Risk Management Strategies in Petroleum Industry in Nigeria

This research study aims to analyze the strategies used to minimize the risk in the petroleum industry in Nigeria and the impact of political instability on these strategies. The study is based on qualitative research and primary data collection through questionnaires. The findings suggest that managing the optimum utilization of natural resources and implementing risk management structures are crucial for improving the performance and outcomes of oil and gas companies. The research provides insights into the risk management strategies employed by large oil and gas companies in Nigeria.

Dissertation

Abstract
This research study aims is to analyse the strategies which is used to minimize the risk in
petroleum industry in Nigeria. Also, this in turn provides an insight into how the effects the
political instability of their process. This report is based on qualitative study and both primary
research performed. However, the empirical framework for this research is founded on literatures
on different risk strategy to mitigate political instability. Primary data is collected through
questionnaires under qualitative study to answer the research questions. This report has
examined that, managing optimum utilization of natural resources is considered one of the
biggest political risks in oil and gas industry (Adekola and et.al., 2017). Political instabilities of
government have significant impact on the oil and gas industry. This report has interpreted that,
Oil and gas industry must induce in Enhanced oil recovery to increase the productivity of
company in mere future. This report has interpreted that, organization comply with risk
management structure within large oil and gas companies to improve the performance and
outcomes.
Key word – Political instability, political risk, oil and gas.

Acknowledgement
At first, I would like to thank God to make me capable enough to do something worthwhile.
I would especially like to thank my supervisor for his generous time and commitment.
Throughout my dissertation, he had taken his valuable time to help me whenever I needed; read
through my draft copies; listened to me patiently; quickly answered all my email queries and
supported me every step of the way. Starting from refining the research topic, he has encouraged
me to develop independent thinking and greatly assisted me with writing.
Thanks to all of those Managers who had taken time for filling in the questionnaires in
my research. Without their active participation it would not be possible to carry out this research.
Last but not the least, I thank to my family members, friends and relatives for their kind
help and cooperation during the research period.

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION....................................................................................................1
1.1 Background to research topic...........................................................................................1
1.2 Background to research organization...............................................................................1
1.3 Research rationale............................................................................................................2
1.4 Research question (s)........................................................................................................2
1.5 Research aims and objectives...........................................................................................2
CHAPTER 2: LITERATURE REVIEW.........................................................................................4
2.1 Introduction of literature review.......................................................................................4
2.2 Main body with heading and sub-headings......................................................................4
2.3 Conclusion of literature review........................................................................................9
CHAPTER 3: METHODOLOGY.................................................................................................10
3.1 Research process............................................................................................................11
3.2 Research approach..........................................................................................................11
3.3 Research strategy............................................................................................................12
3.4 Research methodology...................................................................................................12
3.5 Research instruments/tools.............................................................................................13
3.6 Sampling.........................................................................................................................13
3.7 Ethical implications........................................................................................................14
CHAPTER 4: FINDINGS (DATA PRESENTATION)................................................................15
CHAPTER 6: CONCLUSION, RECOMMENDATIONS AND IMPLICATIONS FOR
FURTHER RESEARCH...............................................................................................................28
Conclusion............................................................................................................................28
Recommendation..................................................................................................................29
REFERENCES..............................................................................................................................30
Appendix........................................................................................................................................35
A blank copy of questionnaire/interview script....................................................................35

