Local Content Strategy - CommDev
Local contentstrategyA guidance document for theoil and gas industrySocialResponsibility2011www.ipieca.org
The global oil and gas industry association for environmental and social issues5th Floor, 209–215 Blackfriars Road, London SE1 8NL, United KingdomTelephone: 44 (0)20 7633 2388 Facsimile: 44 (0)20 7633 2389E-mail: info@ipieca.org Internet: www.ipieca.org IPIECA 2011 All rights reserved.No part of this publication may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording or otherwise, without theprior consent of IPIECA.This publication is printed on paper manufactured from fibre obtained from sustainably grownsoftwood forests and bleached without any damage to the environment.
Local contentstrategyA guidance document for theoil and gas industryAcknowledgementsThis document was prepared by the IPIECA Local Content Task Force, under theauspices of the Social Responsibility Working Group. IPIECA gratefully acknowledgesthe assistance of Petter Matthews and Matthew Lynch of Engineers Against Povertyin preparing this document.All photographs reproduced courtesy of Shutterstock.com
IPIECALOCAL CONTENT STRATEGYContentsExecutive summary1Part 1: Introduction3Developing a local content strategy4Understanding local context4Regulatory requirements6Business drivers7Stakeholder expectations8Part 2: Capacity developmentWorkforce development10Employment policies10Training and skills development10Accelerated staff progression11Education and training institutions11Construction phase employment12Supplier development13Procurement policy13Modifying procurement strategies and systems13Part 3: Implementing and sustaininglocal content19Internal organization and coordination20Working with other stakeholders21Infrastructure22Measuring progress23Summary—key success factors24Starting early25Taking a long-term perspective26Free flowing, transparent information streams28Referencesii930
LOCAL CONTENT STRATEGYExecutive summaryMany oil and gas producing states are introducingThis guidance document is based on IPIECArequirements for ‘local content’ into their regulatorymembers’ efforts to develop good practice inframeworks. These requirements aim to create jobs,managing local content. It is aimed at practitionerspromote enterprise development and accelerate theand other company representatives withtransfer of skills and technologies. Local content hasresponsibility for this objective.therefore become a strategic issue for the oil andgas industry—presenting both challenges andThe guidance is divided into three sections:opportunities. Part 1—Introduction: discusses the businessbenefits of developing and implementing a localcontent strategy, including the types of data andFor the purposes of this document, ‘local content’analysis that may be used as inputs.refers to the added value brought to a host nation(or region or locality) through: Part 2—Developing capacity: provides detail onworkforce development:developing the primary components of a local employment of local workforce; and training of local workforce; andcontent strategy, including building localinvestments in supplier development: developing supplies and services locally; and procuring supplies and services locally.workforce and supplier capacity. Part 3—Implementing and sustaining localcontent: focuses on key issues that practitionerscan consider to help ensure the successfulimplementation of a local content strategic plan.For the purpose of this document ‘local content’captures local community content and nationalThe experience of IPIECA members suggests thatcontent in one term.the time and effort invested in developing localcontent strategy can create social and commercialLocal content can be measured on a project basis,benefits that progress economic growth andaffiliate basis and/or country aggregate basis.contribute to sustainable development. Since every1
IPIECAoil and gas company is different, there is no singleActions for achieving local content objectivesway to achieve a successful local contentinclude four key factors. These are:programme. thoroughly analysing the local context; starting early in the project life cycle to considerhow and when to intervene;Important observations include the following: A local content strategy is not a quick fix or a taking a long-term perspective; androute to achieving short-term benefits. It requires effectively managing information flows andplanning, coordination, resources andtransparency.perseverance to obtain improvements—which are often realized in the long term.Although companies have made considerableIt is essential to communicate within theprogress in advancing local content, it remains ancompany the range of business benefits that canemerging issue. As such, it requires more time andbe gained through a local content programmeeffort to improve practices.in order to justify the time and effort involved.This communication can include a wide range ofIPIECA will continue to support these efforts andinternal stakeholders across different businesswelcomes comments on this document andfunctions such as human resources,additional examples of good practice.procurement, public and government affairs,etc.). An effective local content strategy can assistcompanies in meeting regulatory requirements,contributing to sustainable development andprotecting their commercial interests. Practitioners should avoid becoming solelyfocused on meeting internal and externalreporting requirements. A strategic approach to local content hasrealistic targets that contribute to lasting benefitsin the long term. Targets that are beyond theexisting capacity of local industry or theabsorptive capacity of particular assets maycreate inefficiencies. These result in higher costs,lower government revenues and lesscompetition. Established procurement practice tends to focuson cost and efficiency—factors that favourestablished businesses and global supply chains.While there may be a short-term cost premiumin developing local suppliers, in the long term areliable local supply chain can offer betteroverall value.2
