Crude Oil Lifting: Time for Enhanced Local Participation

After more than five decades of crude oil exploration and production in Nigeria by International Oil Companies, IOCs, Nigeria’s indigenous companies are yet to build sufficient technical and financial capacity to play a dominant role in the exploration and production (E&P) business.

Findings by the Orient Energy Review (OER) show that only a paltry 10 per cent of Nigeria’s daily production of over two million barrels of crude oil is produced by the Nigerian independent companies, while the rest is produced by the deep pocket multinationals and other foreign players.

Though the oil and gas sector is an international business, indigenous companies and National Oil Companies (NOCs) are showing increasing appetite to participate in the business that is currently dominated by the multinationals.

               The consequence of this is that the country’s economy is exposed to a potential risk of collapse in the event of any international sanctions that will require the IOCs to pull out of the country or significantly reduce the volume of their investment in the oil sub-sector.

Unlike Iran, which survived international sanctions as a result of the deep involvement of the country’s local capacity in the oil and gas business, Nigeria stands no chance of economic survival in the event of any diplomatic confrontation with the western countries.

Though Iran lost its place at the summit as the second-largest producer among the member countries of the Organization of Petroleum Exporting Countries (OPEC) when the west ostracized her in 2012, the country’s economy did not collapse because local content involvement in E &P was able to shoulder the shock considerably.