Impact Of Economic Recovery On The Oil Sector In Nigeria (essay).

Field of Research

Discuss about the Impact of Economic recovery on the Oil Sector in Nigeria.

“A critical analysis of the impact of economic recovery on the oil sector in Nigeria” has been selected as the topic for the research. As commented by Perrons and Jensen, (2015), the economy of the oil rich countries like Saudi Arabia and Nigeria is depended on the oil and gas sector of the country. Therefore, considering the present economic situation and predicting the future scenario is equally important for an oil rich country like Nigeria. Being a student of Petroleum Engineering Management the field of research is related to my profession as it discusses the factors that affect the petroleum industry of Nigeria.

https://www.gate.iitg.ac.in/Syllabi/PE_Petroleum_Engineering.pdf

The article from provides the basic idea of the various factors that impact the oil and gas sector in a country. Considering the topic of discussion, the impact of economic recovery has helped to strengthen the oil and gas sector. Nigeria has also experience long years of recession that has resulted in the contraction of GDP (Abuja, 2017). In the recent time, when there has been positive impact over public institution and governance, the economy of the country has improved and with it the oil and gas sector.

1. How the economic recovery in Nigeria has improved the oil and gas sector of Nigeria?
2. What are the factors that affect the oil and gas sector of Nigeria?

Independent variables: Economic recovery in Nigeria, Factors affecting oil and gas sector of Nigeria

Dependent variable: Oil and Gas sector of Nigeria

1. The petroleum industry of Nigeria
2. Factors influencing the petroleum industry
3. The present economic situation in Nigeria
4. Impact of economic recovery on the oil sector in Nigeria
5. Positive impact over public institution and governance on economy of Nigeria

1. Development of the non-oil sector in Nigeria: Challenges & lessons for less developed countries.
2. Wireless sensor networks based pipeline vandalisation and oil spillage monitoring and detection: main benefits for Nigeria oil and gas sectors
3. Nigerian Content Development in the Oil and Gas Sector: The Role of the Nigerian Academia.

Findings:

It is a clear understanding that all the developed and the developing countries are largely depended on the oil and gas sector for the supply of their energy (Sola & Joachim, 2016). It has been evident that there have been many reforms in order to diversify the economy of the country and break out of the boom and bust cycle (Idachaba, 2017).

Understanding the present scenario of the oil and gas industry in Nigeria:

Nigeria has been found to struggle with the oil refineries and other petroleum related issues since a long time. There have been many opportunities available for this oil rich country to brighten its future in the oil and gas sector (Abuja, 2017). There are more challenges that the country is facing in terms of the sustainability and environmental issues. It is the African country that has brought shine and limelight in the economy of the country. It has been found that in spite of the economic instability and recessions around the globe there has been a significant improvement in the oil sector of the country. The reason behind this could be determined as an oil rich country and the global supplier of oil and gas. 30% of the oil and gas reserve is found in Nigeria and the country ranked eighth in OPEC’s share (Appiah-Adu & Sasraku, 2016).

Source of Secondary Data

Impact of economic condition of a country on the oil and gas industry:

Although it is a less acknowledged fact, however, it should be noted that the economic condition of a country plays an integral role in determining the growth of the oil and gas sector of the country. First of all, it is a well-known fact that the oil consumption of the residents of a country determines the growth of the oil and gas sector in the country (Henry & Henry, 2015). In case, a nation is economically strong, there would be greater demand for and consumption of the oil and natural gas, and this would lead to the growth of the oil and gas sector. However, at the same time, it should be remembered that the undeveloped economy can also at times facilitate the growth of the oil and natural gas industry (Munasib & Rickman, 2015). For example, Russia is a poor and under-developed nation, and hence the inhabitants of the nation nor had insulations not thermostats. Under communism, most of the people would open windows and doors for managing the interior temperatures. Since Russia has not been able to make an efficient use of energy due to lack of economic growth and socio-economic growth, its resources remain underutilized. Hence, this would facilitate the growth of a new oil and natural gas industry (Yusuf et al., 2014). More than often, the economically undeveloped countries have not fully explored or exploited the oil and gas reserves, and hence there are greater prospects in such countries.

