Optimal Local Content in The Liberian Hydrocarbon Sector

Cpnma| Loca| Content |n the L|ber|an
nydro-Carbon Sector

ur Mlchael Warner, ulrecLor

2011 Local ConLenL Soluuons, All rlghLs reserved
1
2

Llberlan ConLenL ln ConLexL
Leglslauon vs ollcy ullemma
Cpumlslng Llberlan ConLenL
Concluslons

L|ber|an Content |n Context

3
!"#$%&$
Loca| Content |n nydro-Carbons Sector
Cll & Cas
SecLor
M|d and Down stream
Pydrocarbon processlng
Lnergy supply
Soc|o-o||nca|
lM/Cll curse
State kevenues
ubllc nances
CaplLal and 8ecurrenL
uebL repaymenL
Managlng prlce volaullLy
Llberlan [obs, conLenL,
caplLal and lnfrasLrucLure
Soclal llcense Lo operaLe
ConlcL prevenuon and
peace-bulldlng
Upstream*
SLaLe caplLal paruclpauon
LmploymenL for nauonals
(dlrecL, lndlrecL, lnduced)
Llberlan conLenL ln goods
and servlces procuremenL
Llberlan caplLal ln suppllers
lnfrasLrucLure
AdapLed from: nlC/ClZ, Aprll 2011
Upstream*
lnfrasLrucLure
peace-bulldlng
!"#$%&$
Loca| Content |n Upstream
Cll & Cas
SecLor
M|d and Down stream
Pydrocarbon processlng
Lnergy supply
Soc|o-o||nca|
lM/Cll curse
State kevenues
ubllc nances
CaplLal and 8ecurrenL
uebL repaymenL
Managlng prlce volaullLy
Upstream*
lnfrasLrucLure
peace-bulldlng

Leg|s|anon vs o||cy D||emma

6
'%()*+,-.% 01)#2)3+%* "# '"2,+ !"#$%#$
etro|eum Law of L|ber|a, 2002
7
uomesuc reference

Secuon 2.2.13 - Llcensees ..shall award Lhe purchase conLracL for Llberlan or
lmporLed goods or servlces valued aL uS$3m or less Lo Llberlans conLracLors.
rov|ded, of course, that such goods and serv|ces are compennve |n qua||ty,
quannty, pr|ce and ava||ab|||ty. ln Lhe evenL Llberlan goods and servlces are noL
compeuuve ...Llcensees shall be enuLled Lo lmporL all arucles.

Secuon 23.8 - 1he holder of a peLroleum conLracL, as well as hls subconLracLors,
shall glve preference Lo Llberlans companles for consLrucuon, supply, and servlce
conLracLs, prov|ded they oer equa| qua||ty, pr|ce, quannty, nme and
performance and payment cond|nons"

Plrlng of nauonals
Secuon 2.3.9 - 1he holder of a peLroleum conLracL, as well as hls
subconLracLors, shall glve preference Lo Llberlans ln Lhe hlrlng of qualled
personnel, prov|ded the L|ber|ans meet the need and requ|rements of the
operanons..1o Lhls end, from Lhe ouLseL of Lhe peLroleum operauons, Lhe
holder of a peLroleum conLracL musL esLabllsh and nance a program for Lhe
Lralnlng of Llberlan personnel for all posluons and quallcauons"

1he Go|den 1hread: local 2"43,#)%* 5)++ #"$ 6% $1%,$%7
7)8%1%#$+9 5)$: 1%(,17 $" ;<,+)$9= 31)2%= 7%+).%19= >?@
2"43+),#2%A

1he ("+7%# $:1%,7 of
procuremenL ls Lhe
prlnclple of conLracL award
on an 'lnLernauonally
compeuuve' basls
8
1he Go|den 1hread of rocurement
under W1C agreemenLs on 1rade 8elaLed
lnvesLmenL Measures (18lMs) local conLenL
measures are prohlblLed .
lf Lhese requ|re the purchase or use by an enLerprlse of
producLs of domesuc orlgln or from any domesuc source,
wheLher specled ln Lerms of:
parucular producLs,
volume or value of producLs
proporuon of volume or value of lLs local producuon
under W1C, Speclal and ulerenual 1reaLmenL
(Su1) for developlng counLrles allows for some
dlscrlmlnauon, eg Lransluon counLrles, LeasL
ueveloped CounLrles

9
x
B1,7% ')6%1,+)*,-"# C<+%*
Some I|ex|b|||ty
10
When M|ght rotecnon|st Loca| Content Measures be
Iusnhed?

