Skills shortage shuts indigenous oil firms out of $17.5bn opportunities.

A shortage of skills has denied indigenous oil servicing companies a significant share of the job opportunities in the Nigerian oil and gas industry through exploration and production (E&P) activities, which have been estimated at about $17.5 billion annually.

Nigerian indigenous companies are benefitting from only a fraction of this amount because of lack of competencies and capacities.

Analysts say for Nigerian independent E&P companies and service providers to be empowered to bid for such jobs, they need to develop their capacities and competencies with respect to planned projects between now and 2025 in three key E&P areas – engineering, procurement and services.

Oil and gas drives the Nigerian economy and billions of dollars are spent annually on servicing the entire industry, with most of the spending going to engineering-related operations such as Front End Engineering Design (FEED), Detailed Engineering Design (DEED), Engineering Procurement and Construction (EPC), and other E&P services.

Because the equipment and services for the above activities are domiciled outside Nigeria, most of the spending indirectly ends up outside the country in the process of procuring the services and equipment. This situation provides employment and business opportunities for citizens of other countries, with only a small fraction of the accruable profit spent in Nigeria.

Oluwole Oluleye, executive secretary, Petroleum Development Trust Fund (PDTF), says his organisation plans to change this situation. He adds, however, that in an attempt to change it, there is a challenge that the change agents might be confronted with, which is empowering the independent companies to improve on their competencies and capabilities.

Oluleye says having identified the needs of the indigenous companies, the next thing is to avail them of upgrading opportunities available in the industry.

Further investigation revealed that under the engineering aspect, there is an appreciable $2 billion opportunity every year, but a shortage of indigenous skilled manpower to handle FEED, DEED and conceptual design jobs can be a challenge for indigenous companies.

Under procurement, every year there is an appreciable $11 billion opportunity for procuring equipment components, parts and accessories, but lack of skilled manpower required to deliver such jobs locally is also a challenge.

In the area of services, there is a $1 billion opportunity annually for drilling services, which is also hindered by lack of indigenous skilled manpower required to execute drilling jobs.

There seems not to be adequate indigenous crewmen and engineers available to local service providers to enable them bid for marine services. Meanwhile, there is also an estimated $3 billion opportunity annually in this area.

Also there is a shortage of skilled trainers with the capacity to provide training services. It is also challenging for indigenous companies to access requisite projects to execute on-the-job training, despite possible training opportunities to the tune of about $500 million annually.

Eddy Wikina, managing director, Treasure Energy Resources, and former external affairs manager for Shell Nigeria Exploration and Production (SNEPCO), says that if the investment climate in the country is right, the opportunities in the oil and gas industry could be more.

“It could be as much as $20 billion if there is the right atmosphere for investment in the country,” he says.

According to him, if there are construction works going on simultaneously at various locations for oil and gas activities, capacities would be built in country.

Seye Fadahunsi, executive director, Pillar Oil, says that even though he is not sure of the figure, he believes there is much more room for improvement over the $17.5 billion, adding that if all the marginal oil fields were given out, there would be more activities in the industry.

While the jobs are available from these marginal oil fields, Nigeria can use that opportunity to develop local capacity.

Olusola Bello.
Culled from Business Day Online.