Challenges in the Nigeria Oil & Gas Sector 2018
Some of the challenges facing the country’s oil and gas industry are discussed below:
Consequently, the region has remained unstable with periodic attacks on oil facilities and pipelines. The government has committed efforts to resolving the problems with the commencement of the Amnesty Program, which has seen most of the Niger Delta youths rehabilitated and sent outside the country for training and capacity building. This has resulted in relative peace in the region where petroleum is produced.
5.2 Government underfunding A recurring problem in the upstream sector is the inability of the NNPC to meet its funding obligations to JV operations. In response to this problem, the FGN has explored other models like the PSC terms and Modified Carried Agreement (MCA) with MOCs to provide permanent solutions.
5.3 Long Contract Award Process Typically, the process of contract award in the Nigerian oil and gas upstream sector is tedious and lengthy. The duration of contract award between initiation and eventual execution of the agreement could take as much as 36 months in some cases.
This could affect the project economics of contracts. In response to this slow pace of award process, MOCs start contract award process well in advance of commencement of project, to ensure that all regulatory and contractual approval processes are complied with before actual project execution.
5.4 Infrastructure Nigeria is also faced with the challenge of lack of sufficient infrastructure to run the oil and gas industry. Government aims to fast track the monetization of the nation’s gas resources, instituting a gas based industrialization and increasing the generation capacity of the power sector, to ensure sustainable electricity delivery for domestic and industrial uses.