Infant |ndustry argument
nascenL lndusLrles oen do noL have Lhe economles of scale of older
compeuLors from oLher counLrles, and need Lo be proLecLed unul Lhey
can aualn slmllar economles of scale

Market ower argument
powerful domesuc and lnLernauonal conLracLors wlLh repeaL use of
preferred suppllers and global sourclng arrangemenLs may lock-ouL
capable and compeuuve domesuc suppllers

Soc|a| compensanon argument
Communlues llvlng close Lo operauons can be adverse|y |mpacted and
presenL soclal rlsks. Lconomlc compensauon ls Lhus [usued, eg llC
Soclal erformance SLandard

o||nca| harmony argument
ConlcL-prevenuon - nlgerlan ConLenL AcL 2010
osL-conlcL - Llberla, Slerra Leone
Lmerg|ng o||cy on L|ber|an Content
11
roposed ollcy emphaslses marg|ns of preference based on L|ber|an ownersh|p
and lnL/domesuc [o|nt ventures

Llberlan company: > 31 Llberla owned (uv)
uomesuc company: > 31 forelgn, reglsLered and operaung ln Llberla (A)
Cerucauon of goods and servlces from Llberlan-owned companles (uv)
Mlnlmum LargeLs for goods/servlces LargeLs from Llberlan-owned companles
(uv)
Margln of preference for Llberlan-owned companles ln conLracL award (uv):
eg 70 local lnpuLs (domesuc orlgln?) = 30 nomlnal prlce advanLage (A)

Llberlan-only compeuuve Lender llsL for selecLed goods and servlces (?)
MandaLed paruclpauon of Llberlan companles ln forelgn conLracLs (?)
Compeuuve blddlng for Llberlan-only Lender llsLs (?)

uv = uevln Corp, March 2011, A = ubllc rocuremenL AcL (A), M - ollcy on margln of reference 2007
12
1he lundamenLal 8egulaLory ullema
ollcy and roposed 8egulauons

targets for procurlng from
Llberlan-owned suppllers
pr|ce advantage on Lender award
for Llberlan-owned suppllers or
servlces of domesuc orlgln
mandated parnc|panon of
Llberlan companles ln forelgn
conLracLs
L|ber|an-on|y Lender llsLs
8U1 legal obllgauons on
llcensees glve domesuc
preference only lf:
lnLernauonally
compeuuve on quallLy,
quanuLy, prlce and
avallablllLy
=
13
Pow uo Lmerglng 8egulauons Compare wlLh Leglslauve
rlnclple of Compeuuve ConLracL Award
Possible Liberian Content Regulations Adherence to Legal principle of
contract award on internationally
competitive basis (!/")
Minimum Targets
1. PSCs targets for local employment and training
depends
2. Local Content targets that exceed capacity of Liberian
and Domestic suppliers
"
3. Local Content targets within capacity of Liberian and
Domestic suppliers
!
Margins of Preferences for Liberian Suppliers
4. Preference to Liberian suppliers if competitive with
international performance and prices
!
5. Nominal Price advantage to Liberian-owned suppliers
"
6. Nominal Price advantage to Domestic suppliers
"
7. Competitive bidding for Liberian-only tender lists where
not internationally benchmarked
"
8. Mandated participation of Liberian suppliers in foreign
contracts
depends
9. Reporting and monitoring system for local content
performance
!
10. Obligations to prepare Business Linkages Plan
!

Cpnm|s|ng L|ber|an Content

14
13
WAkNING

1he followlng local conLenL opumlsauon modelllng ls
|||ustranve on|y.

uaLa ls based on a hypothenca| o|| d|scovery and eld
developmenL scenarlo o-shore of Llberla. uomesuc suppller
capablllues are profess|ona| esnmates and noL based on
deLalled markeL analysls.

