Opinion
- Editorial- Commentary
STCIC:
Local content and local capability:
Importance
of institutional support
As
part of our vision for the future of the energy sector,
the South Trinidad Chamber of Industry and
Commerce has advocated that T&T should focus on
the export of energy services to other oil and gas
producing countries. At the heart of providing support
for this initiative is the establishment of institutions
that support indigenous energy service companies with
the capacity to service export markets.
Norway and the UK are examples of countries which
have opted to respond to the maturing and declining
of production in their oilfields by focusing on the
export of oilfield talent and knowledge through energy
services.
In both cases the critical success factors have been
the establishment of institutions to firstly increase
levels of local content and secondly (having achieved
the first objective) support these companies in developing
business abroad.
UK experience
In the case of the UK, in the 1970s two major fields
were discovered in the North Sea: Forties and Brent.
At around the same time there was the first energy
shock (1973-1974) that effectively quadrupled oil prices.
These events prompted British authorities to take steps
to ensure that UK oilfield services and supplies companies
got a share of the work in the North Sea. To do this
they established the Offshore Supplies Office (OSO).
The
OSO audited and monitored purchases made by oil companies.
As a check, oil companies operating in the
UK North Sea were required to submit to OSO quarterly
reports listing contracts in excess of £100,000,
the name of the successful bidder and the list of UK
firms which had bid on the contract or had been approached
by the oil companies. While there were no penalties
for low levels of local content it was expected that
such companies would find it difficult to be successful
in future bid rounds.
By
the 1990s the UK’s focus changed from increasing
local content to supporting UK service companies develop
export markets. At the same time there was a recognition
that the North Sea’s once prolific oilfields
had begun to mature.
In
recognition of these facts, the Oil and Gas Industry
Task Force (OGITF) was established in 1998 with the
mandate to keep the UK’s energy service and supplies
industry on the cutting edge in terms of overall competitiveness.
Today, the OGITF has evolved into PILOT.
PILOT is a joint programme involving the UK Government
and the UK oil and gas industry operators, contractors,
suppliers, trade unions and small and medium-sized
enterprises (SMEs). Its aim is to secure the long-term
future of the oil and gas industry in the UK.
The
strategies adopted by industry groups in the UK and
the UK Government with regard to supporting indigenous
service companies have paid handsome dividends. This
is evidenced by the fact that today some of the UK
service companies that “cut their teeth” in
the North Sea provide services all over the world (including
T&T).
Norway experience
One
year before the UK established the OGITF, the Norwegian
oil and gas industry and the Norwegian Government
had established a similar institution, called Instok.
Instok was established to work with companies throughout
the Norwegian oil and gas industry to expand their
business activities in the international oil and gas
markets. Instok is financed by the Norway’s oil
and gas industry and Government.
According to its Web site, Instok works to:
n Assess market opportunities and enhance the ability
of the partners to compete in the global marketplace.
n Build relations between clients and government representatives
abroad.
n
Provide information about Norway’s achievements
in: enhanced recovery, cost reduction strategies and
health, safety and environment measures.
Essentially Instok functions as an international business
development agency on behalf of Norwegian energy service
companies.
PILOT and INSTOK are examples of what can come out
of industry/government collaboration with a vision
to promote the export of energy services.
What
is happening in T&T?
In
T&T, a Local Content and Local Participation
Policy Framework was completed by the Permanent Local
Content Committee in 2004. This policy framework was
officially launched by the former Minister of Energy
Dr Lenny Saith in 2006 at the T&T Petroleum Conference.
Since then very little has been heard of the Local
Content and Local Participation Policy Framework. It
was expected that a full-time secretariat would have
been established to implement the policy but to date
this has not materialised and no word on its status
has been forthcoming.
In
this environment, T&T’s local content
initiative has made limited progress, mainly on the
basis of “moral suasion.” The platform
fabrication industry that was established in 2002 has
been a great success:
Government
and the industry rightly deserve credit for this
initiative. However, a lot more remains to
be done if we are to get anywhere close to the level
of support that is provided to energy service companies
in the UK and Norway. The Government’s Local
Content Policy essentially remains a proposal, with
little evidence that it is being actively implemented.
The
STCIC has developed some specific recommendations
on how the local content policy could be implemented
and how the export of energy services from T&T
could be encouraged. The proposals, contained in a
2006 document entitled “Playing to our Strengths” (available
for download from the STCIC Web site), were well received
by the Government in mid-2006, but implementation of
the recommendations has not taken place.
The
T&T Petroleum Conference 2008, will be held
from February 25 to 26. The theme of this year’s
conference is “The Future of Energy?” One
of the topics that will be explored under this theme
is “Are Services our Future?”
For
more information on the T&T Petroleum
Conference go to www.stcic.org
STCIC is
South Trinidad Chamber of Industry and Commerce.
Petroleumworld not necessarily share
these views.
Editor's
Note: This article was first publish
in Trinidad Guardian, Thursday 10th January, 2008
Petroleumworld reprint this article in the interest
of our readers.
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Petroleumworld
01/ 13 /07
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