STRATEGIES TO ESTABLISH STRATEGIES TO ESTABLISH

QUALITY, HIGHQUALITY, HIGH--VALUE ENGINEERING VALUE ENGINEERING

CENTRES IN THE CENTRES IN THE

NIGERIAN OIL & GAS INDUSTRY.NIGERIAN OIL & GAS INDUSTRY.

Dr. Lola AmaoPresident, LONADEK Oil and Gas Systems Consultants.

March 18th, OWA 2004

FORMATION OF HIGH VALUE ENGINEERING CENTRES

GOVERNMENT POLICY

ON-THE-JOB TRAINING

SKILLS DEVELOPMENT

CLASSROOM TRAINING

TECHNOLOGY TRANSFER

THROUGH

ATTRACTIVE

INCENTIVES

LOCAL

CONTENT

POLICY &

LEGISLATION

CONDUCIVE ENVIRONMENT

WORLD-CLASS

HIGH-VALUE ENGINEERING

CENTRE

INSTRUMENTS FOR THE CREATION OF HIGH-VALUE CENTRES

• Domiciliation of all FEED and Detailed Engineering Projects to ensure Capacity Enhancement and Long-term Reduction in Project Execution Cost

GOVERNMENT POLICY

STRATEGY ISTRATEGY I

LOCAL CONTENT POLICIES THAT REQUIRE

IMPLEMENTATION AND MONITORING:

1. Engineering Policy for FEED and Detailed Engineering

2. Engineering Contracting Policy

3. Project Management Policy

4. Project Categorisation Policy

5. Procurement Policy For Facilities

6. Construction Execution Policy

7. Library and Data Archiving Policy

8. Oil and Gas Project Financing Policy

CONDUCIVE ENVIRONMENT:

1. World-Class Infrastructure: Un-Interrupted

Power Supply

2. World-Class Communications Network

3. Creation of Business Parks and Trade Zones

4. Skills Development Programmes Funded

and Supported By All Industry Stakeholders

5. Effective Investment Monitoring

6. Oil and Gas Industry Regulation

• Human resource development to guarantee a

continuous supply of skilled personnel who can

render quality service in the execution of

projects “in-country”.

• Development of Process, Piping, Civil/Structural,

Pipelines Mechanical, Vessels, Electrical and

Instrumentation Personnel

STRATEGY IISTRATEGY II

PTDF

of both site and design office experience

with a good balance

(PETROLEUM TECHNOLOGY DEVELOPMENT FUND)

• Skills gap identification at least a year or two ahead of project execution with a view to training and skills acquisition programmes addressing this short fall.

STRATEGY IIISTRATEGY III

PTDF(PETROLEUM TECHNOLOGY DEVELOPMENT FUND)

• Remuneration Commensurate to Performance, Skills and Productivity

STRATEGY IVSTRATEGY IV

•Salary

•Performance Related Profit Sharing

•Project Allowance

•Education Allowance

ENGINEERING CONTRACTORS

• Project Organisational Structure Definition

• Optimisation of Local Personnel and

Resources.

• Good Balance of Expatriate to Local Ratio

STRATEGY VSTRATEGY V

ENGINEERING CONTRACTORS

EFFECTIVE TECHNOLOGY TRANSFER

EXPERT

SKILLED

SEMI-SKILLED

UN-SKILLED

WORLD-CLASS TECHNOCRAT

INDIGENOUS COMPANY

5 or 10 YEAR TECHNOLOGY TRANSFER PLAN

0

10

20

30

40

50

60

70

Year 1 Year 2 Year 3 Year 4 Year 5

Expert

Semi-Skilled

Un-Skilled

Year 2 Year 4 Year 6 Year 8 Year 10

BLENDING OF LOCALS AND EXPATS TO SAVE COSTS

AV. HR.RATES EXPAT LOCAL

CONSULTANT $180/HOUR $50/hour

TOP $120/HOUR $40/HOUR

LOWER $60/HOUR $15/HOUR

ON A 500,000 MAN-HOUR JOB

Effective Cost Reduction on average =

20% * $130 + 30% * $80 + 50% * $45 * 500,000 = $36.25million

On average over the next 4 years of zero flaring target at least

$500 million can be saved if 2500 skilled Oil and

Gas jobs are created through collaboration

• Development of Strategic Alliances with Foreign Technical Partners to Enhance Capacity

• Formation of Strategic Alliances between Local Companies to Increase Capacity

• Strategic Alliancing with Foreign Contractors of Major Owner Operators who are Prepared to Domicile Work to Nigeria

