Developing Local Content in Gabon

Gabon is aiming to become an emerging

economy by 2025. To do this, Gabon must boost its oil and gas sector, despite the fluctuating oil price and the country’s declining oil production. Developing Local Content through the Gabonisation of oil and gas is one area Gabon is keen to improve on in its efforts to diversify its economy.

Angola:

Just like Nigeria, Angola is another country in

sub-Saharan Africa that has high crude

production and has been producing for a

considerable time. Local Content

employment requirements are similar to

Gabon, with Angola setting a 70%

employment level of Angolans, and protects

against discrimination of nationals in favour

of foreign employees.

What does the new

petroleum law mean for

Gabon’s Local Content

obligations?

Gabon’s new hydrocarbons

law came into force on

September 15th 2014. The

“New Law” sets out to

improve control in Gabon’s

oil and gas industry and to

encourage greater

transparency as well as increase local benefits. 1 Before this new code,

Gabon legislation dated

back to 1962 and was

predominately governed by

the Petroleum Code of

1983. 2

The unemployment rate in

Gabon is approximately

16%3; therefore labour

requirements in the new

hydrocarbons law is of high

importance to the Gabonese

people. Priority is to be

given to Gabonese

nationals that are of equal

skill and qualifications to

expatriates in the hiring for

personnel in the oil and gas

industry. Progressive

replacement of foreign

employees is also

highlighted.4

Sustainable development

initiatives are in the “New

Law” with provisions for

investments set at 1% and

2% of a percentage of

annual turnover.5 Other

contributions shall be made

to various funds for local

community development.

Contractors

have to locally incorporate their branches as well, as an

additional Local Content measure.

Refineries, petrochemical plants and lubricant plants

have to source crude oil and natural gas that has been

produced in Gabon. Local market needs also dictate the

issuing of export licences for raw hydrocarbons

products.6

Who can Gabon learn from?

Gabon is keen to understand and learn from international

Local Content perspectives and best practices. These

case studies illustrate just a fraction of who Gabon could

look to when taking direction on implementing Local Content initiatives.

Trinidad & Tobago:

Trinidad and Tobago has opted for a softer approach in

comparison to Nigeria. With no measurement guidelines,

operators are asked to report on a quarterly basis to the

Ministry of Energy and Energy Industries to discuss their

Local Content activities, and priority is given heavily to nationals when employing.

Nigeria:

Continental case studies are examples

Gabon can learn from. Nigeria has seen

success off the back of the Nigerian Oil

and Gas Industry Content Development

Act 2010, with the Nigerian Content

Development & Monitoring Board

attributing approximately $5 billion worth

of investments to the implementation of

the Local Content Act, which is also said

to have created 38,000 jobs.7

Local Content is part of the Nigerian

government’s plans to transform the

country. It is important for Nigeria when

considering asset ownership that

Nigerians start to own what is used in

the oil and gas industry – for example

giving nationals the opportunity to buy

and own marine vessels and set up

businesses. The country could then see

a robust supply chain if the interest going

forward is also focused on

manufacturing.

Oman:

Oman has made Local

Content a national priority.8

The country has set targets

of 90% Omani manpower in

production and operation

and has launched

successful expatriate

succession plans to develop

the local skills of its

workforce, all through a

voluntary approach. The

higher the local input by

firms bidding for contracts in

Oman, the higher the

likelihood is that the tender

bid will be viewed

favourably.

Angola:

Just like Nigeria, Angola is

another country in sub-

Saharan Africa that has high

crude production and has

been producing for a

considerable time. Local

Content employment

requirements are similar to

Gabon, with Angola setting a

70% employment level of

Angolans, and protects

against discrimination of

nationals in favour of foreign

employees.

GABON LOCAL CONTENT ∙ www.gabon-local-content.com∙ JUNE 2015

Angola:

Just like Nigeria, Angola is another country in

sub-Saharan Africa that has high crude

production and has been producing for a

considerable time. Local Content

employment requirements are similar to

Gabon, with Angola setting a 70%

employment level of Angolans, and protects

against discrimination of nationals in favour

of foreign employees.

How can Gabon diversify its economy?

With 90% of Gabon’s total export earnings

attributed to oil and gas, and crude

making up 80% of those earnings, as well

as 56% of total government income from

oil revenue9, the country relies heavily on

the oil and gas industry for economic

stability. The oil price decrease since mid-

2014 has reiterated the need to move

away from this overdependence.10

Gabon has for a number of years worked

to diversify its economy as oil output has

decreased. The President of the Republic

H.E. Ali Bongo Ondimba has identified

manufacturing as a key area the country

needs to develop to become an emerging

economic power by 2025.11 Gabon’s

strategic plan, ‘Plan Stratégique Gabon

Emergent’ (PSGE) offers diversification of

the economy through increasing domestic

processing of raw materials, increasing

foreign direct investment and making the

industrial and services sector more

competitive, as well as the sustainable

management of natural resources and

offering inclusive job growth for the

Gabonese people12 – all strengthening the

country’s Local Content position. Gabon’s

new oil refinery, which is due to be

completed by the end of 2016, will convert

a portion of the country’s oil to finished

products.

