Most petroleum-producing countries have enacted local legislation and content to regulate international Oil and Gas companies. However, there is a dearth of literature focusing on local content policies. Due to the gap in the literature, the research focused on exploring the contents and the impacts of the LCP implementation in Norway and Ghana. These two petro-states have been chosen because they emphasis the contrast between a developing country which initially did not have the means to develop a regulatory framework for local content (Ghana) and a developed country which did (Norway).
The aim of the study was to determine the economic impact of the implementation of local content policies in Oil and Gas producing countries, using Ghana and Norway as examples.
There are a number of major conclusions from the research. First, very high minimum targets for local employment can lead to the creation of skill gaps in some areas while only achieving increases in some job categories; mostly the semi-skilled and the unskilled positions. Secondly, considering the unemployment, there appears to be no relationship between the unemployment percentage and the quality of the local content policies. Third, where National Oil Company takes the lead in the fostering of local content policies, better results are achieved in terms of skills transfer, increased local sourcing and better training programs. Moreover, mandatory cooperation through JVs and partnerships leads to greater technology spill over from the foreign companies to the local companies. Coupled with the above, higher government spending by there would be an increase in the local supply of both non-specialised and specialised products to the oil and gas industry. Finally, the successful LCPs require the provision of fiscal incentives to the local firms, as well as empowering the national oil company to foster technical skills transfer and fostering training. Moreover, some contextual situations such as political stability, HDI in terms of the educational attainment and R&D spending were linked to better outcomes of the LCPs.
Based on the findings and the analysis from the research, it is recommended that policy makers and legislators in countries that want to develop local content policies should focus on coordination and getting input from the oil and gas operators, provision of incentives to the local businesses
Table of Contents
1. Introduction
1.1 Scope
1.2 Aim and Objectives
1.2.1 Aim
1.2.2 Objectives
2.0 Literature Review
2.1 Introduction
2.2 Nature of Local Content Policy in Oil and Gas
2.3 Overview of Local Content Policies in Oil and Gas including legislations in Ghana and Norway
2.4 Impact of implementing LCP on economic factors in Ghana and Norway
2.4.1 Improvement and expansion of local businesses
2.4.2 Success in garnering technology and management skills
2.4.3 Improvement of derivative goods and services
2.4.4 Rise in the Gross Domestic Product (GDP)
2.4.5 Increase in employment
2.4.6 Retraining of local labour force
2.5 Theoretical Framework and Overview
2.5.1 Industry Network Theory
2.5.2 Keynesian Economic Theory
3.0 Analysis
3.1 Introduction
3.2 Comparative Analysis
3.2.1 Justification for the selection criteria
3.2.2 Selection of contextual factors
3.2.3 Criteria for the country selection
3.3 Data/Evidence
3.4 LCP Policy Analysis of Ghana and Norway
3.4.1 Context
3.4.2 The Applied LCPs
3.4.3 Outcomes of the LCP in Norway and Ghana
4.0 Discussion
4.1 Local employment
4.2 Local sourcing of services and goods
4.3 Training requirements
4.4 Technology Transfer
5.0 Conclusion and recommendations
5.1 Conclusion.
5.2 Recommendations
Research Objectives and Thematic Scope
This study aims to determine the economic impact of implementing local content policies (LCPs) within the oil and gas sectors of Ghana and Norway. By conducting a comparative analysis, the research examines how these petro-states utilize regulatory frameworks to integrate domestic economic activities with the international oil and gas industry, identifying successes, challenges, and lessons for emerging oil-producing nations.
- Comparative analysis of LCP implementation in developed (Norway) vs. developing (Ghana) economies.
- Assessment of key impact indicators, including local employment, business expansion, and GDP growth.
- Evaluation of policy effectiveness regarding technology transfer and local labour force retraining.
- Application of Industry Network Theory and Keynesian Economic Theory to explain economic outcomes.
- Strategic recommendations for policymakers to improve LCP framework design and implementation.
