Presentation by Nimi Erekosima of Thomas Douglas Limited at the Subsea Vessels Africa Conference
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Transcript of Presentation by Nimi Erekosima of Thomas Douglas Limited at the Subsea Vessels Africa Conference
Local Content Strategy on Implementing Construction Plans
THOMAS DOUGLAS NIGERIA LIMITEDA R C H I T E C T U R E • E N G I N E E R I N G ▪ C O N S T RU C T I O N
LAGOS ▪ PORT HARCOURT
www.thomas-douglas.com
- Nigeria as case study
NIMI GODFREY EREKOSIMA PRINCIPAL PARTNER
THOMAS DOUGLAS
Once upon a time there was a couple who had been
married for 30 years without a child...
THOMAS DOUGLAS
Then one day the man left his wife and went on a sojourn
across Africa looking for answers...
THOMAS DOUGLAS
...After a few years he came back with a love child and asked
his beloved wife to take care of the child as she would her
own... The child’s name was Local Content
THOMAS DOUGLAS
THOMAS DOUGLAS
LOCAL CONTENT STRATEGY ON IMPLEMENTING CONSTRUCTION PLANS
• Understanding the content rules involved in offshore construction
• Capabilities needed and required
• Cost management and critical aspects of the project
THOMAS DOUGLASLEARNING GOALS
Introduce offshore construction
Define Nigerian Local Content Policy
Learn a Brief History of the Nigerian Local Content Policy
Identify the NC Strategies Applicable in the Nigerian Offshore Construction Industry
View Critical Aspects of the Project Through the Concept of Value Addition
Appreciate the impact of NC in the Nigerian Offshore Construction Industry
We will:
THOMAS DOUGLASCATEGORIES OF OFFSHORE CONSTRUCTION
OFFSHORE PLATFORM CONSTRUCTION
- RISER INSTALLATION
- TOPSIDE INSTALLATION
- MODULAR UNITS
OFFSHORE PIPE LAYING
- SUBSEA PIPING
- PIPE BURIAL
- PIPELINE TESTING
MAJOR OFFSHORE MAINTENANCE
- ADDITIONAL WELL INSTALLATION
- TOPSIDE MODIFICATION
- PIPELINE REPLACEMENT
O F F S H O R E S U P P O R T V E S S E L S
CONSTRUCTION OF SUPPORT FACILITIES
– LOGISTICS BASES – INDUSTRIAL PARKS FOR OEMs – SUPPORT VESSELS– MAINTENANCE WORKSHOPS
THOMAS DOUGLASINTRINSICS OF OFFSHORE CONSTRUCTION
• not for the faint heartedCAPITAL INTENSIVE
• the oceans could be very deep and coldHIGH PREMIUM ON QHSE
• makes senseMOST FABRICATION WORK DONE ONSHORE
• it better be for that cost!HIGHLY SPECIALIZED
• Water and air benders neededINSTALLATION DEPENDENT ON WEATHER WINDOW
• no new friendsDEVELOPED SUPPLY CHAIN
• If you survive all of the aboveHIGHLY REWARDING
THOMAS DOUGLASDEFINE NIGERIAN LOCAL CONTENT POLICY
“Nigerian Content in the Petroleum sector is defined as the quantum
of composite value added or created in the Nigerian economy
through the deliberate utilization of Nigerian human and material
resources in the provision of goods and services without
compromising quality, health, safety and environmental standards”.
Add value to local economy through
Capacity development of Individuals, businesses, and
institutions
Retention of spend to stimulate local economy
Encourage sustainability through responsible use of
resources
THOMAS DOUGLAS
1969• First
Petroleum Act
• Regulation 26 Advocates Indigenization of the Industry
1971 - 1977• Establishment of
Nigerian National Oil Corporation (NOC)
• Merger of NOC and Petroleum Ministry
• Nigerian National Petroleum Corporation (NNPC) formed
• Acquisition of National Interests
• Domiciliation of significant portions of Oil & Gas derivatives
2010 - 2014•Establishes a new body NCMB outside
NNPC
•Sets out specific targets for LC
•50% of Multi national coy Assets to be vested in Nigerian subsidiary
•Nigerian indigenous company defined to be 51% owned by indigenes.