CHAPTER 1: INTRODUCTION
1.1 Background to research topic
Nigeria tends to remain one of the largest oil producer within Africa. The Nigeria's oil in
turn has been situated within the Niger Delta which across coastal areas within south- east
Nigeria (Adekola and et.al., 2017). However, the Nigerian national petroleum corporation pay
for the prices which are below the international rate and helps in selling refined products. One of
the key focus of the study is to focus on examining the key risk management strategies which in
turn largely influenced by the political instability within the petroleum industry (Merem and
et.al., 2017). One of the key significant purpose of the research is that to take necessary
precautionary measure which helps in providing effective risk management strategies.
Through the research, scholar provides an overview of all the risk strategies which are
used by the oil and gas industry in order to solve many issues. Further, the entire study is based
upon country i.e. Nigeria and the country produce more than 90 million tones per year and
supply the same to other countries (Ruqaishi and Bashir, 2015). Thus, the current research paper
is based upon both primary and secondary data collection which in turn assist to meet the define
aim in the set tenure.
1.2 Background to research organization
Nigeria is considered to be as one of the key global player within the oil and gas
industry. Nigeria tends to have one of the largest natural gas reserve within Africa and also the
2nd largest oil reserve within Africa (Humphrey and Dosunmu, 2016). Nigeria has a total of four
oil refineries and also has an estimated refining capacity of 4,45,000 barrels per day. However,
the oil production within the Nigeria has started over the period of 100 years. There seems to be
two principal oil market within Nigeria i.e., downstream and upstream (Raimi and et.al., 2018).
The upstream oil market has been situated within prolific Niger river delta. The economy of the
Nigeria has been producing over 90% of the total exports.
In Nigeria, the major foreign stakeholder is Shell which has a strong financial
performance and consider the top competitor for oil and gas industry as well. But Nigeria's
financial spine is strong and that is why, it is able to survive and offer the best services to others.
Though there are many laws and legislation which must be complied by oil and gas industry so
that it offer the best services to other countries.
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1.3 Research rationale
The key driving force behind carrying out the research study is mainly associated with
the rise within the oil and gas industry. The researcher of the study can effectively resolve the
problem of the research by attaining distinctive set of interest which is highly relevant in
establishing between the political instabilities and risk management strategies. It is important to
gain information associated with the study because the previous study only focuses on emission
reduction of greenhouse gases and the environmental sustainability. The present research topic
has reflected on effectively examining the risk management strategies which has been
effectively employed by the large oil and gas companies which helps in mitigating the key
effects related with the political instability. Another significant reason behind the selection of the
research topic is to identify the key relevant political instabilities which can largely influence the
oil and gas companies within Nigeria.
1.4 Research question (s)
 What are the risk management strategies?
 What impact does the governments political instabilities have on the petroleum industry?
 To what extent our developing countries dependent on the petroleum industry to survive?
 What could the petroleum industry induce in future to ensure the company’s productivity
increases?
 What are the existing challenges the petroleum industry face that the authority should be
informed of, if any, what should they do about it?
1.5 Research aims and objectives
Aim
“To study and examine risk management strategies employed by large oil and gas companies in
order to mitigate the effects of political instability in developing countries like Nigeria.”
Objectives
 To understand the risk management strategies utilized and how these strategies are
implemented within the organizations
 To study the overall risk management structure within large oil and gas companies to
gain a better understanding on how the organization works
 To explore the political instabilities within developing countries like Nigeria and how
these political instabilities effect the large oil and gas companies
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 To provide a recommendation to the senior management of the business services which
can be improved from the evaluation of the literature study.
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CHAPTER 2: LITERATURE REVIEW
2.1 Introduction of literature review
A literature review is a comprehensive summary of previous research on the selected
topic. In the same way, for current study different books, articles, and relevant sources are
selected for a particular area of research (Sadaghiani and et.al., 2015). Under this section, the
researcher discussed different risk management strategies that are utilized by oil and gas
companies. Further, the section also elaborates on the risk management structure designed
within large oil and gas companies to understand how the different organization works. Lastly,
the current section will assist to examine how the political instabilities create a direct impact on
the large oil and gas companies using comparative case studies.
2.2 Main body with heading and sub-headings
Theme 1: Political risk that affects the oil and gas industry
Patey (2020) stated that political instability is a political risk factor that affects the entire
oil and gas industry of Nigeria. Thus it is all about to changes in government, riots, and policy
changes and as a result, most of the corporation do not invest in a country. Hence, political risk
is all about the probability that changes in the political environment which will reduce the
returns, and thus, the project is no longer profitable. It is also analyzed by Li, Chen and Zhu
(2016) that the oil and gas industry is covered by different laws and regulations which limit how
the extraction is done. Therefore, this is limit from state to state and country to country. Nwapi
(2020) also argued that oil and gas companies tend to prefer countries with a stable political
system and if there is no stability then the price of the oil and gas will fluctuate. Thus, it is
examined that there is a strong interrelationship between the fluctuation in political instability
and the price of the oil and gas industry.
As per the view of Das (2020) in the oil and gas industry, the company's entire activity is
controlled by the government of the host nation. So, these rules are sometimes unfavourable to
oil companies and sometimes not. Due to political instability, most of the companies operating
in the oil and gas industry are faces price issue, rather than industries and firm being helpless
victims due to political instability, companies start work on their advantage depending on how it
is managed (Shuen, Feiler and Teece, 2014). For example, in 2003 due to disorder in Nigeria's
petroleum policy, Shell can maintain its top position in the industry without entering other
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companies within the same industry. Kassem, Khoiry and Hamzah (2020) also argued that
Nigeria faces the issue of political instability and that is why there is always a fluctuation in the
oil and gas prices. Furthermore, oil is of great significance to ethnic communities as oil produces
areas are mostly located in ethnic minority regions. As a result, the biggest issue arises due to
political instability is relating to oil revenue access and distribution because oil plays an
important role in community relations and national politics (Aqlan and Ali, 2014).
That is why, Fernandes and et.al., (2019) provide their views and stated that Nigeria
needs to look after all the energy reform and also assist to grow the non-oil sector as well. It is
so because it helps in economic growth through efficient use of all sectors which will decrease
poverty and infrastructural growth as well. Nigeria is one of the largest oil producers in Africa
and also has the largest natural gas reserves on the continent. That is why, due to sudden
fluctuation in political stability, sudden nationalization or shifting political winds may also
change the regulatory environment. As a result, the country has to make decisions which in turn
leads to minimizing the issues. Xue and et.al., (2014) also argued that every country uses
overutilization of resources, and thus to minimize the same, government takes action or develops
policies that have to be followed by companies to mitigate the risk.
Fadun and Saka, (2018) sought to determine the fact that, the key long term risk
associated with the oil and gas companies is linked with the dwindling up of the natural supply.
However, short term risks related to the oil and gas companies mainly comprise of the political
stances and are also linked with supply and demand. There seems to be a high degree of real
demand associated with energy. The politics in turn can largely influence the oil within the
regulatory sense. Moreover, Tasmin and Muazu, (2017) stated that the political risk tends to
increase when the oil and gas company has been working upon the deposits abroad. Oil and gas
companies focus on preferring countries which tends to have a stable set of the political system.
Domnikov and et.al., (2017) share that a shift in the political wind and nationalization leads to
change within the regulatory environment. Geographical risk also tends to impose a greater
degree of risk on the oil and gas companies.
Theme 2: Overall risk management structure within large oil and gas companies to gain a
better understanding on how the organization works
Fernandes and et.al., (2019) stated that there is a need to understanding political risk
within the oil and gas industry and then conduct an industry-specific risk analysis within an
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emerging market is quite essential. For that, industries use different risk mitigation strategy such
that in Nigeria, Transnational oil Corporation (TNOCs) tries to understand the political risk and
also develop a mitigation strategy to minimize the risk or eliminate the same (Salas, 2015). That
is why, it is examine that in order to minimize the problem of political risk, companies deal in
oil and gas industry should use de facto insurance that leads to maintain good relationship
between leader and the host country (Political Risk in the Oil and Gas Industry in the Emerging
market: A comparative study of Nigeria and Mexico, 2016). Through this way, they are trying to
manage the risk so that it does not cause any negative impact upon the oil and gas industry.
Mshelia and Anchor (2019) also explain in their studies that two another strategies are
also implemented to minimize the political risk within Nigeria i.e. Protective techniques and
integrative techniques. Through protective technique, it helps to reduce the severity of loss and
its purpose is to protect the internal strength of MNC. On the other side, Koko, Aminurraasyid
and Tapiwa (2017) provide own views that integrative technique concern with the frequency of
loss and it aims to create a direct impact upon the relationship with institution and actors within
a political environment. So, it is identified that risk of political instability can be minimized by
using this technique because the protective technique make sure the firm's competitive strong
points. On the other side, Gaghman (2020) shares another strategy ensures that company will
respond to both i.e. demand of host country's political environment and opportunities which
company get. Moreover, most of the political risk is manageable, but cannot be eliminated, so
effective management helps in TNOC's exposure so that risk can be controlled (Torres, Yadav
and Khan, 2016).
Olujobi, UFUA and OLUJOBI, (2020) sought to determine the fact that, managing risk
within the oil and gas companies are considered most important because it helps in effectively
mitigating up with the political instability which mainly comprises of political risk, economic
risk and another set of environmental risk and it affects the functioning of the company (Arena
and et.al., 2015). It is also essential to identify the right measure which helps to determine the
risk in management. However, Nnamani, (2017) stated that risk management strategies are quite
important within the oil and gas companies. The accidents and downfalls within the oil and gas
industry are of utmost importance. It is important to use all set of safety measures which is
useful in the mitigation of risk. Shad and et.al., (2019) also presented their opinion that
complying with all the necessary precautionary laws is helpful in effectively minimizing the key
6

