1. Local Content Strategy
on Implementing Construction Plans
THOMAS DOUGLAS NIGERIA LIMITED
A R C H I T E C T U R E • E N G I N E E R I N G ▪ C O N S T RU C T I O N
LAGOS ▪ PORT HARCOURT
www.thomas-douglas.com
- Nigeria as case study
NIMI GODFREY EREKOSIMA PRINCIPAL PARTNER

2. THOMAS DOUGLAS
Once upon a time there was a couple who had been
married for 30 years without a child...

3. THOMAS DOUGLAS
Then one day the man left his wife and went on a sojourn
across Africa looking for answers...

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...After a few years he came back with a love child and asked
his beloved wife to take care of the child as she would her
own... The child’s name was Local Content

5. THOMAS DOUGLAS

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LOCAL CONTENT STRATEGY ON IMPLEMENTING
CONSTRUCTION PLANS
• Understanding the content rules involved in offshore construction
• Capabilities needed and required
• Cost management and critical aspects of the project

7. THOMAS DOUGLAS
LEARNING GOALS
Introduce offshore construction
Define Nigerian Local Content Policy
Learn a Brief History of the Nigerian Local Content Policy
Identify the NC Strategies Applicable in the Nigerian Offshore Construction
Industry
View Critical Aspects of the Project Through the Concept of Value Addition
Appreciate the impact of NC in the Nigerian Offshore Construction Industry
We will:

8. THOMAS DOUGLAS
CATEGORIES OF OFFSHORE CONSTRUCTION
OFFSHORE PLATFORM
CONSTRUCTION
- RISER INSTALLATION
- TOPSIDE INSTALLATION
- MODULAR UNITS
OFFSHORE PIPE LAYING
- SUBSEA PIPING
- PIPE BURIAL
- PIPELINE TESTING
MAJOR OFFSHORE
MAINTENANCE
- ADDITIONAL WELL INSTALLATION
- TOPSIDE MODIFICATION
- PIPELINE REPLACEMENT
O F F S H O R E S U P P O R T V E S S E L S
CONSTRUCTION OF SUPPORT FACILITIES
– LOGISTICS BASES
– INDUSTRIAL PARKS FOR OEMs
– SUPPORT VESSELS
– MAINTENANCE WORKSHOPS

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INTRINSICS OF OFFSHORE CONSTRUCTION
• not for the faint heartedCAPITAL INTENSIVE
• the oceans could be very deep and coldHIGH PREMIUM ON QHSE
• makes senseMOST FABRICATION WORK
DONE ONSHORE
• it better be for that cost!HIGHLY SPECIALIZED
• Water and air benders neededINSTALLATION DEPENDENT
ON WEATHER WINDOW
• no new friendsDEVELOPED SUPPLY CHAIN
• If you survive all of the aboveHIGHLY REWARDING

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DEFINE NIGERIAN LOCAL CONTENT POLICY
“Nigerian Content in the Petroleum sector is defined as the quantum
of composite value added or created in the Nigerian economy
through the deliberate utilization of Nigerian human and material
resources in the provision of goods and services without
compromising quality, health, safety and environmental standards”.
Add value to local economy through
Capacity development of
Individuals, businesses, and
institutions
Retention of spend to
stimulate local economy
Encourage sustainability
through responsible use of
resources

11. THOMAS DOUGLAS
1969
• First
Petroleum Act
• Regulation 26
Advocates
Indigenization
of the Industry
1971 - 1977
• Establishment of
Nigerian National Oil
Corporation (NOC)
• Merger of NOC and
Petroleum Ministry
• Nigerian National
Petroleum Corporation
(NNPC) formed
• Acquisition of National
Interests
• Domiciliation of
significant portions of Oil
& Gas derivatives
2010 - 2014
•Establishes a new body NCMB outside
NNPC
•Sets out specific targets for LC
•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
•Power of the Minister to approve 3-
year waiver for areas of insufficient
capacity
•Fines for non-compliance
BRIEF HISTORY

12. THOMAS DOUGLAS
BRIEF HISTORY
1969
• First
Petroleum Act
• Regulation 26
Advocates
Indigenization
of the Industry
1971 - 1977
• Establishment of
Nigerian National Oil
Corporation (NOC)
• Merger of NOC and
Mines and Steel Ministry
• Nigerian National
Petroleum Corporation
(NNPC) formed
• Acquisition of National
Interests
• Domiciliation of
significant portions of Oil
& Gas derivatives
2010 - 2014
•Establishes a new body NCMB outside
NNPC
•Sets out specific targets for LC
•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
•Power of the Minister to approve 3-
year waiver for areas of insufficient
capacity
•Fines for non-compliance

