Low cost country sourcing harming local prospects
Shell VP for MENA: Local content promotion has some way to go
The oil industry has been "somewhat complacent" on the crucial issue of developing local employment and services, a senior oil executive admitted today.
Mark Carne, Executive vice president for MENA at Shell, said a "new approach" is needed to assist the economies where oil companies operate, a crucial issue for GCC producers which are trying to wean themselves off over-dependencies on exports of raw hydrocarbons.
Carne told the NOCs and Governments Summit in Dubai that "low-cost country sourcing and global framework agreements have been industry best practices, but have worked against the promotion of local content."
According to Carne, IOCs and NOCs together need to commit to several steps if local content provision is to improve. In addition to clear policies, localisation considerations need to be integrated at the design stage of projects.
A $240 million ten-year contract signed this week between Petroleum Development Oman and local community-owned firm Shaleem Petroleum Company for hoist services was held up by Carne as an example of what can be done, said Carne.
Another example from Oman is the Joint Qualification System, which allows local suppliers more transparent access to oil industry contracts through open disclosure and standardised sets of information on contracts and capabilities.
Carne says Shell would like to see a GCC-wide version of the JQS initiative, and "will work to promote it."
Lastly Carne recommended support to small and medium-sized business that provide the bulk of job growth.