Last week, more than 300 top oil and gas industry leaders from the region gathered in Nairobi for the second edition of the Oil and Energy Services Local Content Convention. The meeting was designed to share experiences and deliberate on development of local content for the oil and gas industry.
To put things in perspective, local content is the added value that a community or country gets from its extractive industry. These mainly come in the form of employment for locals, partnership (which allows locals to supply goods and services) and sometimes the opportunity to own a stake in the multinationals.
The latter, due to their technical and financial capacity as well as experience, have been given a licence to prospect, explore and produce minerals from the host country.
The delegates agreed on one major point: to push for a holistic policy to guide wealth sharing from the extractive sector between host communities, local and national government on the one hand and multinationals on the other.
Existing laws and regulations are disjointed and with a comprehensive policy on local content from which laws and regulations could be drawn lacking.
Kenya has an estimated 1 billion barrels of crude oil. And there could be more billions of barrels waiting to be confirmed. However, it will take years before this wealth can be translated into tangible wealth for local communities and the country.
The discovery of what has been christened 'black gold', has given rise to high expectations both from host country and multinationals. Specifically, communities resident in areas where oil has been discovered are more than keen to usher in new fortunes without any further delay. It is therefore imperative for stakeholders to carefully manage expectations to avoid unnecessary conflict and disillusionment.
Thankfully, we do not have to wait till Kenya's oil enters the market to start benefiting from it. There is money to be made from unskilled and skilled labour as well as supply of basic and highly specialised services to multinationals and contractors.
Both multinationals and host country agree that workforce development through employment and training as well as investment in supplier development by procuring supplies and services locally, benefits not just the host country but multinationals as well.
The onus is on the national government to come up with a clear definition of local content in Kenyan laws and put in place a comprehensive framework spelling out goals and roles of various stakeholders in the extractive industry. Given the foregoing, stakeholders should not expect quick fixes or instant results.
We must adopt a long-term view regarding local content while maintaining robust communication and regular information flows among all parties. Development of local capacity for services such as seismic acquisitions, drilling, research and development, among other core services, will probably take years of investment and partnership to realise.
However, once these are in place, they can contribute to the reduction of operational costs by keeping expatriate staff to a minimum, ensuring easy availability of supplies and services and improving relations between multinationals and their hosts.
The key issue, therefore, isn't just regulation and legislation, but having a clear strategy that safeguards the commercial interests of multinationals and contributing to sustainable development of the host country.
There are already several examples of ongoing efforts at capacity building spearheaded by multinational and local industry players. These include development of basic skills at Lodwar Youth Polytechnic in Turkana County by Africa Oil Kenya BV, training at postgraduate level in Geology and Geosciences by Total and SME training and support in local vehicle ownership by Tullow.
National Oil has also partnered with the University of Nairobi to build a Geochemical Analysis Laboratory at Chiromo Campus while Africa Oil is involved in imparting skills on oil and gas to employees of relevant government departments through its PETRAD scholarship programmme and parastatals such as NOCK.
