The price of local content : a case study of the impact oil-price fluctuations has on local content development in Angola's petroleum industry
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Norad’s Oil for Development (OfD) programme is set for renewal in 2015, a year where the petroleum industry is recovering from the largest sustained fall in oil-prices since 2008/2009. In light of these developments, this thesis seeks to examine the link between oil-prices, and the ability of oil-exporting countries to develop its local content in the petroleum industry. The literature on local content has been focused on the domestic factors that influence local content development. This paper however, contends that this focus on domestic factors somewhat neglect the influence that the external environment has on the ability of these factors to contribute to local content development. The most notable external factor in this regard being oil-prices, which reflect not only the global supply and demand for oil, but also profitability in the industry as a whole. Through this qualitative case study of Angola, which has been one of the OfD programmes “core” recipient countries, this paper examine the link between oil prices and local content development. This is done by looking at how a decline in oil-prices affect the macroeconomic environment in the country, and how this environment influence domestic investment and development. The main findings suggest that a drop in oil-prices does indeed affect the macroeconomic environment, in a way that limits Angola’s ability to develop local content in the petroleum industry. This topic is relevant for several reasons. Firstly, it provides decision-makers in oil-exporting countries with an extra dimension when considering the shape of future local content policies. Secondly, this insight into the effects of oil-price fluctuations in Angola might help to improve the assistance to similar countries provided by petroleum-related aids programs, such as the OfD programme, in years to come.