Insight
Can African local content thrive in a lower-cost upstream industry?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Local content has become a "must-have" within Sub-Saharan Africa. But since the crash of 2014, there are fewer projects being developed and only the most competitive will progress. How can higher local content costs be absorbed when they contribute to declining competitiveness? Legislation is one approach, but there is evidence that strict target-based methods can increase lead-times and costs. Collaborative approaches work better. This is apparent in countries that are new to upstream, who rely on the industry to educate them on the infrastructure, goods, services and standards required to develop a thriving sector. Many countries' upstream sectors will comprise relatively few projects, while energy transition and the threat to long-term oil demand requires governments to think carefully about focusing on highly specialist upstream skills with limited linkages to the wider economy.
Table of contents
- Executive Summary
- Sub-Saharan Africa's local content boom
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Implications of a lower-cost upstream industry
- There will be fewer projects
- Deepwater and LNG dominate production
- How costly is local content?
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Strategies to maximise local content
- Good governance and strong partnerships with industry
- A sustainable local service sector
- Realistic and sustainable targets
- Conclusion
Tables and charts
This report includes the following images and tables:
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Changes in local content in SSA between 2012 and 2019Supply chain inefficiencies and potential for cost savingsForecast capital expenditure in SSA
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SSA production by resource themeGoods and services required for upstream projectsComparison of local content by cost type in MozambiqueEvolution of local content and costs over time
What's included
This report contains:
