Shell Nigeria links Nigeria & Chinese suppliers to develop local content

More than 20 Nigerian and 60 Chinese suppliers met in a strategic sourcing development forum in Shanghai mid-November in the latest effort by Shell Nigeria Exploration and Production Company (SNEPCo) to boost the capacity of indigenous vendors in the oil and gas industry. Coming shortly after the 4th edition of the Global Nigerian Forum in Aberdeen, Scotland, the latest event, which held in a global financial powerhouse with the world’s busiest container port, offered the Nigerians a compelling opportunity to engage their Chinese counterparts on cost leadership, more efficient supply chain and transfer of technology.

 

In an opening speech, the General Manager of Shell China Strategic Sourcing Development, Ding, Hiu Kwong said local content development is not peculiar to Nigeria but a global trend, and Shell continues to focus on safety, quality and cost reduction in its quest for growth through strategic sourcing in China.

 

The Director of Monitoring and Evaluation at the Nigerian Content Development and Monitoring Board (NCDMB) Tune Adelana who represented the Executive Secretary thanked Shell Companies in Nigeria for pioneering the effort to create collaboration between Chinese and Nigerian suppliers. He challenged the Chinese to establish visible presence in the Nigerian oil and gas industry and compete with the other international companies that are taking the lead in major projects.

 

The Vice Chairman of the Petroleum Association of Nigeria (PETAN) Geoff Onuoha said Nigerian companies were keen to develop partnerships and effective collaborations for better service delivery lauded Shell “for the tenacity and commitment in pioneering a game changing initiative.”

 

The NAPIMS Group General Manager represented by Alexander Chukwu enthused: “We expect to see the birth of new joint ventures and collaboration between Nigerian and Chinese suppliers.” He advised the delegates to look beyond the event and take advantage of the opportunity to deploy technologies and solutions that deliver quality services and reduce cost.

 

SNEPCo’s Nigerian Content Development Manager, Austin Uzoka said there were many areas in which Nigerian and Chinese suppliers could collaborate in the oil and gas company and that Shell would continue to provide the required opportunities within the limit of its resources and operations.

 

The Nigerian suppliers also visited some companies, among them, Neway valves, the world largest valve manufacturer, Sulzer Pumps, Hilong and MSP Drillex facilities to help deepen their appreciation of best practices. The Chinese suppliers, on their part, obtained guidance on business development and capital investment in Nigeria, even as they set up initial connections with potential Nigeria partners. SNEPCo’s Contracting and Supply team will track the identified cost opportunities and work to embed them as part of an overarching cost reduction drive and faster supply chain transactions.

 

The Nigerian and Chinese companies found the network session very useful. “This event was beyond my expectation for a maiden edition. It has exposed our organization to significant opportunities and immediate benefits to us and Shell through alternative sourcing,” said Tunde Oduwole of Future Oilfield Services (Nigeria) Limited. Molly Zhu Xiuping of Morimatsu (China) Group. “The workshop helped us to understand the opportunities in Nigeria and how to do business in Nigeria. It was worth my while and I hope to develop further partnerships with the Nigerian company that has agreed to visit our facility here in China.”

Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.