Buying from local suppliers is a particularly effective way for us to encourage development in the places where we operate. It directly contributes to the local economy, creates jobs and builds skills. We actively promote the use of local suppliers and contractors and train local companies to help them meet our standards, so they can compete for contracts. For example, on the Salym oil production project in Siberia, we held a series of meetings for Russian companies that were invited to bid for major construction contracts. In these sessions, we helped them to understand our tendering and contract requirements as well as the online bidding process. As a result of this and other efforts, Russian companies had won 80% of the contracts (by value) that had been awarded by the end of 2006.

We help local communities set up businesses to sell us goods and services. For example, in the Athabasca Oil Sands Project, Shell Canada helped the neighbouring aboriginal community set up trucking, maintenance, catering and security businesses. They now work for the project and other oil sands operators.

Based on an annual internal questionnaire to our senior country representatives, in 2006, we had programmes in place to promote the use of local suppliers in over 90% of the low and medium income countries where we operate (see the Performance Data page for more on this data). It is estimated that we spent approximately $10 billion on goods and services from locally owned companies in these countries. Buying locally also helps create opportunities for minorities and women.

In South Africa for example, in support of government policies, over 60% of our expenditure is with black economic empowerment companies and we continue to champion minority and female-owned businesses in the USA.

Host governments sometimes set requirements for buying or hiring locally. In 2006, Sakhalin Energy again met the challenging targets of 70% Russian-sourced materials and services on the Sakhalin II project.