1he resulLs are oered Lo |nform stakeho|der d|a|ogue ln
formulaung local conLenL regulauons and corporaLe local
conLenL sLraLegles LhaL Lake accounL of Lhe beneLs and cosLs

Current Supp||er Capab|||ty
16
Source: nlC/ClZ, Aprll 2011
Llberlan
84
non-
Llberlan
16
8us|nesses keg|stered |n
L|ber|a
Ceneral
Merchandlse, 470
CloLhlng and
8ouuques, 343
CLher Servlces, 207
PosplLally, 172
AuLo Sales and
arLs, 168
Communlcauon
Servlces, 131
ConsLrucuon
and Lnglneerlng
Servlces, 130
Lducauonal
Servlces, 117
8ulldlng and
Pousehold
MaLerlal,
108
rofesslonal
Servlces, 82
eLroleum
roducLs, 39
Shlpplng
Loglsucs and
MalnLenance, 46
Businesses in Montserrado County
Source: Ministry of Commerce
LIBA 2009/2010 Business Directory
Supp||er Deve|opment Cpportun|nes
17
MINING and CIL
1echn|ca|
! Ceologlcal ! Lnglneerlng
Lqu|pment
! 1rucks
! uozers

! Speclallzed Cll
! Speclallzed Mlnlng
C|v|| Works
! ConsLrucuon
! 8oad Works

! Lnglneerlng
! 8oad MalnLenance
Log|sncs
I|eet
Ma|ntenance
Supp||es & arts
! LlecLrlcal
! luel

! 1lres
! Spare arLs
8as|c Goods &
Serv|ces
! PoLel
! 1ransporL

! CaLerlng
! SecurlLy
AGkICUL1UkL
Lqu|pment
! 1racLors

! 1rucks
C|v|| Works
! ConsLrucuon

! 8oad Works
Log|sncs
I|eet
Ma|ntenance
Agr|cu|tura|
Inputs
! Seedllngs

! lerullzers
8as|c Goods &
Serv|ces
! PoLel
! 1ransporL

! CaLerlng
! SecurlLy
1echnlcal Servlces
Clvll Works
ConsLrucuon
WasLe ManagemenL
MalnLenance
Loglsucs
LqulpmenL urchaslng
Supplles and arLs
1ransporL
CaLerlng
SecurlLy

Llberlan and
uomesuc llrms
Synerg|snc Markets

AdapLed from: nlC/ClZ, Aprll 2011
Introduc|ng the 1rade-Cs
18
DB:%1% )* #" *)43+% ,#*5%1 ,* $" :"5 $" 7%.%+"3 ,#7 )43+%4%#$ ,
4"7%+ E"1 6<)+7)#( 6<*)#%** +)#F,(%* G')6%1),# !"#$%#$ H%.%+"34%#$IA

o||cy makers shou|d be aware of the trade-os and the p|ua||s they
encounter |n deve|op|ng such a mode|.

J 6,7+9 %#E"12%7 +"2,+ 2"#$%#$ 3"+)29 4,9 ,2$<,++9 )43%7% %2"#"4)2
(1"5$: 69 2"#*<4)#( 5%,+$: 1,$:%1 $:,# 21%,-#( .,+<%A

B:%1% )* ,+*" $:% 1)*F "E 3%14,#%#$ 31"$%2-"# $:,$ 2,# +%,7 $"
2"11<3-"# ,#7 6<1%,<21,29A

B:% "6K%2-.% *:"<+7 6% $" *-4<+,$% , 21%,-.% ,#7 7%4,#7)#(
%#.)1"#4%#$ E"1 G7"4%*-2I 6<*)#%** 7%.%+"34%#$LA

March 2011, uevln Corporauon

19
'"2,+ !"#$%#$ 0"+)29
1rade-Cs and |ua||s
L|ber|an C-shore roducnon Scenar|o
M%9 J**<43-"#*
20
nCCAL lnLeresL - xx
8ecoverable reserves - xx
8oyalLy raLe - xx
Sale prlce - xx
CosL recovery - xx
Slngle Lhreshold for slldlng scale on producuon sharlng -
ComposlLe Lax (excl. royalues and prod sharlng) -
!"#*$,#$ 31)2%* ,#7 7)*2"<#$ 1,$%
N#7<2%7 %43+"94%#$ 4<+-3+)%1 O)#E"14,+ *%2$"1P