13. THOMAS DOUGLAS
BRIEF HISTORY
1969
• First
Petroleum Act
• Regulation 26
Advocates
Indigenization
of the Industry
1971 - 1977
• Establishment of
Nigerian National Oil
Corporation (NOC)
• Merger of NOC and
Petroleum Ministry
• Nigerian National
Petroleum Corporation
(NNPC) formed
• Acquisition of National
Interests
• Domiciliation of
significant portions of Oil
& Gas derivatives
2010 - 2014
•Establishes a new body NCDMB
outside NNPC
•Sets out specific targets for LC
•50% of Multi national coy deployed
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
•Power of the Minister to approve 3-
year waiver for areas of insufficient
capacity
•Fines for non-compliance

14. THOMAS DOUGLAS
STRATEGIC MANAGEMENT CYCLE
Strategic Planning
APPRAISAL /ACTION PLAN
Strategic Implementation
CAPACITY BUILDING/ EVALUATION
Value
added to
Nigerian
economy
A
B

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STRATEGIC MANAGEMENT – NOGIC JQS

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Nigeria Oil and Gas Industry Content Joint Qualification System (NOGIC JQS)
• Marine Vessels Ownership Data
• Contract Processing Data
• Equipment Ownership
• Nigerian Content Compliance
Certificate Data
• Skill Base Tracking
• Training and Employment Data
• Nigerian Content Plans and Reports
Archive
• Expatriate Quota Utilization and
Succession Data
STRATEGIC MANAGEMENT – NOGIC JQS
DATA CAPTURE DATA MANAGEMENT
• Categorization of oil and gas service
companies
• Industry data base for skills verification.
• Verification of available in-country
capacity
• Effective information exchange across
stakeholders
• Compliance Monitoring
• Test data uploaded
• Launch Q2 2012
Adapted From Nigerian Content Implementation Model, 2013

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STRATEGIC MANAGEMENT – TARGET vs. CAPABILITIES
0
10
20
30
40
50
60
70
80
90
100
100 100 100 100
90
55
15
25
% TARGET % CAPABILITIES
ACTIVITY
NC TARGET
RANGE (%)
UNIT OF MEASUREMENT
ENGINEERING OF
OFFSHORE FACILITIES
50 - 90 MAN-HOUR
FABRICATION AND
CONSTRUCTION
50 - 100 TONNAGE
MAINTENANCE/
MODIFICATION
45 - 70 SPEND/ TON/VOL
SUPPORT VESSELS 45 - 100 SPEND
Adapted From 7E Nigerian Content Development – Presentation by Ernest Nwapa, ES NCDMB
Source: NOGIC Act, 2010

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STRATEGIC MANAGEMENT
COLLABORATIVE IMPLEMENTATION MODEL
Regulator
Operator
Indigenous
Service
Provider
Foreign
Partner
• Training and employment of
Nigerians;
• Promoting indigenous
ownership of marine
vessels, offshore drilling
rigs, etc;
• Establishment of critical
facilities such as pipe
mills, dry docking and marine
facilities, pipe coating
facilities;
STRATEGY FOCUS
Adapted From 7E Nigerian Content Development – Presentation by Ernest Nwapa, ES NCDMB

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STRATEGIC MANAGEMENT – TRAINING AND EMPLOYMENT
Project Based
Training and
Attachment
JQS as staff
sourcing
platform
NCDMB + PETAN
= NCEmI
NCDMB Direct
Training
Programs
Community
Environmental
Remediation Training
Construction
Skills Training
Institutional
Development
Upgrade
Identified
institutions into
O&G TCEs
Establish
Subsea
Academy
Establish
Engineering
Academy
Facilitate
International
Certification
Expatriate
Quota
Management
Monitor Quota
Monitor
Succession
Planning
Nigerian Content Employment Initiative (NCEmI); Joint Qualification System (JQS); Petroleum Technology Association of Nigeria (PETAN);
Oil and Gas Training Centre of Excellence (OG TCE)
Adapted From Nigerian Content Human Capacity Development Initiative Implementation Guidelines, 2014

