Local content requirements in extractive industry contracts

1

• Local content requirements in extractive industry
  contracts
• 8 April 2008
• FIELD
• www.field.org.uk

2

• Overview
• A brief introduction to local content in the
  context of extractive industries contracts

3
Local content defined

• Obligation to employ and train local staff and
  contractors, and to procure local goods and
  services
• Best practice, contractual or legislative

4
Rationale

• By insisting on greater and more intricate
  engagements between oil companies and local
  businesses and communities, the economy will move
  up the value chain, developing industrial
  capacities, which will prove to be of long-term
  benefit to the nation
• Notion developed by Norwegian government
• It has yet to be conclusively proved that local
  content requirements have the desired effect

5
Who benefits and how?

• Local communities
• employment
• skills development
• technology transfer
• Governments
• direct share of profits
• transfer of experience and skill
• economic growth
• Investor
• social license to operate (competitive
  advantages)
• long term cost savings (local labour,
  transportation, and logists)

6
Obstacles

• Dominance of global over local supply chains
• Difficulty identifying where to enter the value
  chain
• Information gaps
• Standards
• Safety and environmental concerns

7
Ingredients for success

• Predictable regulatory and institutional
  environment
• Local content part of broader project community
  development planning
• Understand community priorities and capabilities
• Short term and long term targets
• Clear decision making processes and local
  partnerships
• Monitor and evaluate local content initiatives
  with stakeholder participation

8
Thank you!

• Please feel free to contact me with questions
• linda.siegele_at_field.org.uk