impact associated with the risk and helps in effectively coordinating with the economical
resources (Political risk threatens Nigeria's oil sector recovery, 2019). There seems to be a
range of socio and political conditions and circumstances which in turn tends to significantly
give rise to the effective management of the risk within the oil and gas companies in Nigeria
(Anis and Siddiqui, 2015).
Adebiyi, Sanni and Oyetunji (2019) also presented their opinion that management of the
oil and gas company should also decide to minimize the risk such that they may develop
alternative plans which in turn reduce the impact of political risk upon the industries. It is so
because in Nigeria, most of the companies are situated in unstable geological locations which
may exhibit political tension and as a result, It leads to an unstable geological location as well.
Agbonifo (2016) also share that energy commodity prices are quite volatile and political risk
may also cause the price to rise or decrease at the same time. Thus, it can be examine that
political risk is dynamic and companies should develop a strategy to minimize the risk and reach
their business at a high level. As Nigeria is one of the tops and the leading producer of oil and
that is why it has to make sure that the supply chain of the companies should be free from
disruptions (Perrons and Richards, 2013). For that company has to work with risk advisor in
which plans are implemented with lots of alternative suppliers.
According to Mucci (2017) proper risk management planning should be done in which
probability of the risk needs to be identified and then leads to mitigate the risk. As there are
many ways through which risk management plan is identified and also develop a quality control
system. These systems are introduced to measure quality assurance and ensure that operations
are handled in the right manner or not. Moreover, Ekhator (2016) also highlighted in their study
that political stability is all about to changes in government and policies and that is why, if this
fluctuation is increased then companies working in Nigeria do not offer oil to other countries.
For that government has greater control and once the production begins nearly all the economic
and geological risk are no longer but there is a need to deal with political risk (Papavinasam,
2013).
Also, Cordes and et.al., (2016) stated that operation of oil and gas industry is considered
as one of the most sensitive of all international corporate activities because it is the concern with
all the national inheritance which leads to creates a direct impact upon political stability of a
7

country. That is why countries also use different industry-specific risk analysis which in turn
leads to mitigate the risk.
Theme 3: Comparison between countries regarding risk management strategies used by oil
and gas industries in the context of political instability
Fiksel (2015) explains that Nigeria, a country which is well-known for the production of
oil and gasses and exporting the same throughout the globe, also used a variety of different
strategy to mitigate the risk of political challenges. At the same time when comparing the same
with UK oil and gas industry mitigation strategy. Trotter, Maconachie and McManus (2018)
highlight that the UK industry uses simulation software for the same reason. Managing optimum
utilization of natural resources is consider one of the biggest political risks for the UK oil and
gas industry. Hence, using this advance technology by oil and gas companies is fruitful. The
author explains that using this software in the market used to help in offshore supply vessel fuel
reduction and also help the company in drilling a good flow of optimization in the market.
Not only that, the software helps the industry to reduce the usage of natural resources
and optimizing the efficiency and work of different companies in the market. Stosberg (2018) in
their own published paper explain that this software not only helps companies to optimum
utilization of resources but also used to reforming the design process. So that it will reduced
cost of all the different activities carried out within the organization and also used to assist the
company in improving the efficiency of oil and gas (Perrons, 2014).
On the contradicting note, Iftinchi and Hurduzeu (2018) explain that this mitigation
strategy does not guarantee success for the industry and is not that successful. As the author
highlights for the same reason, the UK government has decided to look at the future policy of
the UK offshoring of oil and gas. This regime will eventually help the government in planning
varieties of different activities in the future. Mitchell, Marcel and Mitchell (2012) also compares
the strategy used by Nigeria and explains that as Nigeria is not that proficient in term of
technology adoption and invention they generally adopt more basic but strong risk mitigation
strategy (Government Decision. 2020).
As it has been identified that they generally focus on integrative and protective technique
to mitigate the political impact. Lambrechts and Blomquist (2017) provide evidence by
explaining that integrative and protective strategy generally help the Nigerian companies in
keeping the different operation of company simple and bringing good sort of clarity in the
8