L|ber|an C-shore roducnon Scenar|os
21
nASL I
CALx - $xx over ve years
Leased/operaLed lSC, capaclLy xx bb/day
C-loadlng dlrecL Lo overseas renlng markeLs
CLx - $xx over 24 years
lncluslve of lSC cosLs [ xx

nASL II
Same slzed eld
CALx - $xx bllllon over ve years
newbulld lSC (hull converslon) - $ xx MM
CLx - $xx/bbl over 24 years

hase I - Loca| Content - Leased ISC
22
CaLegorles of LxpendlLure
!"#$"% '()*
of LoLal
expendlLure
8ase-Case Local
ConLenL ln
Llberla
Max Local conLenL
wlLh on-Lhe-[ob
Lralnlng, supervlslon
and quallLy conLrol
Max Local ConLenL
wlLh upfronL caplLal
lnvesLmenL
Schedule
uelay
+,-#. /0(12
ro[ecL - ln-house pro[ecL managemenL and lLLu 6.0 34546 37546 84546 2 yrs
ro[ecL - Sub-sea deLalled englneerlng and M (ouLsourced) 12.0 7546 34546 94546 2 yrs
ro[ecL - Cwner procuremenL of sub-sea maLerlals and equlpmenL 33.0 4546 7546 34546 1 yr
ro[ecL - labrlcaLlon of sub-sea equlpmenL: flexlble flowllnes, xmas Lrees, manlfolds 24.0 4546 4546 94546 2 yrs
ro[ecL - lSC and sub-sea lnsLallaLlon, hookup and commlsslonlng 10.0 34546 37546 84546 2 yrs
ro[ecL - Cnshore consLrucLlon and oLher servlces: porL upgrades, marlne supply
base, avlaLlon servlce, access roads, offlces, canLeens, warehouses,
communlcaLlons, houslng, foundaLlons
10.0 37546 97546 :7546 1 yr
ro[ecL - Cnshore consLrucLlon maLerlals and bulk commodlLles, lncludlng sLeel for
fabrlcaLlon
3.0 7546 34546 94546 2 yrs
3446
+,-#. *(12
CperaLlons - ln-house professlonal employees 4.0 34546 84546 74546
CperaLlons - ln-house non-professlonal employees 1.0 74546 ;4546 <7546
CperaLlons - Lease and operaLlon cosLs, spread across 24 years 44.0 4576 3546 8546
CperaLlons - sub-conLracLed servlces (over operaLlonal llfe) 18.0 34546 94546 :7546
CperaLlons - boughL ln maLerlals and rouLlne equlpmenL (over operaLlonal llfe) 10.0 34546 37546 84546
CperaLlons - boughL ln exoLlc equlpmenL/maLerlals (over operaLlonal llfe) 23.0 3546 7546 34546
0:,*% N Q '%,*%7 R0?S
Loca| Content |n CALk
0:,*% N Q '%,*%7 R0?S
Loca| Content |n CLk
hase II Loca| Content - Cwned ISC
23
!"#$% '()!
of LoLal
expendlLure
8ase-Case
Local ConLenL ln
Llberla
Max Local conLenL
wlLh on-Lhe-[ob
and quallLy conLrol
Max Local
ConLenL wlLh
upfronL caplLal
lnvesLmenL
Schedule
uelay
*+,-. /0(12
ro[ecL - ln-house pro[ecL managemenL and lLLu 4.0 34546 37546 84546 2 yrs
ro[ecL - lSC LCl conLracL 30.0 7546 34546 94546 2 yrs
ro[ecL - lSC modules fabrlcaLlon: waLer LreaLmenL, processlng, compresslon, LurreL, hell, accom 13.0 4546 4546 34546 2 yrs
ro[ecL - Sub-sea deLalled englneerlng and M (ouLsourced) 3.0 7546 34546 94546 2 yrs
ro[ecL - Cwner procuremenL of sub-sea maLerlals and equlpmenL 13.0 4546 7546 34546 1 yr
ro[ecL - labrlcaLlon of sub-sea equlpmenL: flexlble flowllnes, xmas Lrees, manlfolds 10.0 4546 4546 94546 2 yrs
ro[ecL - lSC and sub-sea lnsLallaLlon and commlsslonlng ln fleld 10.0 34546 37546 84546 2 yrs
ro[ecL - Cnshore consLrucLlon and oLher servlces: porL upgrades, marlne supply base, avlaLlon
servlce, access roads, offlces, canLeens, warehouses, communlcaLlons, houslng, foundaLlons
8.0 37546 97546 :7546 1 yr
ro[ecL - Cnshore consLrucLlon maLerlals and bulk commodlLles 3.0 7546 34546 94546 2 yrs
3446
*+,-. !(12
CperaLlons - ln-house professlonal employees 7.0 34546 84546 74546
CperaLlons - ln-house non-professlonal employees 2.0 74546 ;4546 <7546
CperaLlons - lSC operaLlon cosLs, spread across 24 years 17.0 9546 :546 =546
CperaLlons - sub-conLracLed servlces (over operaLlonal llfe) 24.0 39546 98546 :;546
CperaLlons - boughL ln maLerlals and rouLlne equlpmenL (over operaLlonal llfe) 12.0 38546 3<546 89546
CperaLlons - boughL ln exoLlc equlpmenL/maLerlals (over operaLlonal llfe) 38.0 3546 7546 33546
344546
0:,*% N Q S5#%7 R0?S
Loca| Content |n CALk
27
1hree Scenarlos for Llberlan ConLenL 8egulauons
8ase||ne Loca| Content
Legal prlnclple of conLracL
award on an lnLernauonally
compeuuve basls
no mlnlmum LargeLs
Llberlan-only Lender llsLs,
lnLernauonally
benchmarked
CovernmenL Lakes full
responslblllLy for Lralnlng

