Local content and procurement requirements in oil and gas contracts: Regional trends in the Middle East and North Africa

Resource-rich countries in the Middle East and North Africa (MENA) region, especially Gulf countries – Kuwait, Iran, Iraq, Bahrain, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) – are increasingly inserting local content requirements (LCRs) into their legal framework, through legislation, regulations, guidelines, industry contracts and bidding practices. Despite the clear and uniform overall policy drivers of LCRs and product mandating requirements in the MENA region, approaches taken to enforce LCRs vary and must be carefully understood and clarified to avoid misalignments and contractual mismatch between governments and international oil companies. This paper examines how local content and procurement requirements have evolved in the MENA region. It provides a comparative analysis and profile of LCRs in MENA countries, in order to determine prevailing preferences and legal risk points. It concludes with recommendations on how investors and national authorities can evolve collaborative and achievable LCRs that minimise disputes and legal risks.

By: Damilola Olawuyi

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