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STRATEGIC MANAGEMENT – MARINE VESSEL OWNERSHIP SCHEME
60% of marine assets in the hands of Nigerians by 2015
Encourage construction of vessels in Nigerian yards
Promote ownership of marine vessels by Nigerian entities
Stimulate flagging & registration of vessels in Nigeria
Deepen Nigerian manning of marine vessels
Inter Agency collaborative enforcement of the Nigeria Coastal
and Inland Shipping (CABOTAGE) Act. NIMASA+NCDMB
CABOTAGE Vessel Financing Fund (CVFF)
Nigerian Maritime Administration and Safety Agency (NIMASA)

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STRATEGIC MANAGEMENT – MARINE ASSET OWNERSHIP
Adapted From Nigerian Content Marine Vessel Categorization Procedure, 2013
OFFSHORE RIG ACQUISITION STRATEGY- ORAS
– Establish SPV.
– 50% equity set aside for Nigerian ownership in
blocks to be taken up as Nigerian capacity
increases.

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Nigerian Content Development Fund (NCDF)
Topside Integration Facilities, Pipe Mills, Dry Docks
Nigeria Oil and Gas Industrial Park Scheme (NOGIPS)
Nigerian Content Equipment Certificate (NCEC)
Offshore Rig Acquisition Strategy (ORAS)
Original Equipment Manufacturer (OEM) Strategy
Equipment Components Manufacturing Initiative (ECMI)
STRATEGIC MANAGEMENT – RELEVANT INITIATIVES

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VALUE BASED PROJECT MANAGEMENT
EXPLORE AND
APPRAISE
DEVELOP PRODUCE TRANSPORT PROCESS DISTRIBUTE
ASSESS,EXPLORE,
APPRAISE
DEVELOP VIABLE
FIELDS
PRODUCE AND
EXTRACT MINERALS
TRANSPORT RAW
MATERIALS THROUGH
PIPELINES/ SHIP
PROCESS RAW MATERIALS
INTO FINISHED PRODUCTS
DISTRIBUTE, MARKET
FINISHED PRODUCTS
Business decision to convert an
opportunity into an asset which
creates value to its owners.
VALUE
PROJECT
SCOPE
TIME
QUALITY
COST
PROCUREMENT
RISK
COMMUNICATION
•LEAN CONSTRUCTION
•VALUE FOR MONEY
•LIFE-CYCLE COSTING
•COST OF QUALITY
•VALUE ENGINEERING
•DISCOUNTED CASHFLOW
•NET PRESENT WORTH
•COST BENEFIT
•OPPORTUNITY COST
•UTILIZATION FACTOR
•OPTIMIZATION
•EARNED VALUE
MAXIMISE ASSET VALUE
INCEPTION FEASIBILITY
FEED & DETAILED
DESIGN
CONSTRUCTION &
COMMISIONING
OPERATIONS &
MAINTENANCE
VALUE ARTICULATION AND PROJECT
DEFINITION
OPTIMIZATION OF BENEFITS AND COSTS LESSONS LEARNT
OIL AND GAS VALUE CHAIN
CONSTRUCTION PROJECT LIFE-CYCLE – PROJECT OBJECTIVES MUST BE CHAMPIONED BY ALL

24. THOMAS DOUGLAS
CONSTRUCTION COST MANAGEMENT
Includes the processes involved in Estimating, Budgeting and Controlling costs so that the project objectives are met within
the approved budget.
Estimation – Develop approximate
monetary resources needed to complete
project activities
Budgeting – Aggregation of costs
estimated in order to establish an
authorized cost baseline
Control – Monitoring progress and
changes to cost baseline.
Source: Project Management Book of Knowledge, 2013
Contracting strategy
•PSC, JOA, SC
Procurement strategy
•Locally sourced, imported
Project scope Engineering design
Stakeholder
requirements
•Taxes, regulations
Risk management
strategy
Resource requirements
•Human, equipment, materials
Operational
expenditure
FACTORS THAT IMPACT CONSTRUCTION COST BASELINE

