ost of the world’s major oil producers – such as ExxonMobil, ChevronTexaco and Shell – are well established in Nigeria. These companies operate joint ventures alongside state-owned Nigerian National Petroleum Corporation (NNPC) and collectively account for nearly all of the country’s crude oil output.

The largest of the joint venture companies is operated by Shell Petroleum Development Company (SPDC). It pumps nearly half of all Nigeria’s oil and holds approximately 50% of total oil and gas reserves.
SPDC is the largest oil and gas company in the country. It employs 4,000 people – the vast majority Nigerians – and a further 15,000 are retained through contracts. Its operations, which are concentrated around the Niger Delta and adjoining shallow offshore areas, include social and environmental commitments.

Chris Finlayson Chairman and Managing Director of SPDC

Chris Finlayson, SPDC’s chairman and managing director, says the firm is now capable of producing 1 million b/d. When the operations
of its offshore sister company, Shell Nigeria Exploration and Production Company (SNEPCO), come on-stream later this year, it will raise group output to over 1.2 million b/d. “We are running a consistent
and continuous annual investment program of $2.3 billion for joint ventures,” says Mr. Finlayson.

Then there is the gas. While oil dominates, the expansion of the gas sector represents a major opportunity for both Shell and Nigeria. SPDC is the lead partner in the Nigerian Liquefied Natural Gas (NLNG) export plant on Bonny Island, which has successfully supplied both North American and European markets for the last five years. When a sixth production train is added, it will make NLNG the second-largest LNG complex in the world.

Mr. Finlayson believes there is room for further expansion of the gas business in Nigeria, not only to eliminate all flaring by 2008, but also to add value to the energy chain and diversify the economy away from oil. “It is very much a virtuous circle, giving us the chance to raise oil production but also to create a major revenue stream for the country,” he says.

Another important initiative being pursued by SPDC and other foreign producers is the advancement of the indigenous oil and gas industry. Mr. Finlayson is among those who would like to see more local involvement in the Nigerian energy sector. Where possible, Shell regularly sources work from local contractors.

On the exploration and production side, one of the best-known Nigerian firms to have emerged over the last decade is Moni Pulo. It has established a solid production base of 20,000 b/d from its concession, which also boasts extensive gas reserves of approximately 3 trillion cubic feet (cu ft).

Chief O. B. Lulu-Briggs CEO of Moni Pulo

Although small by international standards, the firm is highly significant in the development of the local oil industry. Its chairman and CEO, Chief O. B. Lulu-Briggs, is one of the most highly regarded figures in Nigeria’s homegrown oil community. He says being one of the largest indigenous firms also brings responsibility. “We have to be very committed to our community,” he says, “and that is exactly what we are.”

Like Shell and other oil companies in Nigeria, Moni Pulo has established schools and hospitals in the region where it produces oil. In many ways, it is something of a pioneer. The company achieved first production in 1999, just three years after initial discovery, which is a local record. It worked alongside partner Brass Exploration, part of Baker Hughes, which provided essential technical support.

In 2003, it bought out all the shares of the U.S. firm in the joint venture. But Chief Lulu-Briggs says the company is eager to identify a new foreign partner to help the firm’s exploration efforts and tap its vast gas reserves. “At Moni Pulo, we know how important it is
to have a partner,” he says, “and we are really looking forward to finding another.”

The complexities of the newly emerging gas business mean it is vital for local firms to team up with more experienced foreign partners. “Gas is a very expensive business” says Chief Lulu-Briggs. “We have over three trillion cu ft of proven gas that we happened to find when we were looking for oil, and our block probably contains much higher reserves. This is another reason why we are looking for partners.”

Chris Garuba Group Chairman of Obekpa Petroleum

Obekpa Petroleum, part of the Obekpa Group, is another indigenous firm with its sights fixed on gas. Chris Garuba, group chairman, believes the company can cut a niche for itself in the production and marketing of liquefied petroleum gas (LPG).

“Because of frequent LPG shortages in our country, we think there’s real potential in the market for us,” he explains. “We want to find a niche and get involved in the distribution and marketing.” On the oil exploration side, Obekpa hopes that working alongside U.S. firm Devon Energy will help secure results. Again, the emphasis is on partnering.

“Oil exploration is big business. It’s not child’s play,” says Mr. Garuba. “This is why we cannot do it alone and need the human and financial help of a foreign partner.” The company is also committed to building a sustainable business involving local communities and to respecting the environment. Obeka’s motto reads: “Innovative oil and gas exploration and extraction in a green culture.”

Multinational firms introduce new skills and technology to the country.

Another active local oil firm is Chrome Group, chaired by Sir Emeka C. Offor. It owns U.S.-listed Environmental Remediation Holding Corporation (ERHC) and various other subsidiaries. Through ERHC, it aims to gain a foothold in the lucrative waters between Nigeria and São Tomé and Principe, following a 2003 licensing round.

Sir Offor says it is time Nigerians started supplying the needs of the local energy industry. “In the oil and gas sector, almost everything is imported – pipes, tubes, fittings and most importantly technology,” he says. “It is time for us to take care of these elements and become self-sufficient.”

Sani Bello President of NAIPEC

Sani Bello, president of the Nigerian Association of Indigenous Petroleum Explorers and Producers (NAIPEC), agrees but says the role of foreign companies is also important. A partnership approach is vital. “There is no way we can do without the foreign multinationals,” he says.

Schlumberger Oilfield Services, one of the major international suppliers to the Nigerian oil and gas industry, is bringing new skills and technology to the country and putting locals into the most senior posts. Bit by bit, Nigeria is taking control of its precious natural resources sector. Managing Director H. ‘Sola Ayinlola says it is absolutely right that Nigerians should take more of a stake in their own energy industry.

Indigenous oil and gas companies are working alongside foreign firms and gradually gaining a bigger stake in their country’s resources.