different activity which is performed by them in the market. Hence, Merrow (2012) highlights
that Integrating technology reforms with the current strategy of the Nigerian company will be a
good strategy for the Nigerian oil and gas industry in the coming future. At the same time, the
UK can look to invent some new technology to improve the current position and strategy of
them in the market.
2.3 Conclusion of literature review
By summing up above section it has been concluded that oil and gas industry faces
different types of risk but among all, political risk is consider one of the most effective risks
because it affects the prices of the industry. The political risk is all about fluctuation in
regulation designed by the government. As a result, the industry is highly affected by the same
because of variation within the prices. Further, the section also concluded that there is some risk
management structure which organization needs to be developed to control the impact of
political risk upon the company. Such that Nigeria uses Protective and Integrative techniques
which in turn leads to provide solutions that help to control political risk. By comparing the
country with UK, it is analysed that almost all the countries set their own strategies in order to
manage the risk which in turn leads towards a set goal. Hence, literature review section
concluded that deregulation of downstream oil territory is consider an expressed point of laws
and that is why, companies operating under oil and industry have to rely with the same.
Theme Author Area and method Gap
Political risk that
affects the oil and gas
industry
 Patey (2020)
 Li, Chen and
Zhu (2016)
 Nwapi (2020)
 Das (2020)
 (Shuen, Feiler
and Teece,
2014)
 Kassem,
Khoiry and
Hamzah (2020)
 (Aqlan and Ali,
Theme explain that
their instability of
political condition and
its impact on oil
industry of Nigeria.
After that this theme
cover the area of issue
faced due to instability
i.e price issue and cost
issue. Another risk
which is specified in
the discussion is
This risk has helped in
understanding the
different type of risk
which is affecting the
oil and gas industry
but the information
provided by the theme
generally lack in
clarifying reason of
instability and the
instability can be
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2014)
 Fernandes and
et.al., (2019)
 Xue and et.al.,
(2014)
 Fadun and
Saka, (2018)
 Tasmin and
Muazu, (2017)
 Domnikov and
et.al., (2017)
dwelling natural
supply. Hence two
type of the risk
identified by theme.
overcome.
Overall risk
management structure
within large oil and
gas companies to gain
a better understanding
on how the
organization works
 Fernandes and
et.al., (2019)
 Salas, (2015)
 Mshelia and
Anchor (2019)
 Tapiwa (2017)
 Gaghman
(2020)
 Olujobi, UFUA
and OLUJOBI,
(2020)
 Nnamani,
(2017)
 Shad and et.al.,
(2019)
 Adebiyi, Sanni
and Oyetunji
(2019)
 Agbonifo
(2016)
Theme explain that
political risk is very
high in Nigeria and
government has to
take corrective action
to improve the same.
Author explain that
there are three strategy
which can be applied
that is de facto
insurance Protective
techniques and
integrative techniques.
Also, there was a
discussion in regards
of developing the
alternate plan in the
industry.
To covert the gape of
previous gape this
theme explains the
structure of oil
management and this
theme is able to
achieve the same as
well. At the same time
this theme generally
passes on the
operation on the basis
of current situation as
assuming the future
position was not that
easy for different
author.
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 Mucci (2017)
 Ekhator (2016)
 Papavinasam,
(2013)
 Cordes and
et.al., (2016)
Comparison between
countries regarding
risk management
strategies used by oil
and gas industries in
the context of political
instability
 Fiksel (2015)
 Maconachie
and McManus
(2018)
 Stosberg
(2018)
 Iftinchi and
Hurduzeu
(2018)
 Mitchell,
Marcel and
Mitchell
(2012)
 Lambrechts
and Blomquist
(2017)
 Merrow (2012)
Theme explain that
presence of
technology is one of
the difference between
the two countries. As
UK uses better
technology as compare
to Nigeria. Also theme
recommended the
activity which can be
performed by the
Nigerian government
in coming future.
This theme try to
overcome the issue of
future uncertainty by
providing comparison
in two countries and
what can be done by
lacking country. This
has helped the author
in passing on good
strategy but at the
same time this theme
has somewhat lacked
in providing the
solution of political
instability. As this
theme is more toward
improving Nigerian oil
and gas industry.
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CHAPTER 3: METHODOLOGY
Illustration 1: Saunder's Research onion
With the help of Saunder's Research Onion model, each layer of the model has been used
in the study such that the seven step process is used within the research in order to meet the
define aim. Also, in the first layer, primary and secondary data collection methods are selected.
In which survey method has been used under primary research in which questionnaire is
designed that helps to realize the views of different stakeholders. Next layer, the study will be
completed on time and qualitative research choice has been selected. Further, qualitative
research strategy has been selected for the study over quantitative in order gain in-depth
information. In the fourth layer, investigator chooses inductive research approach in which
different theories and models are used to determine the answers of research questions. Also in
last layer of model, interpretivism research philosophy has been selected that will helps to
interpret the responses in better manner.
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3.1 Research process
As per the current research study, scholar follows 7 steps research process which assist to
meet the define aim and objectives, such as:
Research area: In the first step, scholar determine own interest or topic to conduct the
study. As per the present study, scholar shows their interest in oil and gas industry in which
different strategies are analysed which help to mitigate risk.
Formulating aim and objectives: The aim is formulate and to attain the same, objectives
are set. In the context of present study, the aim is to examine the risk strategies employed by
large oil and gas companies in order to mitigate the effects of political instability in developing
countries like Nigeria (Park and Park, 2016).
Literature Review: In this section, scholar conduct a secondary analysis on the basis of
set objectives by choosing relevant articles and journals that assist to meet the set objectives.
Selecting methods of data collection: Under this, researcher critically analyse the
alternative data collection methods for the study which in turn help to accomplish the set
objectives (Herr and Anderson, 2014). Thus, for the present study, scholar chooses both primary
and secondary data collection methods.
Collection of primary data: The research chooses this method because it makes the
research study more clear and reliable. For this, questionnaire is designed that leads to attain the
fixed objectives.
Data analysis: In this, researcher interpret the collected information in better manner like
by presenting themes, graphs. Thus, by analysing the data in better manner scholar conduct
study in precise mode.
Conclusion and recommendations: Moreover, investigator concluded the entire research
and also justifies that research aim and objectives are met or not (Carey, 2013). Further,
recommended some ways that assist to mitigate the risk within oil and gas industry.
3.2 Research approach
Research Approach is a plan and procedure which consist of different steps that helps to
analyse and interpret the data in more better manner (Rudestam and Newton, 2014). There are
mainly three types of research approach i.e. deductive, inductive and Abductive. Moreover,
deductive approach is used under quantitative strategy in order to test the validity of hypothesis,
13

