The Oil Business In Nigeria

By Lawrence Taylor Nordee


This week, thousands of engineers, energy experts and technologists will gather in the world's OIL capital, Houston, Texas, for the Oil Technology Conference (OTC). Oil producing countries will be represented as will giant multi-national Energy Companies and Service companies. Nigeria's delegation will be led by Vice President Atiku.

OTC is a time when advancements in technology that affect the Oil and Gas Industry are displayed for the world to see. These include advancements in Upstream and Downstream as well as Off-shore and On-shore exploration. It offers an opportunity to display the beneficial effects of technology on the business beyond pipelines.

Nigeria, blessed with several natural resources, is also blessed with one of the best grades of oil. Although Nigeria is not one of the top three producers of oil, Nigeri'as light grade oil has been known to form approximately 38-42% of gasoline refining. This was driven home several years ago when Nigerian energy workers went on a labor strike.

OTC is important to Nigeria and Nigeria is important to the energy industry because of the aforementioned fact about the quality of its oil. The following analysis focuses on the beneficial interface of Oil giants, the community and technology. The discussion can further be referred to with the acronym DESH namely: Dollar, Environment, Safety and Health.

1. Dollar (D): It is appropriate to discuss money first because that is the reason corporations are in business. Money derived from oil exploration also enables economic development and therefore the economy of Nigeria. It is a known fact that oil is the mainstay of the Nigerian economy accounting for upwards of 70-90% of the GNP.

The proper allocation of money (using the dollar as the benchmark currency) into other sectors like technological development, economic development, and national governance. The annual fight for the proper allocation of the national cake is world renowned.

Money, in this equation, must be seen as a resource to be used to solve several problems in the country. Oil companies must pay their fair share for oil exploration and refining in Nigeria. The deployment of current and appropriate technology must form a component of payment.

2. Environment (E): The environment is probably the one area in which the interface between government, the community and the multinationals operating in Nigeria must be transparent. Environmental impact studies carried out judiciously benefits each segment of the Nigerian oil community.

No oil company undertakes exploration activities in the western hemisphere without first considering the impact on the environment. Exploration, drilling and refining activities and their consequences on the ecosystems within Nigeria both downstream and upstream is at the crux of the matter of the effect of the oil business in Nigeria. No amount of money can replace any negligence in this area. Some good examples might be Chevron's DIANA project or BP Amoco's GOM (Gulf of Mexico) project. All parties must recognize that cleaner environment is important in the long term.

Environment is also perhaps one area that technological advance have the most impact. The new generations of technology in energy should enable exposed pipelines and openly flared gas to be things of the past in Nigeria.

3. Health (H): The health benefits of a cleaner exploration environment are self evident. Both company workers and the local communities will benefit if companies utilize the superior health standards of the west in Nigeria. Advancements in health-care of the last ten to fifteen years are monumental. Companies can aim to contribute to Nigeria's progress in the area of health.

Studies of some of the diseases plaguing Nigeria can be sponsored by corporations that have business interests in Nigeria. This does not suggest that government relinguishes its responsibilities to the citizens of Nigeria. The citizens themselves also have a role in this area with basic hygiene.

4. Safety (S): Although discussed last, it is certainly not the least of these factors. Careful consideration to safety standards is simply good business. Monitoring of installations, quick action in case of oil spills. No company, even outside the energy industry, operates unsafe work places in violation of OSHA standards in the United States. Nigeria and its citizens deserve no less. Governments role must be to evaluate and enforce, with specificity, safety standards.

There must be commitments on the parts of government, the companies and the communities to have a safe working environment. The standards of all the partners must be raised to par.

Getting DESH right is everyone's business. Government, corporations and the Nigerian community consulting with, listening to and responding to, each other can benefit economically. Appropriate technologies to to assure a clean healthy environment results in good economic returns for all. Existing policies should be reviewed and new beneficial ones developed.


Nordee, an IT Consultant and Financial Analyst, is a contributing editor to USAfrica the Newspaper.