LOCAL CONTENT STRATEGYPart 1:IntroductionAbout 90% of new hydrocarbon production in the next 20 years will come fromdeveloping countries (Baker III Institute, 2007). Many of these nations haveunderstandably introduced ‘local content’ requirements into the regulatoryframeworks governing natural resource developments. The aim is to create jobs,promote enterprise development and acquire new skills and technologies.These new local content regimes pose both risks and opportunities for oil andgas companies. For example, operators and international contractors may faceunrealistic expectations or targets from host governments or communities seekingquick results; opportunities come from longer-term efforts focused on helping todevelop local businesses and employees.Given the growing importance of local content, many companies regard theconcept as a strategic issue that can have a direct impact on a range of corebusiness functions, such as business development, procurement and operations.In response, companies have begun to develop innovative tools and approachesaimed at meeting local content requirements and contributing to sustainableeconomic growth. At the same time, these efforts can protect and enhancecompanies’ own commercial interests.IPIECA members are leading the way in developing good practice for managinglocal content, capitalizing on business benefits while minimizing the challenges. Thispractitioners’ guide draws on that experience and will help in developing corporatesupport of local content objectives.Local content definedLocal content is the added value brought to a host nation (and regional and localareas in that country) through the activities of the oil and gas industry. This may bemeasured (by project, affiliate, and/or country aggregate) and undertaken through: Workforce development: employment of local workforce; and training of local workforce. Investments in supplier development: developing supplies and services locally; and procuring supplies and services locally.3
IPIECADeveloping a local content strategy‘A stable andpredictablebusinessenvironmentsupports thedelivery ofsuccessful localcontentprogrammes.’Source: interviewwith ExxonMobilSuccessful local content programmes are shaped bya well-defined strategic plan. Detailedstakeholder expectations are not explicitly partunderstanding of the local context is imperative.of regulatory requirements or the definedThat means avoiding prescriptive solutions.business case.Practitioners should concentrate on the key driversin achieving local content: regulatory requirements,business and stakeholder expectations—includingthose internal to the company.plan include: reductions in operational costs by keepingexpatriate staff to a minimum; smoother flowing supplies of goods andservices; a consistently renewed licence to operate; and enhanced engagement with stakeholders.With those advantages in mind, the strategic planshould focus on enhancing the capabilities of thelocal workforce. This is done through employment,training and investment in the local supply base bymeans of procurement and development.contentdevelopmentstrategy has thegoal of facilitatingthe developmentof competencies,capabilities andcompetitiveness ofNigeriancontractors.’Source: interviewwith Shell4Stakeholder expectations: These should helpdefine objectives, particularly when keyThe advantages of having a local content strategic‘Our Nigerian a clear understanding of the business benefits andDrivers of a successful strategy Local context: Objectives should be based on athorough understanding of the local context. Thisknowledge enables planners to define what isrealistic and achievable. Particularly importantare the demand-side requirements, the supplyside capabilities, and any barriers that limitlocal participation. Regulatory requirements: Regulatoryrequirements may define explicit targets orobjectives for local content development. Business expectations: There are an increasingnumber of strategic and commercial reasonsbehind the move for local content. By identifyingthem in each case, companies can justifyapplying the necessary resources andmanagement effort and simultaneously identifythe functions and areas of the business thatshould be involved.Understanding local contextKnowing the neighbourhood enables companies tounderstand the importance of local context in termsof demand-side requirements, supply-sidecapabilities, and the barriers that limit local workerand local company participation. These factorsvary by location, the nature of the project and thestage of the project life cycle.Experience demonstrates that targets beyond theexisting capacity of local industry or the absorptivecapacity of particular assets can result in greatercosts, lower government revenues and lesscompetition (Nordas et al., 2003).Thorough analysis of the local context can yield arealistic baseline for a local content strategy plan.Table 1 provides some examples of relevantanalytic exercises.
