Rules of Engagement: A Review of Regulatory Instruments Designed to Promote and Secure Local Content Requirements in the Oil and Gas Sector

Regulatory interventions, such as Local Content (LC) requirements, have been incorporated to counter market forces to maximise petroleum revenues. This has been undertaken with the hypothesis that the governments of petroleum-producing countries depend heavily on petroleum sectors for development, yet energy markets inadequately allocate these resources. Thus, governments revise existing, and often out-of-date, petroleum laws and introduce new petroleum legislation to specifically promote socio-economic objectives. This article explores the key legislative instruments of LC as developed and implemented in the oil and gas sectors both from developed and developing countries’ perspectives. In assessing the overall policy approach, this article evaluates instruments used to secure Local Content requirements in the oil and gas industry. In conclusion, governments must identify appropriate frameworks that consider the political and regulatory challenge of striking a balance between incentivising upstream investors and fulfilling national interests, such as creating jobs.

Abstract licence: CC BY

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