10 Local Content Policies in the Energy Transition Era …
323
USD 1320 GNI per capita in 2020, this largely affects the development
of local content policies in Kenya.
42
10.3.5 The Volatility of Oil and Gas Prices
Oil and gas prices are known for their volatility in the international
market. When the oil and gas industry experienced increased oil and gas
prices in the international market as in the decade of 2005–2015, the
pressure to intensify local content policies in the oil and gas-rich countries escalated due to the massive profits the multinational oil companies
were making. But currently, the effects of the Corona Virus (COVID-19)
pandemic have led to weathering oil and gas prices in the international
market reaching less than $1 per barrel due to the effects of the wide
lockdown measures to combat COVID-19 across the globe.
43 It is clear
that after the wave of the COVID-19, multinational companies will
not be in a favourable position to invest leave alone to meet their local
content mandatory targets. The design of local content policies must take
into account such uncertainties and be flexible in its application so as to
meet the objectives of the policymaker.
10.4 The Advantages and Disadvantages
of Local Content Policies
Local content is both disadvantageous and advantageous in its application. The policy’s efficiency and functionality are dependent on the
nature of the factors that affect the local content design. In countries with
unfavourable political economies and poor social welfare, poor infrastructure as well as lack of capital to integrate the extractive industry
44 :
42 East Africa Economic Outlook 2019. https://www.afdb.org/fileadmin/uploads/afdb/Docume
nts/Publications/2019AEO/REO_2019_-_East_Africa_.pdf.
43 Albulescu, Claudiu. “Coronavirus and oil price crash.” Available at SSRN 3553452 (2020).
44 Subai, Pereowei. Local content oil and gas law in Africa: Lessons from Nigeria and beyond .
Routledge, 2019.
323
USD 1320 GNI per capita in 2020, this largely affects the development
of local content policies in Kenya.
42
10.3.5 The Volatility of Oil and Gas Prices
Oil and gas prices are known for their volatility in the international
market. When the oil and gas industry experienced increased oil and gas
prices in the international market as in the decade of 2005–2015, the
pressure to intensify local content policies in the oil and gas-rich countries escalated due to the massive profits the multinational oil companies
were making. But currently, the effects of the Corona Virus (COVID-19)
pandemic have led to weathering oil and gas prices in the international
market reaching less than $1 per barrel due to the effects of the wide
lockdown measures to combat COVID-19 across the globe.
43 It is clear
that after the wave of the COVID-19, multinational companies will
not be in a favourable position to invest leave alone to meet their local
content mandatory targets. The design of local content policies must take
into account such uncertainties and be flexible in its application so as to
meet the objectives of the policymaker.
10.4 The Advantages and Disadvantages
of Local Content Policies
Local content is both disadvantageous and advantageous in its application. The policy’s efficiency and functionality are dependent on the
nature of the factors that affect the local content design. In countries with
unfavourable political economies and poor social welfare, poor infrastructure as well as lack of capital to integrate the extractive industry
44 :
42 East Africa Economic Outlook 2019. https://www.afdb.org/fileadmin/uploads/afdb/Docume
nts/Publications/2019AEO/REO_2019_-_East_Africa_.pdf.
43 Albulescu, Claudiu. “Coronavirus and oil price crash.” Available at SSRN 3553452 (2020).
44 Subai, Pereowei. Local content oil and gas law in Africa: Lessons from Nigeria and beyond .
Routledge, 2019.