LOCAL CONTENT STRATEGYTable 1 Typical analyses that can be used to review the local context and develop a realistic baselineType of analysisDescriptionAnalysis of nationaldevelopment prioritiesAligning local content activities with development priorities can greatly enhancethe benefits to the company and host country. Depending on the situation,priorities can be identified through formal development plans or through localstakeholder consultations.Local capabilities studyThis look at existing and potential capabilities is particularly important whenoperating in new areas. The study can draw on local expertise and marketintelligence, and may be completed in partnership with government and otherstakeholders to enhance the quality and credibility of the outcomes. Suchpartnerships can be especially useful when there are gaps between the healthand safety capabilities of local workers and the standards for technical andoperational integrity set by international oil and gas operators.Supply chain mappingand analysisThese processes enable companies to identify opportunities for localparticipation. Analyses may include examination of the local contentimplications of different options in design and procurement, particularly at theconceptual design stage.Environmental and socialrisk assessmentTaking into consideration any issues related to local contractors that have notreached international standards of HSE (health, safety and environment) or maynot be experienced in local community engagement and social-cultural matters(Wilson & Kuszewski, 2011).Cost-benefit analysisQuantification and analysis of the different levels of benefits, costs and risksassociated with different local employment and supply options. It is important totake a long-term perspective on the potential benefits.Barriers analysisAnalysing barriers to local content using a problem-tree approach (see Figure1, overleaf) can identify the interventions required. The exercise can also helpto develop the appropriate sequence for these interventions.Access to finance andbusiness support servicesAccess to affordable finance is often cited as the primary factor affecting thesurvival and growth of local businesses, particularly small and mediumenterprises (SMEs) (Ruffing, 2006). Without such access, local firms are severelylimited in their capacity to invest in capital equipment and meet the standardsrequired for inclusion in oil and gas supply chains. SME financing requirementsare generally too large for microfinance but too small to be effectively servedby corporate banking (IFC, 2009). Financial institutions often perceive lendingto SMEs as more risky and less attractive due to higher transaction costs.Consequently, when finance is available, it may come with significant collateralrequirements and/or at very high interest rates (Nguyen et al., 2004) (IFC,2009). To compound the challenge, SMEs often lack the track record andcapabilities to prepare business plans and present attractive loan proposals.Infrastructure analysisInfrastructure needs can be directly tied to local business participation. A lack ofinfrastructure can be a barrier to the provision of local services, and canincrease the cost of doing business. For example, unreliable power suppliersmay force suppliers to invest in generators and fuel, which increases local cost;poor or non-existent shipyard facilities can significantly limit contributions tooffshore operations; and poor transport links can add to the cost of importingcomponents. All these factors can combine to make local firms uncompetitive.‘Genuinepartnerships arefundamental to thesuccess of localcontentprogrammes.Patience andcommitment areneeded on bothsides and anappreciation ofthe other partner’sneeds andpriorities.’Source: interviewwith Chevron5
IPIECAFigure 1 A problem tree analysisConstraints on enhancing local contentNo movement of goodsfrom RDTL to platformNo potentialemployeesFew suitablelocal businessesFew localbusinessesNo suitable RDTL-basedforeign businessesLack of ionsLow costcompetitivenessNo governmentcontributionNo privatecontributionQualityfactorsQuality standards(no previous oil andgas experience)Alternative port facilityavailable (Darwin)Lack ofmanagementskillsInsufficientbusiness caseLow skills base inlocal labour forceInsufficientEnglish skillsLack of vocationaltraining opportunitiespossible entry points for CAJVRestrictivegovernmentregulationCost factors(exchange rate, labourcosts, electricity)NobudgetedfundsLack ofcapacitypossible entry points for RDTLCourtesy of AMEC (Warner et al., 2007): based on the ConcoPhillips-operated Bayu-Undan Gas Recycle Project in the TimorSea. The analysis explores the constraints to developing a local content strategy from the viewpoints of the Democratic Republicof Timor Leste (RDTL) and the Clough Amec Joint Venture (CAJV).Regulatory requirementsThe Index, edited here as Table 2 (opposite) to showa selection of 20 hydrocarbon producing states,Oil and gas companies face a range of differentaverages the country’s percentile rankings on 9regulatory environments. Depending on howtopics, each with a set of indicators. The Index givesregulations are structured, they may impose limitsequal weight to each topic. They are: starting aon the initiation, growth and development of newbusiness; protecting investors; dealing withenterprises. All of this can add significantly to theconstruction permits; employing workers; tradingcosts of doing business. The regulatory environmentacross borders; registering property; enforcingwill influence the feasibility of implementing a localcontracts; obtaining credit; and closing a business.content strategy. Hence, an understanding of thecontext is crucial to the strategic plan’s development.The Index highlights the diversity of businessenvironments that multinational companies must6The World Bank’s Doing Business Index ranksnegotiate. It reinforces the need to understand theeconomies on their ease of doing business, fromlocal regulatory context when developing local1–183, with 1 being the best (World Bank, 2011).content programmes.