25. THOMAS DOUGLAS
IMPROVED EMPLOYMENT AND TRAINING OF LOCALS
Over 30,862 jobs within first 3 yrs (10,792 in Fabrication, 6,797 Post training
employment, 3,000 in Vessel servicing, 1,500 Equipment manufacturing)
INCREASED INDIGENOUS VESSEL OWNERSHIP
65% of Vessels – Class AAA and Category A combined
45% of Vendors – Category A
MORE NIGERIANS OWNING CRITICAL MARINE ASSETS
Pipe laying barges, Drilling equipment, Drilling rigs, Dry-docking Logistics bases etc.
RETENTION OF MORE ANNUAL OIL AND GAS SPEND IN-COUNTRY
About $10Billion of the $20Billion capital flight
MORE ROBUST FORWARD, BACKWARD AND FINANCIAL LINKAGES
Banking, Manufacturing, Education, Legal sectors benefit
NEGATIVE IMPACT ON GDP SHORT TERM
2009 (pre-NOGICD) was 17.8% compared to 14.4% by 2013
(post-NOGICDA era)
IMPACT ON INTERNATIONAL FREE TRADE AGREEMENTS
Protectionist in nature
INCREASES CONSTRUCTION COST SHORT TERM
Contingency, Cost of quality, Interest rate, Inflation
The ayes have it!
NIGERIAN CONTENT IMPACT ON OFFSHORE CONSTRUCTION

26. THOMAS DOUGLAS
CONCLUSION
More work for indigenous local contractors such as
Thomas Douglas, with the construction of new pipe
mills, new industrial parks, new fabrication
yards, new vessels, new production platforms, new
pipeline projects etc.
Better access to funds through economic linkages
to financial institutions, NCDF etc.
Improved project schedule as local manufacturing
eliminates time wasted on importation and
improves just-in-time deliveries.
Transfer of technology ensures a better trained
workforce
The success of this marriage is vital to the implementation of
construction plans. It means:

27. THOMAS DOUGLAS
RECOMMENDATIONS – T E S T
Timely manner
•Already Nigeria has lost 70% of her
exports to her biggest market, the USA.
And shall loose more due to the latter's
embrace of shale oil and other energy
sources.
Effective manner
•Labour cost amounts only between
10-20% of the Total DC of production as
compared to procurement's 54%.
Therefore Manufacturing is key.
Strategic manner
•Look beyond present hassles.
A capacious LC translates to
cheaper, faster first oil and gas.
Transparent manner
•Unpredictable regulations hamper
investment opportunities.
To make the marriage work the Family must collaborate in a(n):

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• Technical Data Sheets
• Utility, Cost And Weight Estimates
• Performance Specifications
• Code Compliance Analysis
• Architectural Shop Drawings
• Structural Shop Drawings
• Room Data Sheets
• Bills Of Materials
• Furnishings, Equipment and
Fixture Selection
• Mechanical (Piping) Shop
Drawings
• Electrical (EIT) Shop Drawings
• HVAC Shop Drawings
• Fire & Safety Communications
Shop Drawings.
• Detailed Design Review
• Bid Package Preparation
• Bid Evaluation
• Determine Company Procurement
Standards
• Utilize Preferred Vendors
Database
• Identify Long-lead Time Items and
Place Orders
• Incorporate Local Knowledge Of
Approved Offshore Materials
• Utilize Knowledge Of NOGICDA
Requirements On Importation Of
Materials To Nigeria
• Coordinate Shipment And Customs
Clearance Of Imported Materials
• Provide Local Logistics and
Transportation
• Fabrication Contract Assistance
• Fabrication Inspection
• Change Order Review
• Payment Request Review
• Submittals / Shop Drawing
Review
• Lifting Procedures
• Integration / Mating Plan
• Tie-ins To Utility Systems
• Systems Testing In Fabrication
Yard
• Systems Testing On-Site
• RFI / Site Query Resolution
• QHSE Management
• Final Acceptance / Punch List
... a multi-disciplinary Engineering, Procurement and Construction Project Management firm
100% Nigerian owned.
CORE VALUES
...leading, innovative and reliable player in the provision of premium, sustainable, client-oriented,
cost effective , safe, and timely - bespoke solutions.
THOMAS DOUGLAS IS...

30. THOMAS DOUGLAS NIGERIA LIMITED
E N G I N E E R I N G • P R O C U R E M E N T ▪ C O N S T R U C T I O N
S&B Floor, Top Notch Building▪ Ajiwe
Km 23 Lekki-Epe Expressway ▪ Lagos, Nigeria
Tel: 01- 7374027, 0703 2240125, 0803 4673729 • E-mail: info@thomas-douglas.com; constarng@gmail.com
Website: www.thomas-douglas.com