Policy and regulatory framework to enhance local content : yardsticks and best practice

Abstract

The focus of this paper is on how to design a policy to enhance national participation in the local oil and gas industry in a way that actually turns out the benefit the host country of these resources. The underlying idea of the policy approach we recommend is to create a sound business climate, to encourage oil companies to compete in involving domestic value generating activities and firms, and to let their track record in this respect influence their rights to future oil and gas. Doing so on a competitive basis, which also allows for preferential treatment of efforts to develop local firms and local labour, should contribute positively to the development of local industrial capacity in relation to the domestic oil and gas industry. This will, in turn, most likely spin off positively to industrial development in other areas of the host country economy as well, which means that also industrial sectors other than oil and gas related industry should benefit. Altogether, this means that the chances for the host country to expand and realize its industrial potential ought to become significantly strengthened.