Local Content Development Plan in Oil and Gas Industry: Opportunities and Threats

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EBRAHIMI SEYED NASROLLAH; KHOSHCHEHREH FATEMEH

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Journal: Energy Law Studies Year:2019 | Volume:4 | Issue:2 Page(s): 267-292

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Information Journal Paper

Title

Local Content Development Plan in Oil and Gas Industry: Opportunities and Threats

Author(s)

EBRAHIMI SEYED NASROLLAH | KHOSHCHEHREH FATEMEH | Issue Writer Certificate

Keywords

Local content policyQ1

foreign investmentQ1

opportunities and threatsQ2

economic developmentQ1

oil and gas industryQ1

Abstract

Since the nationalization of petroleum industry and recognition of the states’ sovereign right over their reserves and underground resources, the “ local content strategy” has become one of the main commitments of the international oil companies in the upstream oil and gas contracts. The rationale behind including such clause is to create jobs, promote enterprise development and to facilitate transfer of new skills and technologies to the host country. According to this provision, foreign investors are obligated to give priority to domestic goods and services as well as native workforce while conducting petroleum operations. Local Content requirement has become a customary rule in the industry and is implemented in different ways. While some of them are mandatory, others are voluntary. This provision increases the operators’ motivations by means of fiscal incentives or tax reduction. Local content regimes entail risks and opportunities for both host government and oil and gas companies. The requirement yields benefit for host governments as well as foreign investors through providing easy access to affordable manpower and services. However, the economic and social impacts associated with such requirement are not always positive for all parties of the contracts, and in some cases serious challenges may arise in host countries and for companies. For example, operators and international contractors may face unrealistic expectations or targets from host governments or local communities seeking quick results. So before proceeding to implementation phase, any potential challenge should be analyzed and appropriate solutions should be found in advance.

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APA: Copy

EBRAHIMI, SEYED NASROLLAH, & KHOSHCHEHREH, FATEMEH. (2019). Local Content Development Plan in Oil and Gas Industry: Opportunities and Threats. JOURNAL OF RESEARCHES ENERGY LAW STUDIES, 4(2 ), 267-292. SID. https://sid.ir/paper/264315/en

Vancouver: Copy

EBRAHIMI SEYED NASROLLAH, KHOSHCHEHREH FATEMEH. Local Content Development Plan in Oil and Gas Industry: Opportunities and Threats. JOURNAL OF RESEARCHES ENERGY LAW STUDIES[Internet]. 2019;4(2 ):267-292. Available from: https://sid.ir/paper/264315/en

IEEE: Copy

SEYED NASROLLAH EBRAHIMI, and FATEMEH KHOSHCHEHREH, “Local Content Development Plan in Oil and Gas Industry: Opportunities and Threats,” JOURNAL OF RESEARCHES ENERGY LAW STUDIES, vol. 4, no. 2 , pp. 267–292, 2019, [Online]. Available: https://sid.ir/paper/264315/en

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