THE NIGERIAN CONTENT LAW: OPTIMIZING OPPORTUNITIES FOR THE PROFESSIONAL QUANTITY SURVEYOR.

REQUIRED COMPETENCES OF QUANTITY SURVEYORS FOR EFFECTIVE PARTICIPATION IN OIL AND GAS INDUSTRY Stan Onyeador

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Objectives of the Presentation

To provide an understanding of: the Nigerian Oil and Gas Industry the Nigerian Oil and Gas Industry Content Development Act 2010 areas of competence required for effective participation of quantity surveyors in Nigerian Oil and Gas Industry the strategic objectives of effective participations and, how these strategic objectives can be attained.
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OIL AND GAS INDUSTRY

Oil and Gas is a unique industry. It is very Capital Intensive The life cycle takes several years to decades Returns on investment high but takes long Secretive and controlled by cabals Similar to drug business a sellers market Mega Money are involved
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OIL AND GAS INDUSTRY

just as dope prices are set by dope dealers (not by dope addicts), oil importing nations must buy their oil at prices set by competition between oil exporting countries, not by importing nations consumers, planners, or politicians- Ivanhoe, (1990) in his article in the OIL and GAS JOURNAL
Oct.29, 1990

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THE NIGERIAN OIL AND GAS INDUSTRY

Oil was first produced in Nigeria in Olobiri, Rivers State in 1948, by Shell Controlled and dominated by foreigners Almost all manpower, plant and equipment, manufacturing, repairs, maintenance, engineering and designs are done abroad or in Nigeria by foreigners A major drain to the Nigerian economy that depends on Oil with contribution to national revenue exceeding 90%.
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THE NIGERIAN OIL AND GAS INDUSTRY

The turning point came in October 1996 when the then minister for petroleum, Chief Dan Etete, made his landmark speech, he asserted: From now, foreign suppliers will have to bid and supply through a local subsidiary or agent Followed by government directive on mandatory 40% and 70% local content by end 2006 and 2010 respectively Today, local fabrication yards and local independent producing companies are beginning to emerge
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WHAT IS THE NIGERIAN CONTENT?:

the quantum of composite value added to, or created in the Nigerian economy through a deliberate utilization of Nigerian human and material resources and services . . without compromising quality, health, safety and environmental standards in order to stimulate the development of indigenous capabilities the development of local skills, technology transfer, use of local manpower and local manufacturing
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THE NIGERIAN OIL AND GAS INDUSTRY CONTENT DEVELOPMENT ACT, 2010
Signed into law on 22nd April 2010 The Act provides for the development of Nigerian content in the Nigerian oil and gas industry, Nigeria content plan, supervision, coordination, monitoring and implementation of the Nigerian content.

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THE NIGERIAN OIL AND GAS INDUSTRY CONTENT DEVELOPMENT ACT, 2010
The NOGICD Act is divided into three parts: Part I Nigerian Content Development in Oil & Gas Industry containing 68 clauses on the provisions and applications of the Law Part II Establishment of the Nigerian Content Development & Monitoring Board (NCDMB) with 42 clauses on the structure, roles and activities of the NCDMB Schedule Minimum percentage Nigerian Content (NC) targets expected to be achieved per category of activity in the oil and gas industry
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NOGICD ACT 2010: TWO CRITICAL QUESTIONS

Having gone through the Act, two critical questions came to mind: How can we measure effectively & efficiently:
the value of Nigerian Human resources employed? the value of Nigerian materials, assets and services utilized?

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REQUIRED COMPETENCES OF QUANTITY SURVEYORS FOR EFFECTIVE PARTICIPATION IN OIL AND GAS INDUSTRY
Knowledge is the key to effective participation of quantity surveyors in the Nigerian oil and gas industry. Overview Knowledge of the Technical, Economic/Financial, Commercial, Organizational, and Political aspects of oil and gas industry, prospects and projects: the Business environment, Subsurface, Surface, Development (incl. Drilling) Operations, Infrastructure generally, with special emphasis to Nigerian Oil and Gas industry are prerequisites.
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Quantity Surveyors need to:

Understand the overall Oil & Gas life cycle from exploration, development, production and abandonment(upstream) and refining (downstream) Understand oil & gas project life cycle from project initiation to commissioning/delivery Understand the activities performed at each stage of the life cycle. Understand Oil & Gas EP processes, plants and equipment, terminologies, etc
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Prerequisites for Effective Participation

The above knowledge are prerequisites for successful development of costs and schedules of activities and operations. Since one cannot cost or schedule or procure what you do not know or understand! Cost engineers must understand what they are costing, project planners must understand what they are planning and procurement specialists or buyers must understand what they are contracting to purchase. It is as simple as that!
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Process Industries
A process facility, such as oil production and refining, can be viewed as consisting of two parts: the process component and the facility component. The process component consists mainly of process equipment, instruments, and piping. The facility component consists mainly of buildings and structures, Ventilation and Airconditioning, lighting, roads, gantries, etc.
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Process Industries: Process or Facility Dominance.

