimize the contractual commitments of Local Content.

In total it is nearly 90% of the engineering, more than 75% of the underwater modules, 6 modules of the FPSO … which were achieved locally, thanks to 25,000 men x year of work (equivalent to 10,000 employees for 2.5 years).

In short, with the current cost of Oil and Gas, it is an illusion to hope to reproduce such a rate of Local Content (Evolen reference)

Case study in Ghana: impact on the Jubilee project

Ghana, a country of 29 million inhabitants, 80% of whose jobs are in the informal economy, has seen its economic face transformed with the entry into production in 2010 of the Jubilee Oil Project.

After an exceptional economic performance in 2011 (GDP growth of 14%), it could not be maintained because of the fall in the prices of raw materials (gold, cocoa, oil). The overly optimistic perception of the authorities has led to an accumulation of private debt with an increase in the deficit and a devaluation. It was at this point that the new President was elected with a programme aimed at diversifying the economy largely dependent on the exploitation of raw materials.

The last 6 years have shown a very small reduction in poverty and a significant increase in inequality.

The private sector, mainly informal, remained dominated by enterprises, 90% of which are microenterprises or SMEs employing less than 20 people; it fails to generate enough jobs to absorb newcomers. (AFD 2019 reference).

Mauritania has around 4 million inhabitants (2.5 million in 2000), 45% of whom are under 15 years of age. The country has important natural resources such as iron, gold and copper ores, offshore gas and smaller quantities of oil.

The primary sector (livestock, agriculture and fisheries), representing 30% of GDP, which is decreasing as a result of climate factors. It is one of the pillars of the Mauritanian economy, generating jobs for about 28% of the working population.

The industrial sector (30% of GDP) includes mining activities (10% of GDP) with mainly the production of iron and also gold, copper, quartz … which employs more than 15,000 people overall. The production of the offshore Chinguetty oil, which brought 13% of GDP in 2006,  is now in the phase of dismantling.

The industrial sector also includes public works and manufacturing activities (food processing, cement factories, chemical or plastic industries), with a contribution to GDP that has decreased in recent years by 11%. The employment of this activity (7% of the active population) is carried out with 200 SMEs (5000 employees) and an informal activity in crafts and small trades such as carpentry, plumbing,… (PNUD national programme reference)

Local Content in Mauritania

Fistly, it should be considered that the only activities subcontracted locally by the international contractors of the new offshore gas fields (Greater Tortue to be shared with Senegal and then Bir Allah) will be those that can be carried out with the slightest investment in training.

The second criteria will be to validate these developments according to the possibility of reusing expertise/investments for other projects in the field of hydrocarbons (example of gas conversion of thermal power plants) renewable energies, mining extractions and ore processing.

It is clear that international contractors will first rely on local companies offering guarantees such as: stability, credibility, experience in the targeted areas… and that from then, the selection would be made quickly if it were limited to oil expertise.

Therefore, it seems to us that, prior to this qualification of subcontractors, a broad mapping study should be done (areas of experience, size of enterprise) with the objective to offer to the companies a “development training”  which could be financed, at least in part, by a national budget.

The ACP (Association of Petroleum Consultants), offers and carries out, through its partner Apave Sahel, such training for Senegalese SMEs. With the support of another partner member, Convergence, the ACP offers the use of the www.convergence.link platform to monitor the development of these companies.

The trainings currently provided by Apave Sahel cover areas such as: MASE process (Business Safety Improvement Manual), Electrical Authorization, Chemical Risk Prevention, Fire Safety, ATEX Authorization, Internal Audit, ISO 9001 management system, ISO 45001;   International Training business development, HSE risk management in operations; Asset integrity Management System…

It is such a massive approach that will make it possible to generate the indirect induced jobs, which has been successfully done by the Mauritanian extractive industry where a rate of 26% of the working population has been mobilized in the mining wilayas, for indirect jobs.

Jean-louis.gaillard@acp-france.org

 

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