NIGERIAN NATIONAL PETROLEUM CORPORATION

NIGERIAN CONTENT DEVELOPMENT

JOURNEY

April 2010

Nigerian Content Implementation Model Current Status – Projections

Performance Risk for sole

regulation-based

implementation

Capacity limitations. No legal backing

Growth from NOC injection of operations

focus

• The major factor for NC growth between 2005 to 2010 is the injection of operations focus to NC implementation

•Absence of legal backing to enforce compliance and limitations of critical capacity militated against higher performance

•ACT provides impetus to add enforcement to Collaboration required to build local Capacity

Policy Target

3

95%Goods and

Services Imported

5% locally

65% import

35%

ShipyardsHeavy industriesPipe MillsEquipment manufacturing Service CoysTraining InstituteVessel OwnershipR & D institutes

Up to 2004 2004 -2010

Very low local capacity

2010-2015

Improved Capacity

Capacity gap Biz Opportunity

NIGERIAN CONTENT IMPLEMENTATION MODEL Impact Of The Act On Local Capacity

20 - 30% import

Nigerian Content Implementation Model Lessons learnt – Focus areas

OPCO Performance Linked To Service Companies& Suppliers

Over 60% Performed By Foreign Service Companies

Local Capacity Building Will Improve Cost Effectiveness And Certainty Of Supply

Deliberate Biz Strategy Needed To Build Capacity backed by Legislation

Nigerian Content Implementation ModelCurrent industry Compliance readiness for Schedule A of the Bill

The wide capacity gap is a recipe for waiver-driven compliance

NIGERIAN CONTENT PERFORMANCE

Summary of Success Milestones

Nigerian Content Implementation Model

7

IMPENDING OIL & GAS LEGISLATIONS

PIB

NC BILL

Nigerian Content Implementation ModelHighlights of the Nigerian Content Bill

8

Establishes a new body NCMB outside NNPC

Sets out specific targets for NC scope in all activities under schedule A of the ACT

50% of Multi national coy Assets to be vested in Nigerian subsidiary

Nigerian indigenous company defined to be 51% owned by indigenes.

Indigenous Companies have first consideration for licenses, Oil blocks, Contracts

Indigenous companies have exclusivity on land and swamp activities

Creates Opportunities for Indigene’s employment and training

Changes to Schedule A Targets can only be effected through NASS

Power of the Minister to approve 3-year waiver for areas of insufficient capacity

Minister to make regulations

Fines for non-compliance

Nigerian Content Implementation ModelRegulator – Operator Roles Schematic

Industry Activity Goal

Collaboration is still key

Concluding Remarks

• NNPC has responded to the National call to domicile significant portion of Oil &Gas derivatives

• A robust foundation Has been Built

• ACT provides unprecedented opportunity to create new business both in NNPC and Local Service companies from capacity building scope

• Industry must continue to work together under the leadership of the board to achieve desired targets

• Thank you10