The country also issued USD1.5 billion in

Eurobonds to reduce its borrowing costs

and to finance infrastructure in port,

airport, road and energy sectors13 –

making the country more valuable and

attractive to foreign investors. These

improvements in transport and energy

have led to joint ventures with foreign

entities in non-oil related sectors,

including Malaysian and Chinese

companies. 14

Managing expectations

African governments are developing

policies to ensure the exploitation of oil will

provide long-term benefits for citizens15, as

these populations are beginning to ask that

African economic successes, and

particularly in countries such as Gabon

who are among the most prosperous in

sub-Saharan Africa, translates into

employment opportunities, skill transfer

and training for the communities.16

However, it is difficult to balance the

expectations of NOCs, IOCs, the

government and the public. Expectations

can also change quickly so there needs to

be constant attention given to understand

how to respond to these changes.17

In aligning goals and expectations,

identifying stakeholders that will be

involved and/ or impacted by the presence

of oil is key. Then consulting these

stakeholders and giving them ample

GABON LOCAL CONTENT ∙ www.gabon-local-content.com∙ JUNE 2015

opportunity to voice concerns, anxieties

and hope in a timely manner18 will allow

expectations to be set realistically and

transparently from the very start.

Engineering, project management and

construction company Bechtel is working

on developing Gabon’s national

infrastructure with the government. They

are establishing a large-scale infrastructure

agency named ‘L’Agence Nationale de

Grands Travaux’ (ANGT) and central to

this is transferring skills and Gabonisation

of the entire project. Bechtel President

EMEA David Welch believes the Gabonese

government has taken a more mature

approach in understanding that Local

Content and local capacities take time and

need support to reach international

standards.19

David suggests in African Business

Magazine that a realistic assessment on

Gabon’s local market’s skill level combined

with its vision on where it wants to be in

the future will lead to a basis for

establishing and implementing Local

Content. Understanding the expectations

of local people and explaining why

expatriates are involved at certain stages

is part of having an open dialogue; thus

helping balance the progress and manage

expectations.

Developing skills

Gabon’s oil wealth will not be the sole

driver of economy prosperity. If Gabon

wants to become an emerging economy

by 2025, it needs to invest in education

and upskill20 the Gabonese people, which

will lead to a sustainable future for the

country.

KPMG Energy & Natural Resources

Director, Gabon, Alexis Majnoni

d’Intignano said in the Financial Mail that

most skilled people in Gabon are

academically trained abroad, and that the

students who do train in Gabon find it

difficult to do so unless they attend a

university sponsored by an oil operator.21

There are successes in Gabon however.

Total Gabon financed the construction of

the Centre for Professional Specialisation

which provides local oil and gas workers

with training and skills and were also the

primary investor in the Oil and Gas

Institute.22 The World Bank also approved

funds to help Gabon by improving its

business environment. 25,000 Gabonese

people are expected to benefit from new

job and skills by 2019.23

Referring back to ANGT, the project aims

to become self-sustainable and globally

respected in the construction and

engineering industry that can invest in

Gabon. With almost two-thirds of ANGT’s

staff Gabonese, Bechtel is also enforcing

a 50% Local Content clause in contracts

which includes Gabonese nationals at

Angola:

Just like Nigeria, Angola is another country in

sub-Saharan Africa that has high crude

production and has been producing for a

considerable time. Local Content

employment requirements are similar to

Gabon, with Angola setting a 70%

employment level of Angolans, and protects

against discrimination of nationals in favour of

foreign employees.

management level. The project is also

partnering with Gabon’s top engineering

university to provide internships for high-

achieving students.24

Indeed, the government, companies and

the people of Gabon have recognised the

need to participate in up-skilling and skill

transfer. The new hydrocarbons law

reflects this with its principles in hiring

members of the local workforce with

equivalent skills and qualifications, and

replacing foreign workers on a

progressive basis.25

The future

Gabon’s economic indicators are good,

and while the oil price has had an effect, it

won’t stop Gabon’s predicted performance

of 7.2% growth rate this year.26

If the government also continues to

diversify the national economy, then the

quality of human capital in supporting

sectors could rise.

The message is clear – Gabon is open for

business27 and Local Content is here to

drive the country forward.

By Larissa Hirst, Online Content Manager, Global Local

Content Council.