while Inductive approach is used under qualitative research because it contributes to emergence
of new theories and it is completely relies upon the secondary resources (Van de Ven and Poole,
2017). Lastly, Abductive research approach is set to meet the weakness link with other two
approaches.
Among all, inductive research approach has been chosen by the scholar because it allows
the scholar to meet the define aim by using theories and comparing strategies with other
countries. Also, through selected approach, investigator also conduct the research in more
precise manner and answer the research question in proper manner by using the relevant
secondary research.
3.3 Research strategy
Research strategy is a step by step plan that assist to conduct the entire research in proper
manner and meet the define aim (Bloomberg and Volpe, 2018). As per the selected research
topic, scholar uses qualitative research methodology in which inductive research approach has
been chosen. Also, there are multiple sources are selected which in turn leads to conduct the
entire study in proper manner. Such that under literature review section, relevant sources are
selected in order to provides a rich understanding to a real life context. Also, Allen (2017) stated
that through qualitative study different cases are selected which assist to determine the risk
strategies opted by oil and gas industry. Hence, using this qualitative type with inductive
approach aid the scholar to interpret the data and also determine the ways through which
political risk are minimized and offer best services to others in better manner.
3.4 Research methodology
Research Methodology is the specific procedure and technique which is used to identify,
select and analyze the information related to topic (Naoum, 2012). Hence, with proper research
methodology, scholar critically evaluate the study's overall validity and reliability. There are
three types of research methods, Qualitative research method which assist scholar to make a
sense of reality and also explain the social world by using relevant theories and models. On the
other side, Quantitative method is second type which completely relies upon the statistical tools
and techniques by using software (Queirós, Faria and Almeida, 2017). Moreover, Mixed
research methodology is the third type which is a mixture of qualitative and quantitative study in
which data are collected on both basis i.e. open and close ended.
14

Among all, researcher chooses qualitative research methodology because it provides
broad information as compared to other in order to attain the define aim. Also, through
qualitative research methodology, investigator gain a deep understanding to a specific topic i.e.
identify the risk management strategies employed by large oil and gas companies in order to
mitigate the effects of political instability in developing countries like Nigeria. This method
assist to understand the opinion and experience of selected respondents which in turn leads to
accomplish the aim and objectives. Therefore, it is more flexible over other that provide best
results and conduct the study in prominent manner.
3.5 Research instruments/tools
In accordance with Bertrand and Hughes (2017) there are different tools used by the
researcher in order to conduct the research in proper manner. Such that to increase the validity,
scholar select multiple articles relevant to research topic so that information can be collected
which in turn conduct the study in better manner. Also, primary data collection methods has
been chosen in which questionnaire is designed that leads to examine the strategies by Nigeria's
oil and gas industry. Moreover, different cases and historical as well as real time data are also
consider that assist to meet the define aim and also track the position of industries working under
Nigeria. Beside this, for secondary data collection methods, OPEC and online books and
journals are selected that assist to determine different methods opted by countries in order to
control the situation.
3.6 Sampling
Sampling is a process which is used under statistical analysis that is used to determine
the number of observation which are taken from the population (Athanasou and et.al., 2012).
Through this, scholar determine the views of people in the context of topic. There are two types
of sampling i.e. purposive and non- purposive sampling method. Under purposive sampling,
researcher want to access the particular subset of people and it is used under qualitative research
only. On the other hand, non- purposive sampling is used to select units for an inclusion in a
sample and this method is quite simple and cheaper (Esser and Vliegenthart, 2017).
So, among all, scholar uses simple random sampling method in which 20 managers of
oil and gas industry in Nigeria are chosen that assist to meet the define aim. Also, through
15

simple random sampling method, scholar wants to know different strategies which in turn assist
to meet the define aim.
3.7 Ethical implications
In order to conduct the entire research in better manner, there is a need to comply with all
ethical implication, otherwise it leads to cause negative impact upon study. Such that researcher
should make sure to maintain confidentiality and this in turn leads to meet the define aim.
Moreover, scholar should also comply with data protection act so that all the personal
information will not share to any third person (Mackey and Gass, 2015). Moreover, there is a
proper flow of communication between researcher and respondents, otherwise it meet to wrong
results. Also, researcher should take prior consent from the respondents before conducting
primary research because it provides positive impact upon results. In addition to this, the
protection of privacy of a research participants is also ensured so that it do not affect the results
and any type of misleading the information or representation of primary data findings in a biased
manner should be avoided because it leads the results in opposite manner (Apuke, 2017). Hence,
by adhering with ethical principles, researcher meet the define aim and conduct the research in
proper manner. Even the ethical form should be signed by all the selected participants as it will
consider as a proof and the questionnaire should be designed without considering any
discrimination key factors.
16

CHAPTER 4: FINDINGS (DATA PRESENTATION)
Theme 1: Maximum managers have been working in oil and gas industry of Nigeria for
around 14 – 21 years.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
0-7 years 2 10%
7- 14 years 4 20%
14 – 21 years 8 40%
More than 21 years 6 30%
TOTAL 20 100%
Theme 2: Political risk is the key risk where oil and gas companies are highly exposed to
within Nigeria.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Political risk 7 35%
17

Geological risk 3 15%
Price risk 4 20%
Supply and demand risk 6 30%
TOTAL 20 100%
Theme 3: Protective and integrative technique and effective risk management planning are
the risk management strategies employed by large oil and gas companies.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Proper risk management
planning
3 15%
Protective technique 6 30%
Integrative technique 7 35%
All of the above 4 20%
TOTAL 20 100%
18

Theme 4: Yes, organization comply with risk management structure within large oil and gas
companies.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Yes 11 55%
No 4 20%
Maybe 5 25%
TOTAL 20 100%
19

Theme 5: Yes, managing optimum utilization of natural resources is consider one of the
biggest political risks in oil and gas industry.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Yes 13 65%
No 3 15%
Maybe 4 20%
TOTAL 20 100%
20

Theme 6: Highly agreed, political instabilities of government have impact on the oil and gas
industry.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Agreed 5 25%
Highly agreed 7 35%
Disagreed 2 10%
Highly disagreed 4 20%
Neutral 2 10%
TOTAL 20 100%
21