The economic growth of a country plays a significant role in determining the supply of oil and natural gas in the country. Greater economic growth entails greater demand for oil and natural gas that makes the sector of a specific country highly conducive for investment. Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation (Saboori et al., 2014). There is no gain stating the simple fact that with rising income levels, the national demand for automobile in a country will always increase, leading to the growth of the oil and gas sector. In absence of proper demand, or supply exceeding the demand, there would be no possibility of growth (Idachaba, 2017). Again, at the very same time, it should be noted that although the nations which are economically underdeveloped have greater prospects, as most of the resources remain under-utilized, the economical backwardness can also challenge and impede the growth of the industry (Alshehry & Belloumi, 2015). In this connection, one can refer to Africa, which has huge resources facilitating the growth of oil and gas sector, and yet the problem of poor infrastructure, unavailability of skilled workforce and uncertain tax framework have created financial burden for the oil and gas sector of the country.

Research Question

Economic recovery in Nigeria in last decade:

Although the strong economic crisis has been impeding the economic growth of Nigeria, in the last decades, various economic plans have been formulated as well as implemented that considerably helped the nation combat its economic crisis, restore economic growth, ensuring sustained inclusive growth of the nation (Dobbs et al., 2014). Although recently Nigeria was found to encounter economic downturn, economic growth is forecast to return into positive territory in 2017. This is especially expected to return largely on the back of recovery in the oil sector as the Nigerian government has recently intensified efforts for restoring peace and economic stability in the Nigerian Delta, while also improving its Joint Venture relationships with a variety of international oil companies (Chete et al., 2014). At the same time, it should be noted that strong growth in the agricultural sector still continues in Nigeria.

The absence of infrastructure has been a major problem impeding the growth of Nigerian oil and gas sector. However, under the economy recovery plan, the country has made huge investment for improving the national infrastructure, as a result of which the roadways, railway systems and electricity system have largely improved, facilitating foreign investments. The robust GDP growth of Nigeria is indeed admirable, as it has soared up to 6 to 7% in the period between 2010 and 2014 (Nwapi, 2015). However, the unemployment rate is equally high as it is approximately 45.65%, and yet however, different skill development programs have been initiated by the Nigerian government that could enhance the equitable growth of income amongst all the Nigerians (Akanmu et al., 2014). The country has also initiated different youth training programs and has made massive investment in the ICT that is expected to boost the economic growth of the nation. At the same time, it is important to note that the government has also succeeded in developing the non-oil and gas sectors, such as the agriculture, manufacture and solid minerals sectors. The government has encouraged the private companies to make heavy investments in these public sectors, and is supporting the private sectors to become the engine of Nigerian economic growth and development (Uma et al., 2013). In addition, the privatization of the public assets is also helping in enhancing the competitiveness of the industry.

Impact of economic recovery in Nigeria over oil and gas industry:

It has been found that Africa has become a leading hub of investment and has attracted many investors to its business activities. The strong price of the commodity with the combination of the huge growth of population and high capital inflow has leaded to a better economic condition for the country (Perrons & Jensen, 2015). This in turn has also helped in the improvement of the oil and gas sector. For instance, Nigeria can apply better technologies for the purpose of drilling or refining of oil and petroleum. In addition to this, the easy transportation capability has also help the country to expand its market opportunities to other parts of the globe. The economic funding has also helped in improving the health and condition of the people by providing better healthcare, education and agricultural ability as well. All these factors have largely helped the country to improve its oil and gas sector as well (Sola & Joachim, 2016).

Proposed Search Terms

The aim of the research is to critically analyse the impact of the economic recovery that took place within the last decade in Nigeria on the oil and gas sector of the country.

Research Question 1: How the economic recovery in Nigeria affected the oil and gas sector of the country?

Research Question 2: What are the factors that affect the oil and gas sectors of Nigeria?

The research shall be completely based on the secondary sources of data. The information on the economic recovery in Nigeria can be obtained from various newspaper articles and other sources like research journals. All these sources can be easily accessed through the internet. The Google scholar or any other available data base can be used for the sake of searching information (Mackey & Gass, 2015). There is no scope for using primary data in the research as the impact of economy on the oil and gas sector cannot be known by any kind of survey. Apart from this, there is also no scope to interview any manager or other personnel related to the oil and gas sector from Nigeria. Therefore, the complete research shall be based on the collected secondary data only.

