Upload
dinhnguyet
View
224
Download
6
Embed Size (px)
Citation preview
Local Content: Lessons Learnt
AOG March 2015
Bernadette Cullinane
Copyright © 2015 Accenture All rights reserved. 2
By the Numbers
Source: IEA: World Energy Investment Outlook Factsheet.
> 48 <20
~40 >20
~8 2/3
The potential to harness the benefits of capital projects for economic
development
Copyright © 2015 Accenture All rights reserved. 3
Frontier Markets
Resource Dependence (Oil & Gas Rents as % of GDP)
Nat
ion
al D
evel
op
me
nt
Nee
ds
(Hu
ma
n D
evel
op
men
t In
dex
, In
fra
stru
ctu
re
Ra
tin
g, E
lect
rifi
cati
on
Ra
te )
Venezuela
Saudi
Iran Russia
Canada
Iraq
UAE
Qatar
Kuwait
USA
Libya
Nigeria
Kazakhstan China
Algeria Turkmenistan Brazil
Indonesia
Mexico
Angola
Norway
Malaysia
Egypt
Azerbaijan
India
Ecuador
Oman
Vietnam
Sudan
Australia
Yemen
UK
Argentina
Netherlands
Ukraine
Syria Colombia
Uganda
Brunei
Pakistan Gabon
Congo, Rep.
Trinidad & Tobago
Peru
Chad
Thailand
Equatorial Guinea Bolivia
Denmark
Mozambique
0%
10%
20%
30%
40%
50%
60%
70%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Bubble size = risk weighted reserves ($ Oil & Gas reserves x political risk rating)
Valued @ Dec-14 prices: $54.23 / barrel; $3.74 / ‘000 cubic feet; Greater value and low er political risk = more attractive for
IOCs and larger bubble
Source: UNDP HDI, WEF Infrastructure, WEO Energy Access, PRS Political Risk, EIA Oil & Gas
Reserves, World Bank Oil & Gas Rents
Developed markets
High risk markets
Frontier markets
Performance in frontier markets has become an increasingly
important differentiator for IOCs and their investors
Copyright © 2015 Accenture All rights reserved. 4
Local Content
Countries with local content requirements or actions in progress or to be implemented
NON EXHAUSTIVE
Indonesia
Venezuela
Australia
Tanzania
Malaysia
Norway
Angola
Mexico
Brazil Colombia
Trinidad and
Tobago
Uganda
South Africa
Congo
Oman
Kazakhstan
Nigeria
UK
Ghana
Yemen
Denmark
China
Egypt
Azerbaijan
Libya
Russia
Canada
Mozambique
Brunei
Source: Accenture Research
Many countries have already established local content requirements
Copyright © 2015 Accenture All rights reserved. 5
Local Content Examples
Source: Accenture Research and global Local Content Council
Brazil
A local content requirement of 37-55% during exploration and 55-65% during
development
Oman
90% Manpower target requirements in production and operations
Nigeria
The Nigerian Content Development Fund is used for training and
infrastructure development
Tanzania
At least 25% state participation in production sharing agreements
Ghana
Petroleum licensing and agreement requires a 5% equity participation of a
local company
Angola
Angolanization policy seeks a 70% management and local contractors in
operating IOC’s
The definition and implementation of local content strategies varies
Norway
Development is driven by international R&D partnerships and the focus on
knowledge transfer to local companies
United Kingdom
Implementation of discretionary licensing, audits of IOC purchases and financial
assistance to domestic companies
Copyright © 2015 Accenture All rights reserved. 6
Evolution and multi-faceted nature of local content
Evolution of Local Content
Government & State Entity Relations
National Supplier & NOC Development
National Workforce & Development
Strong Standards (compliance, legal, HSE, transparency)
Community & Social Development
Financial, Economic & Industrial Development
Public Relations & Communications
Copyright © 2015 Accenture All rights reserved. 7
Maturity levels
Isolated initiatives for local industry
Basic Local Content Model
Emerging Local Content Model
Excellence in National
Industrial Development
• Isolated actions to promote
local industry
• Often leveraged by foreign
companies
• Focus on local workforce
employment and local
infrastructure improvement
• Local content concept
defined
• Local content targets
are set
• Main supply
capabilities and gaps
identified
• Local content regulation
established
• Local content initiatives
sponsored by government
and private companies in
place
