Driving Shared Development
Driving Shared Development
Expanding local content in our industrial projects
The vast majority of our production is located in emerging economies where oil and gas resources could contribute more effectively to local social and economic development. Although we cannot take the place of governments, we do strive to constantly increase the local content in our activities.
“Local content" refers to the set of actions — local recruitment, training, purchases of local goods and services — that are designed to develop the industrial infrastructure and skills of the people in countries that host oil and gas projects. Local content is generally measured as a percentage of investment, hours worked, the equipment manufactured or the number of jobs created.
Increasing the local content of our projects is a way of sustainably enhancing skills and building industrial capacity in host countries. This in turn spurs economic and social growth.
Using Local Resources Whenever Possible
Our local content programs are aligned with the project’s technical characteristics and local industry. They are based on assessments of the industrial context, available skills and stakeholder expectations, to identify and develop local resources.
Local content is taken into consideration right from the project design phase. It is a criterion used in selecting design options within reach of local suppliers of goods and services.
However, the actual results of our local content efforts vary greatly from one country or project to another. The reasons for this include:
- A shortage of personnel and contractors with appropriate skills.
- Insufficiently developed local industrial infrastructure.
- The inability of local contractors to submit competitive bids that meet our quality, safety and other standards.
Tailoring and Strengthening Our Actions
We have been working to improve the coordination of our local content actions since the early 2000s, with some subsidiaries tailoring their organizations for this purpose. In 2006, Total E&P Nigeria created a Nigerian Content Department tasked with helping operational departments achieve their local content objectives.
We also work with other organizations, such as NGOs, non-profits and public authorities, to adapt and strengthen our training and technical and financial assistance initiatives for businesses in our host countries.
Examples of Our Subsidiaries’ Local Content Initiatives
Yemen LNG: Local Training and Recruitment
Our efforts to implement our local recruitment policy and our social and economic programs often run up against the problem of insufficient training or a lack of technical proficiency. Before we can hire nationals or contract with local businesses, we are therefore involved in education, training and skills transfer initiatives.
In Yemen, to ensure the operation of the Yemen LNG plant commissioned in 2009, we set up our own training center with our partners. Some 300 local technicians, supervisors and engineers took part in an intensive training program focusing on English language proficiency and gas technologies, rounded off with hands-on, practical training. Thanks to the program, 80% of the permanent workforce of Yemen LNG, which operates the plant, are Yemenis. This is set to eventually rise to 90%.
Nigeria: Continuing to Increase the Number of Nationals in the Workforce
Integrating local skills at all levels of our workforce is a cornerstone of our local content effort. It is also a key focus of our recruitment policy.
More than 80% of Total E&P Nigeria’s employees are Nigerian, as are 90% of the people working for the local Refining & Marketing (R&M) subsidiary. We conduct massive recruitment programs to attract young Nigerian graduates, with around 100 locals joining us each year.
We also provide substantial training and mentoring to onboard our new Nigerian employees and help them move up to positions of responsibility.
Nigeria, Angola and Indonesia: Supporting Local Entrepreneurs
We strive to help an increasing number of local contractors achieve international standards in terms of quality, lead times, safety, working conditions and cost control. Our goal is to enable them to reinforce their skills in order to better satisfy our requirements, but also to help them expand their customer base and/or scope of activity. To achieve this, several of our subsidiaries help companies improve compliance with specifications, deliver high value added services and secure contracts with other customers.
In Nigeria, thanks to a contractor prequalification process carried out well ahead of the actual project, local content reached 28% of total hours worked during the construction of the Akpo floating production, storage and offloading (FPSO) unit. On the Usan project, launched in 2008, local content will be increased to 59%, representing close to 11 million hours of work for local contractors. The Egina project will take our commitment to local content to the next level, with all of the front-end engineering and design work performed in Nigeria.
In Angola, we have contributed to the emergence of an oil services industry. In 2009, we were able to award local suppliers maintenance contracts for highly sophisticated subsea installations. In 2010, thanks to the CLOV project, a local yard increased its capacity in order to be able to integrate a module weighing around 3,500 metric tons into the future FPSO.
In Indonesia, we segment projects in order to provide work for more medium-sized local contractors. One of them, the engineering and construction firm PT Meindo Elang Indah, took full advantage of this approach, achieving remarkable quality, safety and turnaround performances in just a few years. Local content in Total E&P Indonésie projects has risen to 50% in five years, reflecting the subsidiary’s commitment to helping local businesses to grow and to focus on sustainable activities such as maintenance.
Why Local Content Is Important in Non-OECD Countries
The poorest three-fifths of the global population live in countries that are actually rich in fossil fuel and mineral resources. Only five of the countries with an abundant supply of oil and gas fall into the top quartile of the United Nations Development Program’s (UNDP) Human Development Index. These statistics concern us directly because nearly 75% of our production comes from non-OECD countries1.
We therefore constantly strive to:
- Help make oil and gas production a driver of development at the national, regional and local levels. That is what motivates our constantly strengthened involvement in the Extractive Industries Transparency Initiative (EITI).
- Amplify the positive impact of our presence in host countries and become a key partner in their development. This is why local content is a key priority and a paramount consideration in our projects and operations.
Developing local content projects also meets the expectations of an increasing number of producing countries. For host countries, local content is a way of stimulating the economy, building industrial capacity and enabling skills transfer.
Against a backdrop of heightened competition between oil companies, the ability to implement a local content policy increasingly gives us a competitive edge and is critical to forging partnerships with national oil companies. By improving the acceptability of our operations, local content also helps us gain a firm foothold in the local social and economic environment.
1. The Organisation for Economic Co-operation and Development (OECD) has 34 member countries: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.