LOCAL CONTENT STRATEGYTable 2 Extract from the World Bank’s ‘Doing Business Index’Country2011 Ranking (of 183)2010 Ranking (of 183)This edited samplefrom the WorldUnited States543Canada788Norway81010shows a selectionSaudi Arabia111315of 21 hydrocarbon-Malaysia212321producing states,Mexico355156and averages theColombia393749country’s 364China798986Trinidad and Tobago978178Yemen10599103Indonesia121122129Russian al Guinea164170169Business expectationsBank’s ‘DoingBusiness Index’rankings for 9topics (see maintext for fulldescription).Supply base: maximizing opportunities for achieving higherlevels of reliability and quality through localThe advantages of having a local content strategysupplier proximity; andmay include the following: maximizing opportunities for lower costs onsome locally-procured goods and servicesGovernment relationship: 2009 Ranking (of 183)(mainly in the longer term).contributing to the stability of the businessenvironment; meeting legislative requirements;Workforce: meeting expectations of host governments increasing access to (and development of) new(driven in many instances by the expectations ofstaff resources, ameliorating the growing globallocal communities and business) for localissues of the aging workforce within the oil andeconomic and social benefits of oil and gasgas industry and a gradual shrinking of the pooldevelopments; andof technically capable, skilled resources.increasing the likelihood of ‘competitivedifferentiation’ in bidding rounds/negotiationsReputation:with host governments and government authorities.delivering sustainability and corporateresponsibility objectives, and maximizing theimpact of community investment resources.7
IPIECACASE STUDYLicence allocations in Brazil (ANP, 2009)For Brazil’s Agência Nacional do Petróleo, GásNatural e Biocombustíveis (ANP), an importantaspect of the bidding process is the company’sperformance against a range of local contentcriteria. These seek to increase the participation ofnational industry on a competitive basis, promotetechnological development, and enhanceemployment and income generation. In recentbidding rounds, the local content offering hasrepresented between 20% and 40% of the finalscore in ANP’s evaluation of bids.Stakeholder expectationstherefore benefit from aligning their interests, as faras possible, with those of other stakeholders. Thereis a range of organizations, in addition to nationalInternal stakeholder engagementand local governments, that have a direct interes
local content, capitalizing on business benefits while minimizing the challenges. This practitioners’ guide draws on that experience and will help in developing corporate support of local content objectives. 3 LOCAL CONTENT STRATEGY Local content defined Local content is the added value brought to a host nation (and regional and local
The Local Content Bill, 2018 134134 19—Secretariat. 20—Functions of the Secretariat. PART IV—LOCAL CONTENT PLANS Local Content Plan 21—Minimum local content. 22—Local content plan. 23—Review of local content plan. 24—Local content certification. Employment and Skill Development Plan 25—Capacity building.
HRM Human resource management IOCs International oil companies LCR Local content regulation LCS Local content strategy NOC National oil companies . better local content strategy in global oil and gas projects in emerging economies. By checking the previous work in this field, some issues are still vague, it seems that there is .
Unit-V Generic competitive strategy:- Generic vs. competitive strategy, the five generic competitive strategy, competitive marketing strategy option, offensive vs. defensive strategy, Corporate strategy:- Concept of corporate strategy , offensive strategy, defensive strategy, scope and significance of corporate strategy
Your Content Marketing Strategy Template and Checklist What is a content strategy? A documented content strategy doesn't have to be a 50-page document or a 75-slide PowerPoint pre-sentation. You can make your content strategy as robust or simple as your time and budget allows. All you need to create is an informed, realistic, and ac-
Content strategy is to copywriting as information architecture is to design." —rachel lovinger Content strategy plans for the creation, publication, and governance of useful, usable content." —Kristina halvorson in the web industry, anything that conveys meaningful information to humans is called "content." Every website has content.
responsibility, corporate governance and strategy, public policy, and the media. It bridges theory and practice, builds leadership skills, and supports constructive dialogue and collaboration among different sectors. It was founded in 2004 with the support of Walter H. Shorenstein, Chevron Corporation, The Coca-Cola Company, and General Motors.
ug 5113/15 used hp laptop local ug 5232/15 tablet pc local ug 5389/15 camera canon local ug 5439/15 used hp laptop local ug 5458/15 samsung camera local . ug 2101/16 alloy ring local ug 2102/16 alloy ring local ug 2106/16 alloy ring local ug 2107/16 earrings local ug 2110/16 alloy ring local
in Prep Course Lesson Book A of ALFRED'S BASIC PIANO LIBRARY. It gives the teacher considerable flexibility and is intended in no way to restrict the lesson procedures. FORM OF GUIDE The Guide is presented basically in outline form. The relative importance of each activity is reflected in the words used to introduce each portion of the outline, such as EMPHASIZE, SUGGESTION, IMPORTANT .
