CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The need for resource-rich Nigeria to
assume control of the exploration, exploitation and production
activities in the oil and gas sector and to harness the potentials of
this most strategic industry in order to generate more value-added,
seems to be receiving much desired attention from all the stakeholders.
This need is equally expressed in Nigeria’s desire to domicile a
substantial amount of the average $18 billion per annum exploration and
production spending and stem the tide of capital flight which, over the
years, has made Nigeria a junior partner in her joint venture
arrangements with the International Oil Companies (IOCs). For a country
with over four decades’ experience in oil and gas exploration and
production activities and proven recoverable reserves of about 37
billion barrels, her inability to use the resource wealth as a means for
national development and poverty reduction has perhaps been the
greatest challenge facing successive administrations. These challenges
have their expression in how Nigeria can derive maximum benefits from
oil and gas operations through optimal use of local competences and
resources as practiced in Indonesia, Brazil, Norway and Venezuela, for
example. Although these countries started oil exploration and production
activities after Nigeria they have largely recorded remarkable success
in their efforts to grow the local content in this strategic industry.
The question is: why has Nigeria been unable to surmount her own
challenges?
The Nigerian Oil and Gas Development Law
2010 defines local content as “the quantum of composite value added to
or created in Nigeria through utilization of Nigerian resources and
services in the petroleum industry resulting in the development of
indigenous capability without compromising quality, health, safety and
environmental standards”. It is framed within the context of growth of
Nigerian entrepreneurship and the domestication of assets to fully
realize Nigeria’s strategic developmental goals. The scheme, which has
the potential to create over 30,000 jobs in the next 5 years, is geared
to increasing the domestic share of the $18 billion annual spending on
oil and gas from 45% to 70%, in addition to enhancing the multiplier
effects on the economy, through refining and petrochemicals. The local
content policy action started in 1971 through the establishment of the
Nigerian National Oil Corporation, (NOC). NOC was established as a
vehicle for the promotion of Nigeria’s indigenization policy in the
petroleum sector. It later became Nigerian National Petroleum
Corporation (NNPC) in 1977 through NOC’s merger with the petroleum
ministry. NNPC flagged off the actual local content initiative through
acquisition of interests in the operations of the IOCs. These interests
grew to about 70%, with the responsibility of controlling all acreages
and other activities. Although conscious efforts were made in the past
through Regulation 26 of the 1969 Petroleum Act, enforcement of local
content policy, the springboard for sustainable economic transformation
of Nigeria, was mere paper work. For an industry that contributes 80% of
Nigerian government revenues and 95% of its foreign exchange this is
entirely unacceptable to the Nigerian government hence the clamor for
change.
1.2 Statement of the Problem
Nigeria’s rising profile in oil and gas
production was rather fast and steady such that she soon became a
formidable force within OPEC. Oil exploration, which started onshore has
tremendously improved the nation’s daily production capacity to about
2.3 million barrels per day, and raised her proven reserves to about 37
billionbarrels. However, despite Nigeria’s ever-growing profile and
wealth, the country remains one of the poorest, and technologically
backward, nations in the world. This is basically because the
much-taunted wealth has not translated into improved welfare. One reason
for this is that over 90 percent of the yearly industry expenditures
escape the domestic economy as capital flight.
1.3 Objectives of the study
There is no doubt that the ultimate
objective of any oil-producing, developing country is to control and
operate all phases of its industry. This explains why successive
governments since the country’s return to democracy have deemed it an
urgent need to positively develop the level of participation of
Nigerians in the oil and gas industry. Indeed, the Federal Government of
Nigeria have initiated several policies and enacted some legislations
towards the statutorization of such golden initiative. This paper
critically examines the various local contents in the petroleum industry
in Nigeria, particularly the key statutory and/or policy framework
regulating same.
1.4 Research questions
1. What are local contents in the petroleum industry in Nigeria?
1.5 Significance of the study
Despite the ever growing number of local
oil service companies the latter’s annual gross earnings still account
for less than 5 percent of the sector’s aggregate annual contracting
budget. Even the local media has been denied the much desired
opportunity to advertise the activities of upstream companies in
Nigeria. Some of these companies, including Nigeria LNG prefer to spend
huge media budgets running into millions of dollars on foreign media
like CNN, upstream journals and magazines. They hardly spend 20 percent
of such annual budget on Nigeria media.
1.6 Scope/Limitations of the study
This study on immorality in churches
will cover all forms of immoral activities that exist in churches today
with a view of finding a lasting solution to the problem.
Limitations of study
- 1. Financial constraint-
Insufficient fund tends to impede the efficiency of the researcher in
sourcing for the relevant materials, literature or information and in
the process of data collection (internet, questionnaire and interview).
- 2. Time constraint- The
researcher will simultaneously engage in this study with other academic
work. This consequently will cut down on the time devoted for the
research work.
1.7 Definition of terms
Local Content:Is the
development of local skills, oil and gas technology transfer, and use
of local manpower and local manufacturing. For a more
practical definition, one could say that local content is building a
workforce that is skilled and building a competitive supplier base (Oil
and Gas, 2010).
Oil and Gas industry:A
company that participates in every aspect of the oil or gasbusiness,
which includes the discovering, obtaining, producing, refining, and
distributing oil and gas. An integrated organization usually organizes
its different tasks and operations into the categories upstream and
downstream.