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Think global but act local: local content rules in the oil and gas sector

By Raj Kulasingam

We all want things to be local, whether it is shops, banks (remember the HSBC advert about your local bank?) or products. So it is only right that resource-rich countries should want to spread the wealth taken out of the ground locally. Hence local content is a theme that is becoming increasingly prevalent for investment in the oil and gas sectors in Africa. While the concept has been around for some time, it seems to have crept up the agenda in a number of African countries of late, most recently with Ghana passing its own local content rules (LCRs) — perhaps (dare I say it) — following Nigeria’s path.

Whether you call it local content, local participation or beneficiation, the basic tenet is the same: that where foreign companies are looking to exploit local resources and opportunities, then ‘local’ people and the local economy should benefit from these investments through ownership and operation of assets in the sector; increased employment in the sector; transfer of skills and technology; and the manufacturing and production of materials and parts to be used in the sector (rather than being imported) and development and diversification of the manufacturing sector…

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