GABON LOCAL CONTENT ∙ www.gabon-local-content.com∙ JUNE 2015

Event Information Organised by the Ministry of Petroleum & Hydrocarbons, in partnership with the Global Local Content Council &

Gabon Oil Company, the Gabon Local Content Summit will provide a unique platform for outlining the revised Local

Content obligations in order to attract new investment, diversify the economy and maximise participation of the

State and local communities.

Speakers include:

• Etienne Dieudonné NGOUBOU, Ministre du Pétrole et des Hydrocarbures, Ministère du Pétrole et des Hydrocarbures

• Gabriel TCHANGO Ministre du Commerce, des Petites et Moyennes Entreprises, de l'Artisanat et du Développement des Services

• REGIS IMMONGAULT TATAGANI, Ministre de l'Economie, de la Promotion des Investissements et de la Prospective

• Simon NTOUTOUME EMANE, Ministre du Travail, de l'Emploi et de la Formation Professionnelle Ministre du Travail, de l'Emploi et de la Formation Professionnelle

• Alilat Antseleve Oyima, Director General, General Directorate of Hydrocarbons (DGH), Ministry of Petroleum & Hydrocarbons

• Serge Toulekima, Chief Executive Officer, Gabon Oil Company • Godson Njoku, Chief Executive Officer, SHELL GABON • Henri Max NDONG NZUE, Director General, Total Gabon

For more information on the Gabon Local Content Summit please contact Mohamed Kantar at

mkantar@glccouncil.org or +44 20 7978 0781, or Claire Scott at cscott@glccouncil.org or +44 20 7978 0047.

Resources:

1. http://www.linklaters.com/pdfs/mkt/paris/A19126299_v0.1_Gabon_Hydrocarbons

_NL_Dec_2014_WEB.pdf

2. http://www.energylegalblog.com/archives/2015/02/09/6034

3. http://www.tradingeconomics.com/gabon/unemployment-rate

4. http://www.linklaters.com/pdfs/mkt/paris/A19126299_v0.1_Gabon_Hydrocarbons

_NL_Dec_2014_WEB.pdf

5. http://www.linklaters.com/pdfs/mkt/paris/A19126299_v0.1_Gabon_Hydrocarbons

_NL_Dec_2014_WEB.pdf

6. http://www.linklaters.com/pdfs/mkt/paris/A19126299_v0.1_Gabon_Hydrocarbons

_NL_Dec_2014_WEB.pdf

7. http://ncdmb.gov.ng/index.php/2012-07-19-08-47-18/corporate-info/19-

uncategorised/75-capacity-building

8. ICV Development Blueprint Strategy, 2013-2020, Sultanate of Oman – The Oil

and Gas Industry

9. http://www.theoilandgasyear.com/content/uploads/2015/01/Preview_TOGY_Gabo

n_2014.pdf

10. http://www.imf.org/external/pubs/ft/survey/so/2015/CAR022515A.htm

11. http://uk.reuters.com/article/2014/06/18/uk-gabon-politics-insight-

idUKKBN0ET1W720140618

12. http://www.imf.org/external/pubs/ft/survey/so/2015/CAR022515A.htm

13. http://www.afdb.org/en/countries/central-africa/gabon/gabon-economic-outlook/

14. http://www.bbc.co.uk/news/business-10985014

15. http://www.csmonitor.com/World/Africa/2011/0927/Africa-Rising-African-

countries-create-new-rules-in-the-oil-game

16. http://africanbusinessmagazine.com/sector-reports/infrastructure/21st-

century-approach-infrastructure/

17. http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-

Operations/Managing%20Oil%20Revenue_in%20Uganda%20ENG%20versi

on_01.pdf

18. http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-

Operations/Managing%20Oil%20Revenue_in%20Uganda%20ENG%20versi

on_01.pdf

19. http://africanbusinessmagazine.com/sector-reports/infrastructure/21st-

century-approach-infrastructure/

20. http://www.bechtel.com/projects/gabon-national-infrastructure/

21. http://www.financialmail.co.za/features/2013/12/19/gabon-aims-for-greater-

state-control-of-oil-sector

22. http://www.theoilandgasyear.com/content/uploads/2015/01/Preview_TOGY_

Gabon_2014.pdf

23. http://www.worldbank.org/en/news/press-release/2014/03/11/world-bank-

helps-gabon-diversify-economy-create-new-jobs-women-youth

24. http://www.theoilandgasyear.com/content/uploads/2015/01/Preview_TOGY_

Gabon_2014.pdf

25. http://www.linklaters.com/pdfs/mkt/paris/A19126299_v0.1_Gabon_Hydrocarb

ons_NL_Dec_2014_WEB.pdf

26. http://www.afdb.org/en/countries/central-africa/gabon/gabon-economic-

outlook/

27. http://www.un.org/apps/news/infocus/sgspeeches/statments_full.asp?statID=

876#.VVC3avlVhBc

The Gabon Local Content Summit

will take 6-8 July 2015 in Libreville.