National Content As The Backbone for Horizon 2020

By Maite C. Colón Pagán
Associate

With almost three decades in the Oil and Gas Industry, Equatorial Guinea is now one of the top 5 largest oil producers in Sub-Saharan Africa. As such, this sector of the economy accounts for almost 95% of its gross domestic product and almost 99% of export earnings in the year 2011, according to reports from the International Monetary Fund. Despite the large investments the petroleum sector brings, it doesn’t come without its share of challenges. The struggle between what would be beneficial for the IOCs versus what is beneficial to develop and protect the national economy and social infrastructure is at the backbone of every PSC negotiated and every well drilled.

There is a need for increased contribution from the petroleum industry in the local economy. Though there are no clear statistics on the level of employment in the country, it is widely suggested that the lack of a skilled and adequately trained work force is a problem that forces many IOCs to look elsewhere in order to find the necessary resources. This pushes investment outside Equatorial Guinea, hindering local growth and fomenting the exclusion of nationals from participation in the economy’s principal industry. Due to misinterpretation, as well as lack of strong mandates to enforce them, compliance with the national content regulations in place has been minimal and its effects have been felt in all sectors of the local economy.

The Government of Equatorial Guinea is approaching this issue directly and has now approved and enacted National Content Regulation. The Regulation, marks a crucial point in the economic development of the country by increasing local production, ensuring national participation in the Oil and Gas sector, encouraging investment and aiding the development of national capacity through the effective transfer of technology. The Government is ensuring that National Content plays a central role in the hydrocarbon sector and now all agreements must have National Content clauses and provisions for capacity building.

Under the new Regulation’s aggressive plan, Operators or Exploration companies are required to send all requests for services to the Ministry of Mines, Industry and Energy before contracting. The MMIE will in turn provide a list of local companies identified as suitable from their centralized database and invitations to tenders are to be done not only on the international level, but also nationally, and be published in the MMIE, as well as GEPetrol and Sonagas. In this process it is clearly stated that provided the capacity to meet the demand, Contractors must give preference to national companies and it mandates the submission of a Development Program for National Content as well as a Formation and Training Plan for each national citizen employed by the company.

The social work projects to be carried out by companies in the hydrocarbon sector in communities all over Equatorial Guinea, play a crucial role in this new Regulation. In efforts to change the notion of viewing National Content as charity, the Regulation is clear in addressing this as a duty of all players in the industry. Companies are to finance on behalf of the Government the approved social work projects and ensure their proper implementation in order to impact successfully critical sectors of the country. Thus, the new National Content Regulation is not only attempting to boost the local economy and investment, but also it aims to boost Equatorial Guinea’s most valuable resource, its people and their community.

This new National Content Regulation is an affirmative step by the Government to put their citizens and local interests back in the frontlines. Only with this initiative will the country be adequately equipped to not only fulfill, but also exceed, the expectations for Horizon 2020 and have a fortified and stable local economy that will the backbone of Equatorial Guinea’s goal to place itself as a leader in the industry and the region.