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LOCAL CONTENT: WORKFORCE INTEGRATION And procurement

Marathon Oil strives to hire workforces that reflect the communities where we operate to build relationships and contribute to local social and economic progress.

Local Content

Navigate Page: Equatorial Guinea Workforce Integration | Global Supply Chain | Institute Technological National of Hydrocarbons of Equatorial Guinea (ITNHGE) | North Dakota Tribal BusinessesOur activities may include training, workforce integration programs, and educational and vocational programs to build workforce capabilities. Through efforts like these, we have raised the percentage of national employees in our workforce in Equatorial Guinea to approximately 750 Equatoguineans in 2015, or 79 percent of our workforce in the country. Marathon E.G. Production Limited (MEGPL) increased national employees in managerial/supervisory and professional roles 34 percent and 19 percent, respectively, between 2014 and 2015.

To further develop the national workforce, in 2015 MEGPL funded more than $500,000 in scholarships at four universities around the world. In addition, as part of the Alba B3 compression project, we are sponsoring 20 Equatoguinean students at the Institute Technological National of Hydrocarbons of Equatorial Guinea (ITNHGE) for a total expected expenditure of $4.5 million over three years. The students are about to begin the final year of the program.

Building Local Supplier Capacity

We seek suppliers that align with our values and honor our Code of Business Conduct. Our contracts spell out our expectations that contractors adhere to Company policies and comply with all relevant and applicable exports laws and regulations, including the U.S. FCPA and United Kingdom Bribery Act.

We look for suppliers that reflect the diversity of our customer base, while providing competitive goods and services. Our supplier strategy includes capacity building, training, education, certification tracking and outreach.

Our goal in Equatorial Guinea is to support local suppliers and use them whenever possible. From 2008 to 2014, our national content spending increased every year, boosted by procurement for the Alba B3 compression project. In 2015, our total spend with all local companies was approximately $92 million, a 13 percent decrease from 2014 due to project changes resulting from lower oil prices. Since 2011, spending with local companies has averaged approximately $86 million per year.

Increasing Spending with Tribal Businesses in North Dakota

Marathon Oil strives to do business with Tribal Employment Rights Office (TERO) Tier One suppliers – companies that are owned 100 percent by a member of the Three Affiliated Tribes on the Fort Berthold Indian Reservation in North Dakota. TERO expects operators and service companies operating within the boundaries of Fort Berthold to use Tier One suppliers when they are available, with the goal of increasing the capabilities of member-owned companies. To work with Marathon Oil, Tier One companies must meet the same requirements for HES performance, insurance coverage and financial viability as other Marathon Oil suppliers, as well as offer competitive pricing for goods and services.

In early 2015, a gap analysis revealed additional opportunities to work with Tier One suppliers, particularly in drilling and completions. We developed a procurement plan for critical services and collaborated with TERO to execute the plan. Through stakeholder engagement and capacity building efforts, Marathon Oil awarded all bids for work on the reservation to Tier One suppliers. Our spending with Tier One suppliers increased from approximately $14.8 million in 2011 to more than $78.4 million in 2015. Even with our lower capital budget compared to 2014, in 2015 we grew spending by approximately $4 million and put contracts in place for approximately 35 new Tier One vendors.

To build capacity, Marathon Oil employees are available as a resource to help Tier One suppliers set up invoicing processes and understand our requirements, and provide guidance on HES policies and procedures.

On several occasions, Tier One suppliers adopted our HES policies and guidelines as their own with successful results. All employees of new Marathon Oil suppliers must attend a half-day safety orientation session prior to working on our locations. Additionally, our HES professionals meet monthly with critical individual suppliers and quarterly with contractor groups to share safety performance information and lessons learned.

In addition, we regularly provide ongoing education to ensure our employees, contractors and subcontractors understand TERO licensing and regulation requirements. TERO has the authority to impose fines and shut down operations if operators, their contractors or subcontractors do not have valid licenses to work on the reservation.

We are also engaging our Tier One suppliers to make sure they understand our activity plans and encouraging them to expand their customer base. We believe that hiring Tier One suppliers and helping them improve their capabilities to work for Marathon Oil and other operators contributes to the sustainability of our suppliers and our industry.

Global Supply Chain 2016 Focus Areas

Marathon Oil identifies vendors and service lines that are critical to our performance and assesses their financial capacity each quarter. If we identify potential risks, we work with the supplier to create an action plan for improvement or find a new supplier. Global Supply Chain goals in 2016 include seeking vendors that can help us move quickly and remain competitive in an upturn, optimizing cost, improving efficiency and providing transparency to help Marathon Oil run our business effectively.



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