Indigenous Participation in E&P Sector for Production Capacity Expansion and Investment Enhancement: Lessons from Nigeria

Abstract

Abstract The indigenous operatorship programme in Nigeria was introduced by the Federal Government in 1993. A set of discretionary awards made on sole risk (SR) basis, in which government has neither participating nor economic interests was initiated to jump start the programme. Furthermore, a total of 28 fields were allocated to 35 indigenous companies to commence a complementary marginal fields program. Twelve (12) marginal fields are currently producing, the rest are at various stages of development. As at 2015, 16 indigenous companies had successfully acquired interests divested by the international oil companies (IOCs) from the joint venture (JV) assets. Hence, the number of JV companies has increased from the primary six IOC JV entities. Performance evaluation of indigenous companies in terms of investment profile and production growth is the key objective of this paper. For the purpose of this paper quantitative descriptive approach is applied to appraise the indigenous operators, following allocation of sole risk blocks, marginal fields and the major divestments of the equity participation of some IOCs from the JV assets. Accordingly, the emergence of indigenous operators has obviously changed the landscape of the oil and gas industry in Nigeria. Some IOCs are gradually divesting from the onshore and continental areas, while shifting attention to developing deep offshore assets. The Nigerian National Petroleum Corporation (NNPC), now has more JV Partners to manage and perhaps would have to revise its strategies for value maximization from its JV assets.