• Indigenous Companies have first consideration for licenses, Oil blocks, Contracts
• Indigenous companies have exclusivity on land and swamp activities
•Creates Opportunities for Indigene’s employment and training
•Power of the Minister to approve 3-year waiver for areas of insufficient capacity
•Fines for non-compliance
BRIEF HISTORY
THOMAS DOUGLASBRIEF HISTORY
1969• First
Petroleum Act
• Regulation 26 Advocates Indigenization of the Industry
1971 - 1977• Establishment of
Nigerian National Oil Corporation (NOC)
• Merger of NOC and Mines and Steel Ministry
• Nigerian National Petroleum Corporation (NNPC) formed
• Acquisition of National Interests
• Domiciliation of significant portions of Oil & Gas derivatives
2010 - 2014•Establishes a new body NCMB outside
NNPC
•Sets out specific targets for LC
•50% of Multi national coy Assets to be vested in Nigerian subsidiary
•Nigerian indigenous company defined to be 51% owned by indigenes.
• Indigenous Companies have first consideration for licenses, Oil blocks, Contracts
• Indigenous companies have exclusivity on land and swamp activities
•Creates Opportunities for Indigene’s employment and training
•Power of the Minister to approve 3-year waiver for areas of insufficient capacity
•Fines for non-compliance
THOMAS DOUGLASBRIEF HISTORY
1969• First
Petroleum Act
• Regulation 26 Advocates Indigenization of the Industry
1971 - 1977• Establishment of
Nigerian National Oil Corporation (NOC)
• Merger of NOC and Petroleum Ministry
• Nigerian National Petroleum Corporation (NNPC) formed
• Acquisition of National Interests
• Domiciliation of significant portions of Oil & Gas derivatives
2010 - 2014•Establishes a new body NCDMB
outside NNPC
•Sets out specific targets for LC
•50% of Multi national coy deployed assets to be vested in Nigerian subsidiary
•Nigerian indigenous company defined to be 51% owned by indigenes.
• Indigenous Companies have first consideration for licenses, Oil blocks, Contracts
• Indigenous companies have exclusivity on land and swamp activities
•Creates Opportunities for Indigene’s employment and training
•Power of the Minister to approve 3-year waiver for areas of insufficient capacity
•Fines for non-compliance
THOMAS DOUGLASSTRATEGIC MANAGEMENT CYCLE
Strategic Planning APPRAISAL /ACTION PLAN
Strategic ImplementationCAPACITY BUILDING/ EVALUATION
Value added to Nigerian economy
A
B
THOMAS DOUGLASSTRATEGIC MANAGEMENT – NOGIC JQS
THOMAS DOUGLAS
Nigeria Oil and Gas Industry Content Joint Qualification System (NOGIC JQS)
• Marine Vessels Ownership Data
• Contract Processing Data
• Equipment Ownership
• Nigerian Content Compliance Certificate Data
• Skill Base Tracking
• Training and Employment Data
• Nigerian Content Plans and Reports Archive
• Expatriate Quota Utilization and Succession Data
STRATEGIC MANAGEMENT – NOGIC JQS
DATA CAPTURE DATA MANAGEMENT
• Categorization of oil and gas service companies
• Industry data base for skills verification.
• Verification of available in-country capacity
• Effective information exchange across stakeholders
• Compliance Monitoring
• Test data uploaded
• Launch Q2 2012
Adapted From Nigerian Content Implementation Model, 2013
THOMAS DOUGLASSTRATEGIC MANAGEMENT – TARGET vs. CAPABILITIES
0
10
20
30
40
50
60
70
80
90
100
100 100 100 10090
55
15
25
% TARGET % CAPABILITIES
ACTIVITYNC TARGET RANGE (%)
UNIT OF MEASUREMENT
ENGINEERING OF OFFSHORE FACILITIES
50 - 90 MAN-HOUR
FABRICATION AND CONSTRUCTION
50 - 100 TONNAGE
MAINTENANCE/ MODIFICATION
45 - 70 SPEND/ TON/VOL
SUPPORT VESSELS 45 - 100 SPEND
Adapted From 7E Nigerian Content Development – Presentation by Ernest Nwapa, ES NCDMB
Source: NOGIC Act, 2010
THOMAS DOUGLASSTRATEGIC MANAGEMENT
COLLABORATIVE IMPLEMENTATION MODEL
Regulator
Operator
Indigenous Service
Provider
Foreign Partner