Some process plants are dominated by facility component, such as pharmaceutical, whilst others are dominated by the process component. Petroleum exploration, development, production and refining are dominated by the process component The knowledge of quantity surveyors is vest in the area of facility and probably nil in the process area
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Lets Test Our Knowledge: Quiz 1

Process Component Quiz What is Process Flow Scheme (PFS)? What is Process Engineering Flow Scheme (PEFS)? What is Process Utility Flow Scheme (PFS)? 5000 Naira for each correct answer!
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Lets Test Our Knowledge: Quiz 2

Facility Component Quiz What is an Architectural plan? What is a Structural plan? What is a Plumbing plan? Prize: 0 Naira for each correct answer!
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MAIN COMPETENCE AREAS I

General knowledge of oil and gas industry generally with special emphasis to the Nigerian Oil and Gas industry. Working Knowledge of Oil and Gas Exploration and Production (EP) life cycle from exploration to abandonment Detailed knowledge of Oil and GAS PROJECT LIFE cycle from project initiation to project closeout. Typical Process Facilities Project Team
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MAIN COMPETENCE AREAS II

Working Knowledge of Process Construction technology and schematic designs of oil and gas facilities Understanding of Flow Sheet symbols Engineering/Construction Project Planning and Control Cost Engineering Principles and Practices Contract Management in Oil and Gas
EPIC type contracts: Engineer-Procure-Install-Commission Tendering in Oil and Gas: Separation of Technical with Commercial tender in tendering and evaluation

Procurement in Oil and Gas

Material , Plant & Equipment

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TYPICAL OIL & GAS EP LIFE CYCLE

A typical Oil and Gas EP life cycle consists of the following stages: Exploration Appraisal Development Production Abandonment (Decommissioning and Restoration)
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Oil and Gas Exploration: Critical Questions

For any oil and gas prospect exploration some critical questions needs to be answered, such as the following: Where are the hydrocarbons? How much volume is present? How much volume can be produced? At what rates ($) can it be produced? And lastly,what are the risks and uncertainties?
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TYPICAL OIL & GAS PROJECT LIFE CYCLE

A typical Oil and Gas Project life cycle consists of the following stages: IDENTIFICATION PHASE-PROSPECTIVE PROJECT
project initiation feasibility study

DEFINITION PHASE-FRONT END ENGINEERING DESIGN(FEED)

development plan-surface and subsurface basis of design project specification

EXECUTION PHASE

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detailed design materials procurement construction commissioning, start-up & handover, close-out & project debrief
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TYPICAL PROCESS FACILITIES PROJECT TEAM

A typical building or facilities project team is largely made up of Architects, Structural Engineers, Quantity Surveyors, Civil Engineers and Services Engineers (or Electrical and Mechanical Engineers). A typical Process facilities project team, is made up geologists and geophysicists, petroleum and chemical engineers, reservoir engineers, process engineers, piping engineers, Mechanical (Vessels and Machinery) engineers, Instrumentation engineers and Production technologists. Their influence or participation depends upon the process facility design in question. The process engineer prepares the process flow diagrams (PFDs).
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CONSTRUCTION TECHNOLOGY AND SCHEMATIC DESIGNS OF OIL AND GAS FACILITIES, SUCH AS:
Flow stations Low Pressure Compression/ Booster Stations Central Processing Facilities Oil and Gas Gathering Flow-lines Oil and Gas Gathering pipelines Major Oil and Gas Pipelines Civil Infrastructure and Power Generation/Distribution

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ENGINEERING/CONSTRUCTION PROJECT PLANNING AND CONTROL

Good understanding of the theory of Critical Path Method and Project Evaluation and Review Technique Understand and use tools of CPM/PERT Planning and Scheduling such as Primavera, Microsoft Project, SAP Project Management, etc (Primavera Project Planner is the tool of choice in the industry) The Practice of Planning The Practice of Scheduling
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COST ENGINEERING PRINCIPLES & PRACTICES

Elements of Cost: Cost dimensions, classifications, types, purchase costs, materials, plant and equipment, labour/salary, overheads and profit, subcontract, pricing, etc Elements of Analysis: Statistics and Probability, Economic and Financial Analysis, Optimization, Enabling Knowledge: Enterprise in Society, People and Organization, Organization Structure, Information Management, Quality Management, Value Management and Environment, Health and Safety and Security. Total Cost Management Process, Planning, Cost Estimating and Budgeting, Resource Management, Value Analysis and Engineering, Risk Management, Procurement Planning and Contract Management, Investment Decision Making, Project Implementation and Performance Management and Assessment

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STRATEGIC OBJECTIVES
The objectives of the strategy are: To contribute our quota as quantity surveyors towards the growth of the economy through the successful implementation of the Nigerian Content Development Act, 2010. To ensure steady supply of qualified manpower in areas project management and planning, contract and procurement management and total cost management throughout the life cycle of oil and gas investment.
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STRATEGIC OBJECTIVES (contd)

To be seem by all the stakeholders and the Nigerian public as a key player in the Nigerian Oil and Gas sector. To contribute in devising a consistent, objective way of measuring and reporting the value of Nigerian Human resources employed and Nigerian materials, assets and services utilized. To provide the relevant statistics and data required by the Act to ensure that the minimum Nigerian content stated in schedule is enforced. To create jobs and future for the younger generation.
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STRATEGY FOR BRIDGING THE CONPETENCE GAP

NIQS/QSRBN should develop a measurable plan and provide sustainable training/development for Nigerian Quantity Surveyors. Short term strategies
NIQS/QSRBN to set up a team made up of mainly QSs experienced in Oil and Gas operations to drive the implementation of NCDOGI as it affects the QS Training Programmes by NIQS, QSRBN, and private training outfits
Formal Informal: On-the-job training
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STRATEGY FOR BRIDGING THE CONPETENCE GAP (contd)

Medium Term Strategies
Professional Diploma or Certificate Programmes

Long term strategies

Comprehensive review of QS course content to deemphasize building construction and emphasis engineering construction (Oil, Gas, Power, Telecoms, etc)

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