• Supplier industry at world-
class Level (competitive to
export goods and services)
• Reduced need for
maintenance of Local
Content requirements
• Employment generation
and maximized income
Loca
l Con
tent
Pol
icy
Mat
urit
y Le
vel
Level I Level II Level III Level IV
• Small regional gains
• Small increase in
employment of local
labour
• Small increase in local
supply of goods and
services by small
enterprises
• Expansion of the
number of suppliers in
the chain
• Increased local supply of
goods and services by
medium / large enterprises
• Government incentives to
develop new business in
country and increase local
competitiveness
• Local industry
internationalization
• Competitive industry
encourages development
of pioneer technologies
Outcome Maturity levels differ by country yielding varying results
Copyright © 2015 Accenture All rights reserved. 8
Local Content and infrastructure accounted for over half of all non-
technical issues a recent global study
Challenges in Capital Projects
42%
11% 8%
8%
7%
6%
6%
4% 3% 3% 2%
Non-technical
Technological
Geophysical
Talent
Financial volatility
Supplier availability / quality
Forecasting
Control / management
Engineering quality
Scope change
FEL
28%
22% 12%
11%
11%
6%
5% 4% 3%
Local content
Infrastructure
Enviro. regulation / lobby
Legislation
Political / social
Environmental incident
Ownership / rights
Security
Corruption
100 $1bn+
projects
$362bn
overruns
90.5 years
overruns
Root cause analysis
% of issues causing cost and schedule overruns by category
Source: Accenture Research
Copyright © 2015 Accenture All rights reserved. 9
2. Tactical
A Framework for Local Content
1. Strategic Strategic Planning
Operating Models
Policies & Strategies
3. Operational Planning, Monitoring & Reporting tools
Corporate Systems KPIs
Demand & Supply Planning
Internal Processes
Development Programs
CAPEX
OPEX
A broad framework for safeguarding value
Copyright © 2015 Accenture All rights reserved. 10
Australian Local Content Initiatives
Project Opportunities: Comprehensive
online system with listing of projects and
suppliers
Supplier Opportunities: Identifies over 1,100 sub-tier operations and
maintenance opportunities that can be
targeted by SMEs
Project Opportunities: listing of projects
with corresponding tenders
Supplier Directories: listing of suppliers’ profile by geography and industry
Examples of existing Local Content initiatives
Copyright © 2015 Accenture All rights reserved. 11
New
Projects
Operating
Projects
AUD$ 16.5 Billion
AUD$ 14.1 Billion
48%
52%
2009
Australia Other
80%
20%
2009
Australia Other
77%
23%
2013
Australia Other
74%
26%
2013
Australia Other
Australian Local Content Outcomes
Source: Department of Western Australia; Department of Commerce Local Content
Report May 2011 & Local Content Report May 2014
Local content in Australia for new projects increased whilst local
content in operating projects is close to 80%
Copyright © 2015 Accenture All rights reserved. 12
Impact of the Industry Participation Framework
Total value of majorcontracts (AUD $M)
Round 1 $182.5
Round 2* $14.2
0
50
100
150
200
Monetary Impact
New StaffNew
Apprentices
Round 2* 16.5 2
Round 1 292 26
0
100
200
300
400
Labour Impact
$0
$25
$50
$75
$100
Round 1 Round 2*
ROI of $1
Source: Department of Western Australia; Department of Commerce Local Content
Report May 2014
*Round 2 results are for regional contracts only. Round 1 results included all contracts.
State and company related funding created a measureable impact
Copyright © 2015 Accenture All rights reserved. 13
Local Content in Action
“The first Native Title
Agreement for
onshore oil
production in the
Kimberley”
March 2015 The West Australian
“The fibre optic cable
will Onslow, Barrow
Island, Gnoorea and
Wheatstone”
October 2014
Australian EPA
“An opportunity for
EDG to expand their
business and staff in
Australia”
June 2013
GHD Press Release
“The vessels have
been specifically
designed to meet the
FLNG facility’s
unique marine
services”
February 2014
Shell Press Release
Opportunities are increasingly prevalent as we transition to
operations