An assessment of local-content policies in oil and gas producing countries

Theophilus Acheampong, Victoria Crystal Svanikier, Marcia Ashong

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

Local-content legislation and policies in oil and gas producing countries have become a key priority of host governments and industry players alike. Increasingly, more resource-rich developing countries are enacting local-content legislation as a means of maximizing the benefits to be gained from their petroleum industries. However, these laws and policies are being implemented with insufficient research into their efficacy, and as a result have often yielded mixed results. This article assesses the effect of local-content legislation and policies in the oil and gas industry presenting insights on the challenges faced by industry players with regard to their implementation. We trace the channels through which local-content legislation advances value creation by evaluating different implementation programmes, using clearly stated local-content targets to measure their efficacy. Nigeria, Ghana, Brazil and Norway are chosen as case study countries to highlight the diversity of local-content strategies for countries at different developmental stages. The motivation for this research is to provide host governments, investors and domestic suppliers with guidelines on how to successfully develop and implement local-content regulations and strategies.
The experience of the case study countries above show that the success or otherwise of local-content legislation and policies remains a function of a country’s institutional setting and developmental paradigm. Based on the review of the case studies, we summarize that successful local-content legislation and policies should be anchored on the following principles: (i) local-content policies need to look beyond simple generation of economic rents to focus on the development of linkages; (ii) the tools developed to measure agreed local-content benchmarks must be clearly defined to the acceptance of all industry players; and (iii) entrenching local content depends on the availability of an industrial-supply base that can act as growth levers.
Original languageEnglish
Pages (from-to)282-302
Number of pages20
JournalJournal of World Energy Law and Business
Volume9
Issue number4
DOIs
Publication statusPublished - 3 Aug 2016

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