Theme 7: Highly agreed, developing countries are dependent on the petroleum industry to
survive.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Agreed 6 30%
Highly agreed 8 40%
Disagreed 2 10%
Highly disagreed 1 5%
Neutral 3 15%
TOTAL 20 100%
22

Theme 8: Oil and gas industry must induce in Enhanced oil recovery to increase the
productivity of company in mere future.
PARTICULARS NUMBER OF
RESPONDENTS
% OF RESPONDENTS
Production optimization 5 25%
Enhanced oil recovery 8 40%
Integrating digital
technologies
3 15%
Complying with
analytical approach
4 20%
TOTAL 20 100%
23

Theme 9: Examining the key existing challenges faced by the oil and gas petroleum industry.
Theme 10: Evaluating the appropriate strategies within which oil and gas industry must
comply with to improve production.
24

Chapter 5: Discussion (data interpretation)
Theme 1: Maximum managers have been working in oil and gas industry of Nigeria for
around 14 – 21 years.
Interpretation: The above carried out study from 20 managers of oil and gas industry. Among
which 40% stated the fact that, maximum managers have been working in oil and gas industry of
Nigeria for around 14 – 21 years. This means the managers who has been working within the oil
and gas industry of the Nigeria have wide degree of experience. They have optimum level of
knowledge which means they know how the specific industry works and must also help in the
attainment of the key goals and objectives of the company (Kelland, 2014).
This helps in taking appropriate course of action and is useful in the better production
within the company. Moreover, approximately 30% of the managers have experience of over 21
years within the oil and gas industry of the Nigeria which states that they have significant level
of risk management strategies employed by large oil and gas companies in order to mitigate the
effects of political instability in developing countries like Nigeria (Raut, Narkhede and Gardas,
2017).
Theme 2: Political risk is the key risk where oil and gas companies are highly exposed to
Nigeria.
Interpretation: The primary investigation with the help of questionnaire from 20 managers of
oil and gas industry has been conducted. Among which 35% stated the fact that, political
instability or the political risk largely affects the entire oil and gas industry of Nigeria. Change
within the political environment which tends to largely reduce the returns and profits of the
project. Change within the political laws and legislations tends to largely affect the working of
the oil and gas industry of Nigeria (Teece, Peteraf and Leih, 2016). As supported by the
literature review, there is a strong interrelationship between the fluctuation in political instability
and the price of the oil and gas industry. The risk associated with the political instability tends to
face issues related with the prices and has significant degree of impact on the working of the oil
and gas industry of Nigeria. One of the significant issue arises because of political risk is
associated with access oil revenue and distribution.
However, the risk related with the political instability must be effectively minimized
within the country. Another 30% of the participants stated that, major long term risk related with
25

the oil and gas companies is associated with the dwindling up of the natural supply. However,
political instability is also related with adverse impact on demand and supply (Salazar-Aramayo
and et.al., 2013). Moreover, Geographical risk also impose a greater degree of risk on the oil and
gas companies which has been stated by the 15% of the respondents.
Theme 3: Protective and integrative technique and effective risk management planning are
the risk management strategies employed by large oil and gas companies.
Interpretation: The above carried out study from 20 managers of oil and gas industry. Among
which 65% (30% + 35%) stated the fact that, protective technique is useful in reducing the
severity of loss and it is also significant in protecting the internal strength of the oil and gas
industry of Nigeria. Integrative technique is mainly concerned about the frequency of loss and
also creates direct impact the operations of the oil and gas industry. The protective technique is
significant because it helps in ensuring and maintaining the competitive strength of the oil and
gas company (Kaviani and et.al., 2019).
As supported by the literature review, integrative and protective technique is significant
in mitigating any type of risk within the oil and gas industry of Nigeria (Lambrechts and
Blomquist 2017). Moreover, integrative and protective strategy help the Nigerian companies in
to comply with the varied operation of the company by bringing good sort of clarity and helps in
better performance within the market of Nigeria. Protective and Integrative techniques helps in
providing solutions to the management of the company in order to control political risk and any
other type of risk within the industry. On the other hand, 15% respondents sought to agree on the
fact that, proper risk management planning must be carried out which helps in mitigating the
probability of the risk occurrence within the oil and gas industry of Nigeria.
Theme 4: Yes, organization comply with risk management structure within large oil and gas
companies.
Interpretation: The primary investigation with the help of questionnaire from 20 managers of
oil and gas industry has been conducted. Among which 55% stated the fact that, organization
comply with risk management structure within large oil and gas companies which helps in
improving the key functions and operations of the oil and gas industry within Nigeria. It is of
crucial importance that, organization must comply with the risk management structure to control
the impact of political risk and any other risk within the oil and gas industry (Ablo and Overå,
2015). This is one of the prominent measure which helps in effectively evaluating how the
26

different section of the organization works which helps in improving the functions and
productivity of the company within Nigeria (Wood, Nwaoha and Towler, 2012). Complying
with varied risk management strategies is useful in managing the risk and other factors which
impose negative impact on the oil and gas industry of Nigeria.
Theme 5: Yes, managing optimum utilization of natural resources is consider one of the
biggest political risks in oil and gas industry.
Interpretation: The above carried out study from 20 managers of oil and gas industry. Among
which 65% of responders agreed by the fact that, efficiency of the management is reflected in
optimum utilization of resources. Efficient resource use ultimately leads to better financial
condition and thereby better socio economic state of people giving the maximum output possible
to the people. Large scale industries like oil and gas have heavy political influence due to its
humongous size and huge amounts of money associated with it (Yusuf and et.al., 2014).
Creating an equilibrium with highly productive management and speed of production is
essential oil and gas industries where market prices can vary in drastic ways by political
fluctuation. Since oil and gas industries are government regulated we know that optimum
utilization of resources is a key factor in risk management as well as maintaining political
balance (Reddy and Xie 2017). Organizational structure of the industry has a political
foundations because maintaining healthy relations with the government is essential for long term
survival and placing profitable prices of petroleum products. Managing optimum utilization of
natural resources is considered one of the biggest risks in oil and gas industry. Only 15% of the
respondents had their answer as no to the above statement. Hence we can say that optimum
utilization of natural resources is fact the biggest risks.
Theme 6: Highly agreed, political instabilities of government have impact on the oil and gas
industry.
Interpretation: The primary investigation with the help of questionnaire from 20 managers of
oil and gas industry has been conducted. Among which 60% (25%+ 35%) stated the fact that,
Coordination of the top level associates of the oil and gas industry with its government is a
building block of its financial structure. Majority of petroleum product revenue is extracted from
its export to other oil deficient countries.
27

