The underutilised value of multinational engineering firms in supporting oil companies to tackle poverty
Dr Michael Warner, Research Fellow, ODI
Roger Swaine, AMEC plc
David Green, Shell Group Contracting and Procurement
Petter Matthews, Director, Engineers Against Poverty
At this meeting, the Overseas Development Institute (ODI) and Engineers Against Poverty (EAP) launched the second of two studies showing how multinational engineering and services companies can markedly increase the contribution that oil and gas development projects make to alleviating poverty and local economic development in poor countries. Both reports were prepared in collaboration with the international engineering services contractor AMEC and its operations in the Philippines and Timor-Leste. Together, the reports explain how a small group of large, mostly international engineering firms, manage the construction and operation of the majority oil and gas production installations in the world:
- helping to spend up to 90% of their clients money
- managing contracts with hundreds of local supplies and sub-contractors
- often in closest day-to-day contact with the local community, local firms and local government
- enjoying access to an enormous range of competencies relevant to training, enterprise support and institutional strengthening
But profit margins for these firms are typically tight. The right commercial incentives need to be in place if their full potential for poverty reduction is to be realised. The two reports identify innovative procurement procedures and contract delivery strategies to achieve this.
These reports come at a time when many international oil and gas companies are challenged by the need to ensure a greater direct economic impact from their local presence - one which provides a counter-balance to the problems faced by the public sector in linking oil revenues to a country's economic and social development.