Breaking News

Declining oil prices threat to indigenous companies—Stakeholders

By Clara Nwachukwu & Sebastine Obasi, Houston, Texas

Indigenous companies operating in Nigeria, yesterday said that declining oil prices may derail the local policy of the federal government as international oil companies, IOCs continue to defer or cancel their capital projects.


Speaking at the ongoing Offshore Technology Conference, OTC, taking place in Houston, Texas,  they advocated for low maintenance and operational costs of existing assets, elongating lives of assets through proactive local supports, cost effective implementation of projects and utilizing local resources to reduce the overall cost.

According to them, there should be cost reduction of operations and projects through local capacity development, indigenous working assets acquisitions, developing local expertise, low maintenance and operational costs of existing assets and  elongating lives of assets through proactive local expertise.

Chairman of Petroleum Technology Association of Nigeria, PETAN, Mr. Bank-Anthony Okoroafor, said there is need to leverage on existing in-country capacity, adding that Nigeria should vigorously focus on reserves and production growth, which has been on the decline.

According to Okoroafor, if the country  can leverage on proven Nigerian companies and in-country capacity building, proper implementation of the Nigerian oil and gas industry content development will significantly drive down the cost of doing business in the oil industry and cushion the effects of the low prices.

“The industry has operated under the local content Act regime for six years now. There is the need to take a closer look at the implementation strategy to ensure it is delivering the desired value to various industry stakeholders in particular and the Nigerian populace in general, proper implementation of local content will lead to massive economic transformation of our great nation”, he said

Also speaking, the  Acting Executive Secretary, Nigerian Content Development and Monitoring Board, Mr. Daziba Obah, said that with the right support and environment, indigenous companies are in a better position to provide services and processes at much lower cost without compromising standards.

He explained that there will be much more cost savings if operators develop increased project management capabilities to manage projects. “Operators will save costs by optimizing existing facilities and improving maintenance efficiencies” he said.

Also speaking, Mr.  Emeka Ene, Managing Director of Oildata Energy Group Limited, said there is need to develop the steel sector for local production of steel billets, coils and plates, so as to save indigenous companies from the declining crude oil prices.

Ene added that government should accelerate gas infrastructure along gas corridors to ease availability of gas in oil and gas parks, oil and gas free zones and other manufacturing locations supporting oil and gas activities.

“There is need to engage relevant agencies to foster cordial and seamless working relationship with respect to expatriate quota and issuance of work permit.  There should also be a periodic industry-wide capacity audit of local companies to establish current capacities and embark on gap closure interventions. Research and development clusters should be encouraged to promote the development of home grown technology,” he said.

The Chairman, PETAN Conference Committee, Mr. Ranti Omole, said that based on the belief of indigenous companies, the association is partnering to reduce cost of operations and projects in Nigeria through increased local patronage.

According to him, “The industry has been undergoing challenging and turbulent period for the past two years due to low prices of crude oil and low demand.  This has resulted in severe adverse consequences in the industry as well as on the economy of many oil producing nations including our country.  This has led major players in the industry to rationalize their operations, seek efficiencies and cost saving measures to ensure profitability and survival of their businesses.”


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.