Free Essay: Challenges Facing Oil and Gas Industry in Nigeria

For the past 50 years, oil and gas has been the mainstay of the economy of Nigeria. In fact, the minerals have played a great role in lifting the economy of the West African state considering the huge revenues generated from them. The petroleum industry is the largest and also mean generator of the country’s GDP. However, it is sad that the oil and gas industry, despite the huge investments placed on it by the Nigerian government, has not offered the people any significant benefits.

There is lack of participation of the local communities in the oil and gas industry in Nigeria. The reason why this is so is because there is no clear road map or laws that are put in place to guide the activities of those harvesting oil and gas in the West African nation. As a result of this, only foreign companies have dominated the industry, leaving the locals in abject poverty and suffering. Since the majority of those who run the oil and gas industry in Nigeria are foreigners, it has not been easy for them to stick to proper practices that are required in oil and gas exploration.

Armed conflicts are yet another greater challenge that has faced and continue to present fears on the future of the oil and gas industry in Nigeria. The fact that mainly foreigners are the ones left in charge of the oil and gas industry, there has been discontentment on the part of some local communities who feel that they have been denied their ancestral right. As a result of the consistent armed conflicts, several operations of the oil and gas industry have been stalled in many occasions. Since the conflicts are still on-going, and there is no hope that they may stop soon, the industry is greatly affected since it cannot be able to conduct its operations as required. There are even instances where oil companies have been forced to suspend operations due to threats from militia groups in the country.

Efforts to come up with comprehensive laws to safeguard the operations of the oil and gas industry in Nigeria have been dealt several blows. The administration of the country’s president Goodluck Jonathan drafted a review of 16 different sets of oil and gas laws to come up with a comprehensive law known as the Petroleum Industry. However, such efforts have consistently been punched by leaders acting on the interests of major influential foreign oil and gas companies.

Bureaucracy is a major challenge that has so far caused major injuries to the Nigerian oil and gas industry. Those who are in authority are not using their powers to streamline the industry and encourage better practices; instead, they are using every opportunity to only enrich themselves and the few around them. This is a culture that continues to water down the industry in bits but will leave a great impact that will not be very easy address in future.

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online resources:

http://allafrica.com/stories/201303040649.html                                     

http://www.theabujainquirer.com/index.php?option=com_content&view=article&id=115:emerging-challenges-to-effective-regulation-oil-gas-industry-in-nigeria&catid=90&Itemid=709