• Training and employment of Nigerians;
• Promoting indigenous ownership of marine vessels, offshore drilling rigs, etc;
• Establishment of critical facilities such as pipe mills, dry docking and marine facilities, pipe coating facilities;
STRATEGY FOCUS
Adapted From 7E Nigerian Content Development – Presentation by Ernest Nwapa, ES NCDMB
THOMAS DOUGLAS
STRATEGIC MANAGEMENT – TRAINING AND EMPLOYMENT
Project Based Training and Attachment
JQS as staff sourcing platform
NCDMB + PETAN
= NCEmI
NCDMB Direct Training
Programs
Community Environmental
Remediation Training
Construction Skills Training
Institutional Development
Upgrade Identified
institutions into O&G TCEs
Establish Subsea
Academy
Establish Engineering
Academy
Facilitate International Certification
Expatriate Quota
ManagementMonitor Quota
Monitor Succession Planning
Nigerian Content Employment Initiative (NCEmI); Joint Qualification System (JQS); Petroleum Technology Association of Nigeria (PETAN);Oil and Gas Training Centre of Excellence (OG TCE)
Adapted From Nigerian Content Human Capacity Development Initiative Implementation Guidelines, 2014
THOMAS DOUGLAS
STRATEGIC MANAGEMENT – MARINE VESSEL OWNERSHIP SCHEME
60% of marine assets in the hands of Nigerians by 2015
Encourage construction of vessels in Nigerian yards
Promote ownership of marine vessels by Nigerian entities
Stimulate flagging & registration of vessels in Nigeria
Deepen Nigerian manning of marine vessels
Inter Agency collaborative enforcement of the Nigeria Coastal and Inland Shipping (CABOTAGE) Act. NIMASA+NCDMB
CABOTAGE Vessel Financing Fund (CVFF)
Nigerian Maritime Administration and Safety Agency (NIMASA)
THOMAS DOUGLAS
STRATEGIC MANAGEMENT – MARINE ASSET OWNERSHIP
Adapted From Nigerian Content Marine Vessel Categorization Procedure, 2013
OFFSHORE RIG ACQUISITION STRATEGY- ORAS
– Establish SPV.
– 50% equity set aside for Nigerian ownership in blocks to be taken up as Nigerian capacity increases.
THOMAS DOUGLAS
Nigerian Content Development Fund (NCDF)
Topside Integration Facilities, Pipe Mills, Dry Docks
Nigeria Oil and Gas Industrial Park Scheme (NOGIPS)
Nigerian Content Equipment Certificate (NCEC)
Offshore Rig Acquisition Strategy (ORAS)
Original Equipment Manufacturer (OEM) Strategy
Equipment Components Manufacturing Initiative (ECMI)
STRATEGIC MANAGEMENT – RELEVANT INITIATIVES
THOMAS DOUGLASVALUE BASED PROJECT MANAGEMENT
EXPLORE AND APPRAISE
DEVELOP PRODUCE TRANSPORT PROCESS DISTRIBUTE
ASSESS,EXPLORE, APPRAISE
DEVELOP VIABLE FIELDS
PRODUCE AND EXTRACT MINERALS
TRANSPORT RAW MATERIALS THROUGH PIPELINES/ SHIP
PROCESS RAW MATERIALS INTO FINISHED PRODUCTS
DISTRIBUTE, MARKET FINISHED PRODUCTS
Business decision to convert an opportunity into an asset whichcreates value to its owners.
VALUE
PROJECT
SCOPE
TIME
QUALITY
COST
PROCUREMENT
RISK
COMMUNICATION
•LEAN CONSTRUCTION
•VALUE FOR MONEY
•LIFE-CYCLE COSTING
•COST OF QUALITY
•VALUE ENGINEERING
•DISCOUNTED CASHFLOW
•NET PRESENT WORTH
•COST BENEFIT
•OPPORTUNITY COST
•UTILIZATION FACTOR
•OPTIMIZATION
•EARNED VALUE
MAXIMISE ASSET VALUE
INCEPTION FEASIBILITYFEED & DETAILED
DESIGNCONSTRUCTION & COMMISIONING
OPERATIONS & MAINTENANCE
VALUE ARTICULATION AND PROJECT DEFINITION
OPTIMIZATION OF BENEFITS AND COSTS LESSONS LEARNT
OIL AND GAS VALUE CHAIN
CONSTRUCTION PROJECT LIFE-CYCLE – PROJECT OBJECTIVES MUST BE CHAMPIONED BY ALL
THOMAS DOUGLASCONSTRUCTION COST MANAGEMENT
Includes the processes involved in Estimating, Budgeting and Controlling costs so that the project objectives are met within the approved budget.
Estimation – Develop approximate monetary resources needed to complete
project activities
Budgeting – Aggregation of costs estimated in order to establish an
authorized cost baseline
Control – Monitoring progress and changes to cost baseline.