Excerpt from the Book
2.4 Impact of implementing LCP on economic factors in Ghana and Norway
The implementation of LCP have had varying impacts on the local businesses. Acheampong, Ashong, and Svanikier (2016) found that the local business involvement is limited as the country has very limited industrial base thus the local businesses lack the knowledge as well as the bespoke services and inputs such as construction, and fabrication services, well-drilling, seismic and exploration services as well as front-end engineering. African centre for Energy Policy [ACEP] (2017) noted that the Jubilee/ TEN Field Partners awarded indigenous companies in Ghana contracts worth $489 million (35%) of the total contracts. ACEP (2017) added that that the ingenious companies were awarded 28% of the contracts in the offshore Cape Three Points Field. However, the local business improvement has been limited due to the limited capabilities and capacities of the local business to undertake the oil and gas operations (ACEP, 2017; Asante and Owusu, 2014; Asamoah, 2012; Asafu-Adjaye, 2010; Boyefio and Ochai, 2014). The challenges include limited information that denies the local businesses the benefits and opportunities in the supply chain, lack of skilled staff to offer services that meet the IOCs standards, limited financial capabilities thus the inability to handle large contracts, and limited certification of the local businesses by the International Organisation for Standardisation (ISO).
Summary of Chapters
1. Introduction: Outlines the research focus on local content policies as a regulatory tool for emerging petro-states, setting the scope for the comparative study between Ghana and Norway.
2.0 Literature Review: Synthesizes academic and institutional perspectives on LCPs, defining their role in fostering employment, technology transfer, and GDP growth through specific theoretical frameworks.
3.0 Analysis: Details the methodology of the comparative research and evaluates the specific contextual factors, policy approaches, and observed outcomes in the chosen case studies.
4.0 Discussion: Compares the findings regarding local employment, sourcing, training, and technology transfer, using the selected theories to interpret why policies yielded different results.
5.0 Conclusion and recommendations: Summarizes the key insights derived from the comparative study and offers evidence-based policy recommendations for improving future LCP implementation.
Keywords
Local Content Policies, Oil and Gas Industry, Ghana, Norway, Economic Impact, Comparative Analysis, Local Employment, Technology Transfer, Industrial Network Theory, Keynesian Economic Theory, Sustainable Development, Capacity Building, National Oil Company, Legislative Framework, Resource Curse.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on evaluating the economic impact of local content policies (LCPs) by comparing the experiences of Ghana and Norway in the oil and gas sector.
What are the central themes of the work?
Central themes include the role of government legislation, the integration of local businesses into global supply chains, skills development, and the transition of emerging petro-states toward sustainable economic growth.
What is the primary objective of this study?
The primary objective is to determine how LCPs have influenced economic factors in Ghana and Norway and to provide evidence-based recommendations for other developing oil-producing countries.
Which scientific methodology is applied here?
The study utilizes a comparative analysis method, evaluating secondary qualitative and quantitative data to draw parallels and identify differences between the two countries' policy outcomes.
What topics are covered in the main section?
The main sections cover the literature review, a detailed contextual analysis of the two countries, and a discussion of results regarding employment, sourcing, training, and technology transfer.
Which keywords best characterize this publication?
Key terms include Local Content Policies, Ghana, Norway, Oil and Gas, Economic Development, Capacity Building, and Industry Network Theory.
How did Ghana's oil industry impact its economy according to the study?
The study notes that while oil production significantly increased the GDP and exports, the local content benefits were constrained by a limited industrial base and technical skill gaps.
What role does the National Oil Company (NOC) play in successful LCP outcomes?
The research concludes that active leadership by the National Oil Company is crucial for fostering successful skills transfer, increasing local sourcing, and improving training programs for the domestic workforce.
- Quote paper
- International Business Management David Onditi (Author), 2018, A comparative analysis of the economic impact of the implementation of local content policies in Oil and Gas producing countries. Ghana and Norway, Munich, GRIN Verlag, https://www.grin.com/document/537200
