Oil Industry In Nigeria Sample Assignment

Oil Industry In Nigeria 1
OIL INDUSTRY IN NIGERIA
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Oil Industry In Nigeria 2
Introduction
The biggest industry in Nigeria is the petroleum industry. It plays an important
function to the maintenance of the nation and economic development activities. Only a small
amount accruable gain is used in Nigeria. Most of the amounts are used away where a lot of
materials are made and hence creating employment chances for the residents of other nations.
This is because of low native content which is a condition where a lot of works are given to
foreign companies since the native firms have inadequate skills, manpower, and low
completion and lack technical knowledge.
Nigeria has the second largest proven oil reserves in Africa, after those of Libya. The
oil fields are located in the south, specifically in the Niger delta and offshore in the Gulf of
Guinea. Current exploration activities are mostly focused in the deep and ultra-deep offshore,
with some activities in the Chad basin, located in the northeast of the country. Nigeria has
been a member of OPEC since 1971. Most of the oil is exported to North America and
Western Europe.
Challenges of oil and gas refineries
Corruption and incompetence
Corruption is not new in the gas and oil company in Lagos. The most challenging is
the one that happened in the time of general Babangida, where there was a loss of 12, 2
billion dollars which have been known during the period of gulf war crises and has never
been counted up to date (Wilson ,2014, pp.69-81). This occurrence is just but one out of
many that occurred in Nigeria. It should be noted that Nigeria could have earned about 340
million dollars in more than its 40 years of oil discovery. Nigeria contains 4 oil refineries that
are running under capacity. Corruption is the huge problem that Nigeria faces that affect oil
improvement from the scratch. It is very difficult to obtain the correct figure of how much
money has been stolen on Nigeria oil sector. If the corruption is eliminated then the nation
will have improved economic development.
According to Wilson (2014,pp.69-81), The shell which dominated at the mid 90's
when it was told to repair at a given price it was deemed by the tender committee and it
resulted to the work given to a less qualified industry which was unable to reach the
maximum production for a given time.
Mechanical breakdowns, militants, vandalism and fire
In Delta state, a pipeline fire in the year 2005 broke and led to the death of more than
sixty people. The incidence was followed by an attack where armed men in speedboat

Oil Industry In Nigeria 3
boomed up opobo channel pipeline. In 2006 there was pipeline attack brought by brass cleek
fields toward the resulted to shutting up of oil production due to lack of security.
Nigeria has embarked on the kidnapping of the workers in oil refineries that has led to the
loss of 16 billion dollars that they get from the export of oil (Wilson, 2014.pp69- 81). In 2006
there was kidnapping situation in the same region where about nine workers were kidnapped.
After where the pipeline operated by Royal Dutch shell was brown up.
There was a close-up of two port which are Port Harcourt refinery for two months
because of technical issues. The militia organizations and Niger rebel group have attacked the
oil infrastructure leading to declining in its domestic refining potential. Also as they search
for compensations or political power they lead to attacks. Many foreign workers and their
households have completely abandoned the Niger Delta due to progressive attacks. In 2006
four overseas workers of Royal Dutch shell were snatched and held for 19 days before they
were realized on humanitarian ground. This led to Nigeria withdrawing licences that were
issued to external and homeland firms to start oil refinery since the companies did not begin
up any particular work after the five years.
Pipeline vandalism has been a great challenge which is attributed by the militants who
are sponsored by the corrupt government officials. For instance the operation at Warri and
Kaduna in the year 2010 did not go through due pipeline damage. Fire and breakdowns are
common in all industries but in Nigeria the main cause of the problem is poor control
measures and untrained staff.
OPEC regulation
This arises from the argument that the body that regulates Oil Company has not
favoured Nigeria as well in order for it to maximize its making. This body was formed in
1960 by Venezuela, Saudi Arabia Iraq, and Iran together with other five nations including
Qatar Indonesia, Algeria which joined before Nigeria, Libya and United Arab emirate. OPEC
control manufacture of its team has not helped Nigeria to increase its output.
Nigeria production remains in OPEC has prevented its refineries since budget of scale
stand. Nigeria is not increasing its manufacture due to the quota levied by OPEC. There are
questions why production of oil is very low. The reason behind that is due to OPEC cartels
have created an obstacle to effective slow trade with other nations and the economic growth
of Nigeria from its oil trade.

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Inadequate finance and insufficient technical proficiency
The sector of finance in Nigeria has been going through the transformation so as the banking
system can become competitive. The banking systems lack adequate finance to fund a large
project in the country.
Poor infrastructure
Organisational problems which include poor transport systems, poor communication
network, inadequate power source. Poor infrastructure leads to delay of industrial
development. Proper infrastructure gives rise to proper industrial company which in turn
increases the market of oil. Poor infrastructure is the major problems in Nigeria From one
region of the country to the other, and this makes Nigeria poor since the products cannot be
transported.
Poor investment environment
Beside the inefficient infrastructure, the investment climate is poor, the housing is
unaffordable, poor health facilities and insecurity due to crimes. This problem hinders the
foreign straight investment.
Political instability
It is efficient for industrial development, and since Nigeria is a young democratic
country there have been regular attacks on aliens and their interest in Niger Delta. This
political instability has led to decrease in the development of oil industry.
Other problems include:
 Lack of a motivating government agenda.
 Lack of effective tools.
 Inadequate education standards
 Poor licensing programs
Opportunities
Though there have been problems, a group of persons realized that Nigeria has many
strengths which comprise of access to a lot of oil and gas reserves, a finely grown oil
industry, a power sector that is privately placed for effectiveness and a capable local sector.
Moreover, many countries guidelines, like gas cost are on spot to move the important projects
in front, For instance, the gas cost ranges from $2 to $2.50, which is an encouraging cost for
both power production and petrochemicals. As a result, the puts more effort so as to monetize
its abundant gas source. Also, the countries development is starting to improve and draws
overseas trade in the oil and gas sector and also power production. The imports are now over