MaLch-maklng expos buL
no mandaLe for lnL/
domesuc alllances

8ase||ne Loca| Content kegu|anons propornonate to
supp||er capab|||nes w|th on-
the-[ob support
compeuuve basls
10 margln of preference
for Llberlan suppllers
no mlnlmum LargeLs Mlnlmum LargeLs for $
procuremenL from Llberlan
companles
lnLernauonally
benchmarked
1argeLs for employmenL and
Lralnlng proporuonaLe Lo
on-Lhe-[ob
no mandaLe for lnL/
domesuc alllances
MandaLe for Llberlan sub-
conLracLors ln forelgn
conLracLs (> > welghung ln
Lender) , eg LCl
8ase||ne Loca| Content kegu|anons propornonate to
supp||er capab|||nes w|th on-
the-[ob support
kegu|anons propornonate to
supp||er capab|||nes post upfront
|nvestment and tech transfer
compeuuve basls
10 margln of preference
for Llberlan suppllers
30 margln of preference for
Llberlan-owned suppllers
no mlnlmum LargeLs Mlnlmum LargeLs for $
companles
Mlnlmum LargeLs for $
companles
lnLernauonally
benchmarked
Llberlan-owned only Lender
llsLs noL lnLernauonally
benchmarked
on-Lhe-[ob
upfronL educauon and Lralnlng
no mandaLe for lnL/
domesuc alllances
MandaLe for Llberlan sub-
conLracLors ln forelgn
conLracLs (> > welghung ln
Lender) , eg LCl
MandaLe for 30 conLracL $
value Lo Llberlan sub-
conLracLors ln forelgn conLracLs,
eg LCl
'Stretch|ng' L|ber|an Content
@2"#"4)2 ,#7 !"44%12),+ N43,2$*
28
Scenar|o Loca|
Content
CALk
Loca| Content
CLk
1ota| I1L
[obs
created
Cn-the-[ob
Lralnlng and
supervlslon
of suppllers
Upfront
lnvesLmenL
ln suppllers
CALk
cost

CLk
cost
over 24
yrs
ro[ect
de|ay

Ikk

Nanona|
Income
foregone
over 24
yrs

ln-
house
Supply
chaln
hase l - Leased lSC
8ase||ne
local
conLenL
4.0

$24m
18.0

$49m
3.3

$176m
8,700 $0 $0 0 33.0 $0
Max local
conLenL -
on-the-[ob
8.3

$30m
38.0

$103m
6.7

$361m
17,800 $260m $0 0 33.8 $89m
Max local
conLenL
- upfront
|nvestment
20.8

$123m
39.0

$139m
14.3

$771m
38,300 $0 $772m 2 yrs 23.9 $300m
hase ll - new-bulld lSC
8ase||ne
local
conLenL
4.3

