Encouraging enterprise

BP seeks to enable more local businesses to participate in BP’s supply chain and to build competitiveness in the local economy

As one of the largest investors in many developing countries, and as a company that spent more than $66 billion on procurement of third party goods and services in 2008, BP seeks to support the development of local suppliers through training and financing programmes, building skills and sharing BP’s internal standards and practices as appropriate. This enables more local businesses to participate in BP’s supply chain and builds greater competitiveness in the overall economy. Our micro-enterprise support schemes also help community based business development.

Developing our local supply base

Sourcing supplies from local businesses makes sense for BP and the community. It avoids the need to ship supplies from overseas and boosts the local economy. However, while local firms can often provide non-specialist supplies such as facilities management, they are often not sufficiently experienced to provide more advanced components and services. This is why BP works among local economic communities to build the skills and capacity needed in a strong supply base.

In Azerbaijan in 2008 we achieved our target to spend $1 billion on local goods and services, either directly from local organizations or indirectly through contractor companies. During 2008, 14 local small and medium-sized businesses signed long-term contracts with BP Azerbaijan totalling more than $50 million. A three-year enterprise development and training programme is under way to help suppliers meet international oil and gas industry standards. Since the programme’s inception, more than 150 local small-and medium-sized businesses have undergone assessments. As well as micro-enterprise programmes, we supported a $15 million supplier finance facility that offers easier access to finance for suppliers and service companies.

In Angola, building local content in the supply chain is a major element of our strategy to be a local energy company. With other companies, we help to support a business centre, the CAE-Apoio Empresarial, which plays an important role in building skills and capacity among an SME sector which until recently could not effectively satisfy the needs of the oil industry. Since its launch in 2005, CAE has delivered technical assistance, supported trade missions and held training events in Luanda, Cabinda, Soyo and Benguela. In total, more than 1,200 people from nearly 500 companies have participated in these events. CAE clients have submitted nearly 200 proposals for procurement to energy companies, and 139 contracts have been awarded including extensions worth more than $60 million.

Egypt has a mature oil and gas industry with a well-established supply base for many areas of BP’s spend. BP’s team already has a relatively high national content for an exploration and production unit, with 48% of our third-party spend going to local suppliers and contractors. We have achieved this by working over several years to engage with local supply chains and develop our contribution to Egypt.

In West Papua, Indonesia, where BP is developing the Tangguh LNG project, we are undertaking a programme designed to build the capacity of local companies. This not only enables businesses to compete for opportunities associated with the construction and operation of the plant, but stimulates more general empowerment of local businesses so they can take advantage of opportunities that arise as a result of the economic development in the area. The Bird’s Head Business Empowerment Program – named after the peninsula where the project is located – includes training workshops and mentoring of individuals. A second phase of the programme began in April 2008 and has provided training in workshops for 158 individuals and 294 mentoring sessions among 60 local companies. Among other things, the training sessions have been aimed at strengthening knowledge and understanding of tender processes, tender administration and preparation of tender proposals.