The duties and taxes on export is decided by the government therefore political
instabilities will cause disruption of proper execution of the specified laws. In the table we can
see that it is highly agreed upon by the notion that political instabilities of government have
impact on the oil and gas industry making the agreeing front to be 60% of the respondents
making it clear that political instabilities affect oil and gas industries. In any country the decision
of the government in regulating laws is considered final and a company does not have enough
authority to make amendments according to its needs (Lin, Wen and Yu, 2012). Any decision by
the political body will influence the oil and gas industry directly or indirectly.
Sudden changes in policies will affect the centralized operations of the company giving it
very less time to adjust with latest market demands disrupting any short term targets. Changes
also affect the optimum utilization of resources which is key to survival in oil and gas industry.
Strategic management of instabilities caused in the government is crucial (Ingraffea and et.al.,
2014). Quick investigation of the problems along with gathering accurate and reliable
information from appropriate sources can help to reduce time period of the instabilities.
Theme 7: Highly agreed, developing countries are dependent on the petroleum industry to
survive.
Interpretation: The above carried out study from 20 managers of oil and gas industry. Among
which 60% (30%+ 40%) stated the fact that, the distribution of oil and gas in the world is
uneven therefore its reserves are of high worth and can be the backbone of a country’s economy.
Developing nations do not have proper infrastructure to push modern facilities and technologies
to its every citizen.
Hence most citizens lack proper knowledge on contributing to the economy and are
instead dependent on the government to make proper facilities for its survival. Oil and gas
reserves have the power to completely change a developing country economy by creating
employment and extracting worth from the resources that are already present in their country
(Ivshina and et.al., 2015). This makes the decision of utilizing resources particularly useful as it
can speed up the development process of a nation and provide enough capital to build the much
needed infrastructure and facilities that it lacks.
Distribution of petroleum to other countries helps to strengthen its bonds with other
countries that will help in the times of potential crises situations where petroleum sector will see
many competitors. This in turn will the economic advancement of African countries that do not
28

enjoy the economic security of developed nations. It may even lift countries out of poverty
providing higher standard of living to millions of people (Olaguer, 2012). Also investments
made in this sector provide long tern results reducing future risks and safeguarding economic
structure.
We see from the table that the notion of dependency of developing countries on
petroleum is highly agreed upon. Only 5% of the respondents highly disagreed from the notion.
Majority of respondents clearly support the statement which highlights the dependence of oil
and gas in developing countries (Urciuoli and et.al., 2014).
Theme 8: Oil and gas industry must induce in Enhanced oil recovery to increase the
productivity of company in mere future.
Interpretation: The above carried out study from 20 managers of oil and gas industry. Among
which 40% stated the fact that, Enhanced oil recovery is one of the most popular ideas in
increasing productivity. The machinery and tools required for extraction are previously invested
hence only identifying new reserves and proper allocation of tools is needed for remarkable
changes in productivity. 25% stated that, optimization of production can result in faster
extraction reducing operational and storage costs. It also helps in structured workflows that will
minimize errors and thereby again increasing efficiency (Al-Ani, 2015). 15% agreed that, new
technologies have now developed that can systematically monitoring of production for attaining
most productive workflows.
New technologies are designed for supervisory control and data acquisition of on field
plants that limit errors and allow for quick correction of mistakes. These also ensure that data
can be analyzed for even better productivity on and off field. 20% stated that, complying with
analytical approach gives a quantitative view of the current operations. Since oil and gas
industry is an industry that is volume based, analytic approach is a constructive in identifying
gross implicit variables dealing with production and useful in coherent plan to produce
maximum quantity of oil and gas (Shukla and Karki, 2016).
Theme 9: Examining the key existing challenges faced by the oil and gas petroleum industry.
Interpretation: The primary investigation with the help of questionnaire from 20 managers of
oil and gas industry has been conducted. Maximum participants stated the fact that, with the
increasing in the demand of oil and gas globally there seems to be stringent with the increased
number of environmental regulations. Reduction within the cost is one of the key major
29

challenge which in turn has been faced by the oil and gas industry of Nigeria (Small and et.al.,
2014). Improving the environmental footprint is also one of the key challenging source which in
turn largely affects the functioning and operations of the oil and gas industry. Moreover, highly
volatile prices is considered to be as one of the major challenge which has been faced by the oil
and gas industry of Nigeria. Producing refined products and crude oil at the lower cost in order
to remain competitive on the market is the major problem which has been faced by the industry
in Nigeria (Shahriar, Sadiq and Tesfamariam, 2012). Meeting the stringent standards and also
ensuring transparency within the environmental management activities is considered to be of
crucial importance.
Theme 10: Evaluating the appropriate strategies within which oil and gas industry must
comply with to improve production.
Interpretation: The above carried out study from 20 managers of oil and gas industry.
Maximum participants stated the fact that, the oil and gas companies is to make the use of latest
technology for the risk management plan. Effective R&D is useful because it helps in critically
reviewing the environment which helps in improving the performance and productivity of the
industry within the oil and gas companies (Eweje, Turner and Müller, 2012). The company must
focus on effectively utilizing the key resources which helps in attaining the key possible
standards and effectively improving the operations of the oil and gas industry. Enhanced oil
recovery is one of the most popular ideas in increasing productivity. Complying with protective
and integrative technique is also considered to be significant in improving the performance and
leads to higher success of the oil and gas industry.
30