STRATEGY VISTRATEGY VI

ENGINEERING CONTRACTORS

CAPACITY ENHANCEMENT THROUGH COLLABORATION

• Alliancing

• Partnering

• Joint Venture

• Consortia Efforts

PROGRESSIVE IMPLEMENTATION OF JOINT VENTURE RELATIONSHIPS

LOCAL REPRESENTATIVE IMPLEMENTATION & TRAINING IMPLEMENTATION OF BUSINESS MIRRORING OF BUSINESSOF FOREIGN COMPANY PROGRAMS PROCESS SOLUTION

(TECHNOLOGY TRANSFER) (OPERATIONAL PROCEDURES) (ISO: 9001 CERTIFICATION)

WORLD- CLASS SERVICE

BUSINESS SOLUTION

EXPERTISE

WORLD- CLASS SERVICE

BUSINESS SOLUTION

EXPERTISE

MAJOR MULTINATIONAL

MAJOR MULTINATIONAL

LOCAL ENTREPRENEUR

LOCAL ENTREPRENEUR

COMMISSION AGENT

PROVIDER OF LOCAL LOGISTICS

CONTACTS & SALES

COMMISSION AGENT

PROVIDER OF LOCAL LOGISTICS

CONTACTS & SALES

TYPE A TYPE B TYPE C TYPE D

AGENCY AGREEMENT MEMORANDUM OF UNDERSTANDING STRATEGIC ALLIANCE JOINT VENTURE /

& AGENCY AGREEMENT & MOU ALLIANCE

EXPERTISEEXPERTISE

MAJOR MULTINATIONAL

MAJOR MULTINATIONAL

LOCAL ENTREPRENEUR

LOCAL ENTREPRENEUR

TRAINING OF LOCAL PERSONNEL

EXPANSION OF ORGANISATIONAL STRUCTURE

EMPLOYMENT OF LOCALS

TRAINING OF LOCAL PERSONNEL

EXPANSION OF ORGANISATIONAL STRUCTURE

EMPLOYMENT OF LOCALS

LOCAL ENTREPRENEUR

LOCAL ENTREPRENEUR

MAJOR MULTINATIONAL

MAJOR MULTINATIONAL

TRAINED LOCALS

MANAGEMENT

OPERATION/SERVICE

STRUCTURE

TRAINED LOCALS

MANAGEMENT

OPERATION/SERVICE

STRUCTURE

PROCEDURESPROCEDURES

QUALITY SYSTEMQUALITY SYSTEM

MAJOR MULTINATIONAL

MAJOR MULTINATIONAL

LOCAL ENTREPRENEUR

LOCAL ENTREPRENEUR

TRAINED EXPERTS

TRAINED LOCALS

MANAGEMENT

OPERATION

QUALITY GOODS & SERVICES

TRAINED EXPERTS

TRAINED LOCALS

MANAGEMENT

OPERATION

QUALITY GOODS & SERVICES

FLUOR

FODE-GENESIS

MUSTANG

BECHTEL

TECHNIP

M.W.KELLOGG

FOSTER

WHEELER

AMEC

HALLIBURTON =

KBR

AUTOCAD/PDMS

MICROSTATION

AUTOPLANT

HYSYS,PRO II

CAESER II; AUTOPIPE

INTOOLS; FINGLOW

SACS; STRUCAD

STAADPRO; FASTRUDL

SKM-DAPPER

PRIMAVERA;

DOCUMENTUM

MICROSOFT PROJECTS

PIPESIM; PIPEPHASE;

FLARENET; AFT FATHOM,

IMPULSE & ARROW

FRONT END AND DETAILED ENGINEERING TECHNOLOGY CENTRES

FEEDDETAILED ENGINEERING

ENGINEERING SOFTWARE APPLICATIONS

GRANHERNE

PEGASUS

INTEC

PARAGON

• Implementation of World-Class Project Execution Plan

• Implementation of State-of-the-Art Project Automation Plan with IT Infrastructure and Software Applications to Reduce Operational Costs

STRATEGY VISTRATEGY VI

ENGINEERING CONTRACTORS

GLOBAL SOLUTION USING STATE-OF-THE-ART

IT INFRASTRUCTURE

Remote Steelwork

Design office

Nigerian Hub office

Remote Piping Design Office

Piping

Fabricator

REQUIRED PARADIGM SHIFT NECESSARY FOR NIGERIANS

GREED, BRIBERY AND CORRUPTION

THE PRACTICAL CHALLENGE

DISCIPLINE

HARDWORK

DILIGENCE

COMMITMENT

GO OUT AND MAKE A

DIFFERENCE !!!!!