$68m
18.9

$61m
3.1

$186m
11,000 $0 $0 0 23.7 $0
Max local
conLenL -
on-the-[ob
8.7

$130m
38.9

$126m
10.4

$374m
21,700 $324m $0 0 22.7 $89m
Max local
conLenL
- upfront
|nvestment
20.4

$306m
60.0

$194m
20.7

$744m
44,781 $0 $909m 2 yrs 18.3 $384m
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Iob Creanon
29
D|rect and |nd|rect I1L Iobs up from 2,100 to 8,700
(lnformal [obs up from 8,800 Lo 36,000)
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Upfront Investment |n Supp||er Deve|opment
30
5 MM upfront cap|ta| |nvestment |n supp||er deve|opment
(ubllc/rlvaLe arLnershlps and !olnL venLures may reduce burden on ro[ecL)
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Schedu|e Impact
31
Upfront |nvestments |n on-shore fabr|canon and mater|a|s
manufacture capab|||nes causes 24 month pro[ect de|ay
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
"#$%&'() *+,#'+- .'/#$(
32
US5 MM of nanona| revenues foregone over ||fe of he|d,
(Lwo year delay Lo publlc lnvesLmenLs ln poverLy reducuon programmes)
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Commerc|a| Impact
33
ayback per|od de|ayed 26 months
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Commerc|a| Impact conunued.
34
Scenar|o CLk D|rect
|oca| content
(llcensee)
CALk
Loca|
Content
CLk Loca|
Content
(supply chaln)
Ikk
(mln = 20)
Nanona|
revenues
forgone
8ase Case Local
ConLenL
18.9 4.3 3.2 23.7 $0b
(0m)
Max upfronL
lnvesLmenL
60.0 20.4 20.7
18.3
$384m
(24 m)
Cou|d L|ber|an Content regu|anons become an
|nvestment 'show-stopper'?
(Ikk fa||s be|ow m|n|mum due to cost esca|anon and schedu|e de|ay)

Cpnm|s|ng L|ber|an Content

33
Cpnmum # I - Iabr|canon and Construcnon
36
Cwned ISC - Cpt|m|sed I
(upfronL lnvesLmenL focused on fabrlcaLlon Lo uLlllse local sLeel
manufacLure and onshore consLrucLlon. 24 monLh delay on
publlc revenues)
of LoLal
expendlLure
8ase-Case
Local
ConLenL ln
Llberla
Max Local conLenL
wlLh on-Lhe-[ob
and quallLy conLrol
Max Local
ConLenL wlLh
upfronL caplLal
lnvesLmenL
CpLlmlsed l Schedule
uelay
1ota| CALk
ro[ecL - ln-house pro[ecL managemenL and lLLu 4.0 10.0 1S.0 30.0 1S.0 0
ro[ecL - lSC LCl conLracL 30.0 3.0 6.0 10.0 8.0 0
ro[ecL - lSC modules fabrlcaLlon: waLer LreaLmenL, processlng,
compresslon, LurreL, hell, accom
13.0 0.0 0.0 10.0 9.0 24
ro[ecL - Sub-sea deLalled englneerlng and M (ouLsourced) 3.0 10.0 1S.0 30.0 10.0 0
ro[ecL - Cwner procuremenL of sub-sea maLerlals and equlpmenL 13.0 0.0 S.0 10.0 6.0 12
ro[ecL - labrlcaLlon of sub-sea equlpmenL: flexlble flowllnes, xmas Lrees,
manlfolds
10.0 0.0 0.0 20.0 14.0 24
ro[ecL - lSC and sub-sea lnsLallaLlon and commlsslonlng ln fleld 10.0 10.0 1S.0 30.0 30.0 24
ro[ecL - Cnshore consLrucLlon and oLher servlces: porL upgrades, marlne
supply base, avlaLlon servlce, access roads, offlces, canLeens, warehouses,
communlcaLlons, houslng, foundaLlons
8.0 1S.0 2S.0 4S.0 40.0 12
ro[ecL - Cnshore consLrucLlon maLerlals and bulk commodlLles 3.0 S.0 10.0 20.0 17.0 24
100
1ota| CLk
CperaLlons - ln-house professlonal employees 3.0 10.0 30.0 S0.0 40.0
CperaLlons - ln-house non-professlonal employees 1.0 S0.0 70.0 9S.0 80.0
CperaLlons - lSC operaLlon cosLs, spread across 24 years 17.0 0.0 1.0 S.0 6.0
CperaLlons - sub-conLracLed servlces (over operaLlonal llfe) 23.0 10.0 20.0 4S.0 30.0
CperaLlons - boughL ln maLerlals and rouLlne equlpmenL (over operaLlonal llfe) 12.0 10.0 1S.0 30.0 22.0
CperaLlons - boughL ln exoLlc equlpmenL/maLerlals (over operaLlonal llfe) 40.0 1.0 S.0 10.0 7.0
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Loca| Content Cpnm|sanon # I
37
Scenar|o CLk D|rect
|oca| content
(llcensee)
CALk
Loca|
Content
CLk Loca|
Content
(supply chaln)
Ikk
(mln = 20)
Nanona|
revenues
forgone
8ase Case Local
ConLenL
18.9 4.3 3.2 23.7 $0b
(0m)
Max upfronL
lnvesLmenL
60.0 20.4 20.7 18.3 $384m
(24 m)
Cpnma| Loca|
Content # I
48.9 13.6