Source: Project Management Book of Knowledge, 2013
Contracting strategy
•PSC, JOA, SC
Procurement strategy
•Locally sourced, importedProject scope Engineering design
Stakeholder requirements
•Taxes, regulations
Risk management strategy
Resource requirements
•Human, equipment, materials
Operational expenditure
FACTORS THAT IMPACT CONSTRUCTION COST BASELINE
THOMAS DOUGLAS
IMPROVED EMPLOYMENT AND TRAINING OF LOCALSOver 30,862 jobs within first 3 yrs (10,792 in Fabrication, 6,797 Post trainingemployment, 3,000 in Vessel servicing, 1,500 Equipment manufacturing)
INCREASED INDIGENOUS VESSEL OWNERSHIP65% of Vessels – Class AAA and Category A combined45% of Vendors – Category A
MORE NIGERIANS OWNING CRITICAL MARINE ASSETSPipe laying barges, Drilling equipment, Drilling rigs, Dry-docking Logistics bases etc.
RETENTION OF MORE ANNUAL OIL AND GAS SPEND IN-COUNTRYAbout $10Billion of the $20Billion capital flight
MORE ROBUST FORWARD, BACKWARD AND FINANCIAL LINKAGESBanking, Manufacturing, Education, Legal sectors benefit
NEGATIVE IMPACT ON GDP SHORT TERM2009 (pre-NOGICD) was 17.8% compared to 14.4% by 2013(post-NOGICDA era)
IMPACT ON INTERNATIONAL FREE TRADE AGREEMENTSProtectionist in nature
INCREASES CONSTRUCTION COST SHORT TERMContingency, Cost of quality, Interest rate, Inflation
The ayes have it!
NIGERIAN CONTENT IMPACT ON OFFSHORE CONSTRUCTION
THOMAS DOUGLASCONCLUSION
More work for indigenous local contractors such as Thomas Douglas, with the construction of new pipe mills, new industrial parks, new fabrication yards, new vessels, new production platforms, new pipeline projects etc.
Better access to funds through economic linkages to financial institutions, NCDF etc.
Improved project schedule as local manufacturing eliminates time wasted on importation and improves just-in-time deliveries.
Transfer of technology ensures a better trained workforce
The success of this marriage is vital to the implementation of construction plans. It means:
THOMAS DOUGLASRECOMMENDATIONS – T E S T
Timely manner•Already Nigeria has lost 70% of her exports to her biggest market, the USA. And shall loose more due to the latter's embrace of shale oil and other energy sources.
Effective manner•Labour cost amounts only between 10-20% of the Total DC of production as compared to procurement's 54%. Therefore Manufacturing is key.
Strategic manner•Look beyond present hassles. A capacious LC translates to cheaper, faster first oil and gas.
Transparent manner•Unpredictable regulations hamper investment opportunities.
To make the marriage work the Family must collaborate in a(n):
THOMAS DOUGLAS
THOMAS DOUGLAS
• Technical Data Sheets• Utility, Cost And Weight Estimates• Performance Specifications• Code Compliance Analysis• Architectural Shop Drawings• Structural Shop Drawings• Room Data Sheets• Bills Of Materials• Furnishings, Equipment and
Fixture Selection• Mechanical (Piping) Shop
Drawings• Electrical (EIT) Shop Drawings• HVAC Shop Drawings• Fire & Safety Communications
Shop Drawings. • Detailed Design Review
• Bid Package Preparation• Bid Evaluation• Determine Company Procurement
Standards• Utilize Preferred Vendors
Database • Identify Long-lead Time Items and
Place Orders• Incorporate Local Knowledge Of
Approved Offshore Materials• Utilize Knowledge Of NOGICDA
Requirements On Importation Of Materials To Nigeria
• Coordinate Shipment And Customs Clearance Of Imported Materials
• Provide Local Logistics and Transportation
• Fabrication Contract Assistance• Fabrication Inspection• Change Order Review• Payment Request Review• Submittals / Shop Drawing
Review• Lifting Procedures• Integration / Mating Plan• Tie-ins To Utility Systems• Systems Testing In Fabrication
Yard• Systems Testing On-Site• RFI / Site Query Resolution• QHSE Management• Final Acceptance / Punch List
... a multi-disciplinary Engineering, Procurement and Construction Project Management firm 100% Nigerian owned.
CORE VALUES...leading, innovative and reliable player in the provision of premium, sustainable, client-oriented,
cost effective , safe, and timely - bespoke solutions.
THOMAS DOUGLAS IS...
THOMAS DOUGLAS NIGERIA LIMITEDE N G I N E E R I N G • P R O C U R E M E N T ▪ C O N S T R U C T I O N
S&B Floor, Top Notch Building▪ Ajiwe
Km 23 Lekki-Epe Expressway ▪ Lagos, Nigeria
Tel: 01- 7374027, 0703 2240125, 0803 4673729 • E-mail: [email protected]; [email protected]
Website: www.thomas-douglas.com