Local participation: Raising standards in Equatorial Guinea

Equatorial Guinea

The director of national content at the Ministry of Mines, Industry and Energy (MMIE), Augustin Mba Okomo, discusses the directive’s work in making domestic companies aware of tenders, helping build technical and services capacities and assisting them in improving their legal documentation and administrative standards.

Do the petroleum regulations released in July 2013 deal sufficiently with national content allocation requirements for international companies?

The current hydrocarbons regulations are not specific enough in terms of national participation. We are preparing new regulations, dedicated to national content, for the second half of 2014.

The new legislation will feature laws for international firms related to training and employing Equatoguineans and participating in social projects in the country. It will also outline the responsibilities of the different ministries to monitor foreign companies’ progress in achieving the national content requirements.

We realise that new regulations do not have an immediate impact, so we are looking to enforce the new laws over the long term. They will require international companies to offer training to all of their employees so that, in time, their local personnel meet the necessary criteria to work in skilled oil and gas operations. The MMIE will continue to inspect firms to see if they are meeting training requirements, as it is currently doing.

 Will the participation of local outfits in US hydrocarbons company Marathon Oil’s upcoming Alba B3 compression platform project serve as a model for future contracts?

No other industry’s development in Equatorial Guinea has had its contracts structured so as to give so much participation to domestic firms as Alba B3 compression platform project. It will serve to test the feasibility of integrating the work of expatriate firms with that of local services companies, as national entities will provide most of the services for the project.

We will evaluate the success of the local companies involved by their technical attainment and their efficiency in negotiating the practical, legal and contractual aspects of the job, as well as the environmental impact of their work. If we get positive results, we will apply the contract model in future industrial projects.

The extent of local participation in the project also depends on us having a good relationship with the players involved. When we were fully aware of the capabilities of the potential subcontractors and the level they are able to work at, the percentage of the contract assigned to national participants was finalised at around 10 percent.

How are domestic companies ensuring they have enough capacity to meet the criteria for participation in the project?

If local firms are incapable of doing something, they will look for support from outside the country. The project’s local content participation target does not prevent domestic companies from partnering with experienced foreign firms if they are assigned a service that they cannot carry out. If this happens, we will expect them to show a strong willingness to learn from their international partners.

From the companies we consider local, we are not demanding that all employees are Equatoguinean but that the vast majority of staff, and above all the shareholders, are local. We also require the company to be based here and doing business here. The firms who meet these criteria are the ones we wish to include in the project.

We cannot shut the door on local companies that meet these criteria if they wish to associate with international firms to fulfil the project requirements. In business, collaboration is necessary and companies must ask each other for advice.

How does the MMIE ascertain when local firms have enough technical capacity to carry out contracts with international oil companies (IOCs)?

The ministry helps domestic firms update their equipment and resources and raise their performance levels. The majority of local businesses have modernised their resources and become more efficient in recent years. In our 2014 seminar, we also trained local companies in the legal issues required to help them win bids.

Ideally, we hope that local entities can win contracts and complete them by delivering services successfully, on time and of a high quality. However, we are not willing to assign a contract to a local company if we know it does not have the capacity to fulfil the job requirements. We assign to local businesses those services that we know they can fulfil, leaving the rest to their foreign counterparts.

We cannot demand IOCs use local companies’ services because IOCs require partners with highly skilled workforces. Many IOCs are working on oilrigs – high-pressure environments with a high risk of accidents. Local firms must train personnel to have the capacity and experience to work in these environments.

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