16.3
20.0
5278m
(24m)
Cpnmum # I: 8eLaln upfronL lnvesLmenL focused on fabrlcauon Lo
uullse local sLeel manufacLure and on-shore consLrucuon, buL
oLherwlse reduce local conLenL requlremenLs unul l88 = 20.

TU 4"#$: 7%+,9 $" 3<6+)2 1%.%#<%* 1%4,)#*
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Cpnmum #1 - rem|ums for Supp||er Deve|opment
38
5 MM upfront cap|ta| |nvestment |n supp||er deve|opment p|us 5
MM |n on-the-[ob prem|ums

Cpnmum # 2 - Construcnon and rocurement
39
Cwned ISC - Cpt|m|sed II
(upfronL lnvesLmenL focused aL on-shore consLrucLlon.
naLlonal revenue delay reduced Lo 12 monLhs, buL no
fabrlcaLlon lndusLry)
of LoLal
expendlLure
8ase-Case Local
ConLenL ln
Llberla
Max Local
conLenL wlLh on-
Lhe-[ob Lralnlng,
supervlslon and
quallLy conLrol
Max Local
ConLenL wlLh
upfronL caplLal
lnvesLmenL
CpLlmlsed ll Schedule
uelay
1ota| CALk
ro[ecL - ln-house pro[ecL managemenL and lLLu 4.0 10.0 1S.0 30.0 1S.0 0
ro[ecL - lSC LCl conLracL 30.0 3.0 6.0 10.0 8.0 0
ro[ecL - lSC modules fabrlcaLlon: waLer LreaLmenL, processlng,
compresslon, LurreL, hell, accom
13.0 0.0 0.0 10.0 0.0 0
ro[ecL - Sub-sea deLalled englneerlng and M (ouLsourced) 3.0 10.0 1S.0 30.0 10.0 0
ro[ecL - Cwner procuremenL of sub-sea maLerlals and equlpmenL 13.0 0.0 S.0 10.0 10.0 1
ro[ecL - labrlcaLlon of sub-sea equlpmenL: flexlble flowllnes, xmas
Lrees, manlfolds
10.0 0.0 0.0 20.0 0.0 0
ro[ecL - lSC and sub-sea lnsLallaLlon and commlsslonlng ln fleld 10.0 10.0 1S.0 30.0 1S.0 0
ro[ecL - Cnshore consLrucLlon and oLher servlces: porL upgrades,
marlne supply base, avlaLlon servlce, access roads, offlces, canLeens,
warehouses, communlcaLlons, houslng, foundaLlons
8.0 1S.0 2S.0 4S.0 4S.0 1
ro[ecL - Cnshore consLrucLlon maLerlals and bulk commodlLles 3.0 S.0 10.0 20.0 10.0 0
100
1ota| CLk
CperaLlons - ln-house professlonal employees 3.0 10.0 30.0 S0.0 40.0
CperaLlons - ln-house non-professlonal employees 1.0 S0.0 70.0 9S.0 80.0
CperaLlons - lSC operaLlon cosLs, spread across 24 years 17.0 0.0 1.0 S.0 6.0
CperaLlons - sub-conLracLed servlces (over operaLlonal llfe) 23.0 10.0 20.0 4S.0 30.0
CperaLlons - boughL ln maLerlals and rouLlne equlpmenL (over
operaLlonal llfe)
12.0 10.0 1S.0 30.0 22.0
CperaLlons - boughL ln exoLlc equlpmenL/maLerlals (over operaLlonal
llfe)
40.0 1.0 S.0 10.0 7.0
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Cpnmum kegu|anons #2
40
Scenar|o CLk D|rect
|oca| content
(llcensee)
CALk
Loca|
Content
CLk Loca|
Content
(supply chaln)
Ikk
(mln = 20)
Nanona|
revenues
forgone
8ase Case Local
ConLenL
18.9 4.3 3.2 23.7 $0b
(0m)
Max upfronL
lnvesLmenL
60.0 20.4 20.7
18.3
$384m
(24 m)
Cpumal Local
ConLenL l
48.9 13.6