A number of theories and applications can be used that would help to understand the concept of the topic and would help to get a clear understanding on the topic. Positivism research philosophy will be used for analysing the theories that would help to analyse the recent situation of the market that remains the primary requisite of the research (Flick, 2015). The complete study shall be based on the deductive approach because the entire concept relies on the existing models and theories and that no other method would help in carrying out the research in the right way.  In addition to this, the descriptive research design will be used that would help to take a descriptive approach towards the topic under consideration. The research study requires carrying out a detailed literature review along with the analysis and the interpretation of the collected data. All these will be carried on using the secondary data collection technique only (Silverman, 2016). The analysis of the data will be based on certain themes that will be based on the set research questions and objectives. It is on the basis of the findings, the data will be gained and the answer to the research questions will be obtained.

Findings

References:

Abuja (2017) Nigeria Faces Prospects of Fragile Economic Recovery in 2017 Retrieved from: https://www.worldbank.org/en/news/press-release/2017/05/19/nigeria-faces-prospects-of-fragile-economic-recovery-in-2017 [Accessed on: 24-8-2017]

Akanmu, A. A., Ogunsesan, A. S., & Ogundiran, A. A. (2014). Assessment of the Challenges and Implementation of Post Flood-Disaster Needs Assessment in Ibadan, Nigeria. In 3rd International Conference of the Faculty of Environmental Studies, The Polytechnic, Ibadan, Nigeria, June (pp. 3-5).

Alshehry, A. S., & Belloumi, M. (2015). Energy consumption, carbon dioxide emissions and economic growth: The case of Saudi Arabia. Renewable and Sustainable Energy Reviews, 41, 237-247.

Appiah-Adu, K., & Sasraku, F. M. (2016). Revenue Management in the Oil and Gas Sector. Governance of the Petroleum Sector in an Emerging Developing Economy, 27.

Asekome, M. O., & Agbonkhese, A. O. (2015). Macroeconomic variables, stock market bubble, meltdown and recovery: evidence from Nigeria. Journal of Finance, 3(2), 25-34.

Chete, L. N., Adeoti, J. O., Adeyinka, F. M., & Ogundele, O. (2014). Industrial development and growth in Nigeria: Lessons and challenges (No. 2014/019). WIDER Working Paper.

Dobbs, R., Fiorini, R., Leke, A., Thompson, F., & Wright, D. (2014). Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy. Pre-publication document. McKinsey Global Institute.

Flick, U. (2015). Introducing research methodology: A beginner's guide to doing a research project. Sage.

Henry, N. F., & Henry, O. N. (2015). Wireless sensor networks based pipeline vandalisation and oil spillage monitoring and detection: main benefits for Nigeria oil and gas sectors. The SIJ Transactions on Computer Science Engineering & its Applications (CSEA), 3(1), 1-6.

Idachaba, F. E. (2017, July). Nigerian Content Development in the Oil and Gas Sector: The Role of the Nigerian Academia. In Nigeria Annual International Conference and Exhibition. Society of Petroleum Engineers.

Mackey, A., & Gass, S. M. (2015). Second language research: Methodology and design. Routledge.

Munasib, A., & Rickman, D. S. (2015). Regional economic impacts of the shale gas and tight oil boom: A synthetic control analysis. Regional Science and Urban Economics, 50, 1-17.

Nwapi, C. (2015). Corruption vulnerabilities in local content policies in the extractive sector: An examination of the Nigerian Oil and Gas Industry Content Development Act, 2010. Resources Policy, 46, 92-96.

Perrons, R. K., & Jensen, J. W. (2015). Data as an asset: What the oil and gas sector can learn from other industries about “Big Data”. Energy Policy, 81, 117-121.

Saboori, B., Sapri, M., & bin Baba, M. (2014). Economic growth, energy consumption and CO 2 emissions in OECD (Organization for Economic Co-operation and Development)'s transport sector: a fully modified bi-directional relationship approach. Energy, 66, 150-161.

Silverman, D. (Ed.). (2016). Qualitative research. Sage.

Sola, A. K., & Joachim, A. A. (2016). Development of the non-oil sector in Nigeria: Challenges & lessons for less developed countries. Covenant Journal of Business and Social Sciences, 5(1).

Uma, K. E., Eboh, F. E., & Obidike, P. C. (2013). Managing rural-urban migration and brain drain for sustainable economic recovery in Nigeria: Constraints and options. Journal of Economics and International Business Management, 1(1), 1-7.

Yusuf, Y. Y., Gunasekaran, A., Musa, A., Dauda, M., El-Berishy, N. M., & Cang, S. (2014). A relational study of supply chain agility, competitiveness and business performance in the oil and gas industry. International Journal of Production Economics, 147, 531-543.