CHAPTER 6: CONCLUSION, RECOMMENDATIONS AND
IMPLICATIONS FOR FURTHER RESEARCH
Conclusion
From the above whole study, it is clear that examining of the risk management strategies is very
essential. The major reason found was that as the business operates in the external environment
and there are many changes takes place in the external environment. Thus, these are risk for the
business as the changes can be both positive and negative. So it is very important for the
business to have use of good risk management strategies so if there is any of the change then the
companies are ready to deal with that change. From the above of the whole study is has been
identified that the risk management is referred to as developing the strategies for dealing with
the risk. Under risk management all the possible risk is assumed and the strategies for
overcoming these risk are made. This is done in advance as when the risk will occur in actual
then the company is already having the strategy to deal with the risk. In the large oil and gas
companies the major risk being faced by the companies are the political instability and
particularly in the developing countries.
Further form the above whole study it was evaluated that framing of aim and objective is the
major task for the successful completion of the research. The major fact underlying this is that
the aim and objective guide the person with the direction in which they have to conduct the
study. Also, along with this it was viewed that literature review that is views of different authors
was very helpful in developing an in depth analysis of the research topic. In addition to this the
listing of methods used for research was very helpful in competing the whole study in effective
manner.
It has been concluded that, productivity of operations is crucial in survival in the contemporary
world especially in the oil and gas industry which is volume dependent. In context of developing
countries in Africa that face issues like inadequate capital, low quality machinery and lack of
skilled labor. These issues can be neutralized by increasing productivity. Political risk is the key
risk where oil and gas companies are highly exposed to Nigeria. Change within the political laws
and legislations tends to largely affect the working of the oil and gas industry of Nigeria. The
protective technique is significant because it helps in ensuring and maintaining the competitive
strength of the oil and gas company. Protective and Integrative techniques helps in providing
solutions to the management of the company in order to control political risk and any other type
31

of risk within the industry. Managing optimum utilization of natural resources is consider one of
the biggest political risks in oil and gas industry. Organizational structure of the industry has a
political foundations because maintaining healthy relations with the government. Political
instabilities of government have significant impact on the oil and gas industry. Developing
countries are dependent on the petroleum industry to survive. Investments made in this sector
provide long tern results reducing future risks and safeguarding economic structure. It has been
summarized that, Oil and gas industry must induce in Enhanced oil recovery to increase the
productivity of company in mere future. Producing refined products and crude oil at the lower
cost in order to remain competitive on the market is the major problem faced by oil and gas
industry in Nigeria.
Recommendation
From the above whole discussion, it is clear that there is a requirement of improvement in order
to effectively manage the risk. Some measures of improvement are as follows-
 The major recommendation for the oil and gas companies is to make the use of latest
technology for the risk management plan. The main reason behind this fact is that the
technology will assist the people in effectively estimate the possible risk and try to make
strategies for its minimization and control (Hassani, Chaib and Bouzerara, 2020).
 Another major recommendation is that the companies must have a strong research and
development department. This is particularly because of the reason that if the companies
will employ effective R&D department then they will critically review the environment
and will find out latest more possible risk and then try to find solution to it.
 Along with this another major recommendation for the oil and gas companies is to
optimise the production level and try to optimally use the limited resources (Hossain And
et.al., 2019). The major reason behind this face is that the resources are very limited and
for better result it is the responsibility of the companies to make the effective and optimal
use of the limited resources.
Implication of the further research
The current study will creates impact upon the further research directly such that by
study on this, different companies operating within oil and gas industry determine how political
stability affect the overall performance of a company. As there are many risk which is face by
32

the company and among all political stability is consider one of the most affecting risk.
Therefore, by conducting the research on this topic will help the Nigeria oil and gas industry to
examine the strategies which in turn lead to minimize the risk. Also, it is examined the globally
the refinery oil demand is increase by 2% from 2022 above and this in turn clearly reflected that
there is a positive impact upon the company's who operating under this. Moreover, the study
also assist other investigators who conduct the same study in their future and they also determine
the strategies which in turn assist them to meet the define aim. Through the study, it is also
examine that there are high chances of risk in the oil and gas industry and therefore, it may also
lead to affect the reputation of a company negatively. .
Therefore, risk related to political instability within-country should be minimized as it
leads to affect the goodwill of a country in the wrong manner within the market. This research is
going to be highly beneficial for effectively analyzing the policies and attaining the different
goals related with the research project. The impact of this study is very high which is useful in
reducing the gaps associated with the research and bridges the gaps related with the specific
research topic. Oil and gas companies tend to prefer countries with a stable political system and
if there is no stability then the price of the oil and gas will fluctuate. This study is going to be
highly beneficial for the researcher.
33

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Appendix
A blank copy of questionnaire/interview script
Name:
Age:
Gender:
QUESTIONNAIRE
1. For how long you have been working in oil and gas industry of Nigeria?
 0-7 years
 7- 14 years
 14 – 21 years
 More than 21 years
2. What are the key risk where oil and gas companies are highly exposed to within
Nigeria?
 Political risk
 Geological risk
 Price risk
 Supply and demand risk
3. According to you what are the risk management strategies employed by large oil and
gas companies?
 Proper risk management planning
 Protective technique
 Integrative technique
 All of the above
4. Does your organization comply with risk management structure within large oil and
gas companies?
 Yes
 No
 Maybe
5. Do you think, managing optimum utilization of natural resources is consider one of the
39

biggest political risks in oil and gas industry?
 Yes
 No
 Maybe
6. Do you agree, does governments political instabilities have impact on the petroleum
industry?
 Agreed
 Highly agreed
 Disagreed
 Highly disagreed
 Neutral
7. Do you agree, that developing countries dependent on the petroleum industry to
survive?
 Agreed
 Highly agreed
 Disagreed
 Highly disagreed
 Neutral
8. According to you, what petroleum industry must induce in future to increase the
productivity of company?
 Production optimization
 Enhanced oil recovery
 Integrating digital technologies
 Complying with analytical approach
9. According to you, what are the key existing challenges faced by the oil and gas
petroleum industry?
10. According to you, what are the appropriate strategies within which oil and gas industry
must comply with to improve production?
40