16.3 20.0 $278m
(24m)
Cpumal Local
ConLenL ll
48.9 13.6 8.7
22.6
5181m
(12m)
Cpnmum # II - upfronL lnvesLmenL focused only aL on-shore
consLrucuon and procuremenL of sub-sea equlpmenL.

uelay Lo nauonal revenues reduced Lo 12 monLhs, buL no fabrlcauon lndusLry
R0?SQS5#%7 ?2%#,1)"= 5)$: *"4% "#Q*:"1% E,61)2,-"#
Cpnmum #2 - rem|ums for Supp||er Deve|opment
41
5 MM upfront cap|ta| |nvestment |n supp||er deve|opment p|us 5
MM |n on-the-[ob prem|ums


42
o||cy Cho|ces for L|ber|an Content kegu|anons
CLIC 1 - Go|den 1hread - SLrlcLly adhere Lo Lhe
prlnclple of conLracL award on a compeuuve basls:
low levels of [ob creauon and lnvesLmenL ln Llberlan
suppllers,
nauonal revenues maxlmlsed for poverLy reducuon,
lnvesLmenL cllmaLe compeuuve wlLhln WesL Afrlcan

CLIC 2 - Cpnm|se - seL local conLenL regulauons Lo
auracL lnward lnvesLmenL Lo selecLed suppller
lndusLrles, buL llmlL adverse lmpacL on pro[ecL dellvery,
commerclal reLurns and nauonal revenues
CLIC 3 - Stee|-Iabr|canon Industry - seL regulauons
Lo lncenuvlse lnward lnvesLmenL ln fabrlcauon lndusLry,
llnked Lo sLeel manufacLure and oLher downsLream
sLeel-fabrlcauon/consLrucuon opporLunlues

43
Conc|us|ons
roLecuonlsL Llberlan ConLenL regulauons are almosL |nev|tab|e
glven low level of currenL capablllLy and pollucal expecLauons for
employmenL and lndusLrlal developmenL
8uL.push Loo hard and Lhere could be trade-os wlLh
adverse lmpacLs on lnvesLmenL cllmaLe and umlng
of nauonal revenues for poverLy reducuon
1herefore..be se|ecnve ln where Lo focus domesuc
preferenclng regulauons:
lncenuvlse !vs, alllances and enLerprlse lncubauon
locus on susLalnable [obs and Lransferable skllls
locus on hlgh growLh SMLs allgned wlLh aggregaLe demand
locus on goods and servlces carrylng low levels of commerclal rlsk
!1)-2,+ )* $" (%$ $:% ('0&'((1&'0 /#'/(234 ,#7 /#'31+/,'0
5 21#/61($('3 431+3(07 1)(:$ E1"4 $:% .%19 "<$*%$

Optimal Local Content in The Liberian Hydrocarbon Sector

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Optimal Local Content in The Liberian Hydrocarbon Sector

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