ABSTRACT

The Nigerian oil and gas industry was probably born on the first commercial
discovery of oil in Olobiri in new Bayelsa state in 1956 by Shell B.P leading to large
influx of oil companies launching Nigeria into the international oil market. This in
turn led to the enacting of rules and regulations to ensure compliance, safe and
good oil practices measured by the standard then known in the industry.

The Premium Ordinance of 1885, then Mineral Regulations Ordinance of 1907

provided that only British subjects or companies controlled by them could explore
Nigerian oil resources. The Ordinance was later amended in 1952 allowing
registered companies of Great Britain or any of its protectorates. These laws
embraced the grant itself, including all terms, conditions, rights, obligations and
other matters. In 1953, the Ordinance was reviewed allowing other companies of
other nationalities; Mobil, Elf, Chevron, Tenneco and Gulf.

However, with the rapid development of the Nigerian oil and gas industry the
existing legislature, therefore, became inadequate leading to the new Oil and Gas
Local Content Act 2010 enacted by the President, Goodluck Ebele Jonathan.

The new law seeks to increase indigenous participation in the oil and gas industry
by prescribing minimum thresholds for the use of local services and materials and
to promote the employment of Nigerian staff in the industry.

The Local Content Act derives from the Nigerian Content Policy which seeks to
promote active participation of Nigerians in the petroleum sector without
compromising standards. The policy also focuses on the promotion of value addition
in Nigeria through the utilization of local raw materials, products, and services in
order to stimulate growth of indigenous capacity.

All regulatory authorities, operators, contractors, subcontractors, alliance partners

and other entities involved in any project, operation, activity or transaction in the
Nigerian oil and gas industry are required to consider Nigerian content as an
important element of their projects. Nigerian independent operators shall be given
priority in the award of oil blocks, oil field licenses, oil lifting licenses and in all
projects for which contracts are to be awarded in the Nigerian petroleum industry
subject to the fulfilment of conditions specified by the Minister of Petroleum
Resources.

Nigerian Content is the quantum of composite value added or created in the

Nigerian economy through the utilization of Nigerian human and material resources
for the provision of goods and services to the petroleum industry within acceptable
quality, health, safety and environment standards in order to stimulate the
development of indigenous capabilities.
The implementation of this Act, therefore will not only launch Nigeria into the fore-
front of the Global oil market but also upturn the curse of the Black Gold and make
the oil boom evident in the country’s economy.