Bridging productivity gaps in the Oil & Gas sector while in pursuit of diversification

Inconsistencies in the working lines of any scheme of human endeavour is one character of defect which readily bear forces of disturbances against expected results. While the patterns that spur out of a system characterised by such syndrome on a macro level is undesirable and counterproductive in any sphere of human endeavour, the manifestations of the effects are usually multi-sectoral. The subject becomes more consequential when consideration is given to the workings of the economy. The discourse on this note assumes an elaborate dimension, putting into assessment the surrounding nexus of other aspects of human endeavors with the macroscopic architecture of an economy in whole, pari parsu the analytical productivity of the sectors which themselves constitute the architecture of the economy.

In the light of the foregoing, it is assertive that the status-profile of an economy is by and large a function of the level and degree of productivity of the sectors driving the economy. It is therefore, certainly possible to measure the productive relativity of sectors based on their contributory performance profile to the economy. In this light, the productivity of sectors to the economy are being weighed by the degree of their contributions to its macroscopic profile, under which those sectors at the higher echelons are defined as the major drivers of the economy. In Nigeria, oil and gas has remained the driving base of which the Nigerian mainstream economy is being defined. It is indisputable that the larger composition of the defining character of the economy gives resonance back to the workings of the oil and gas sector.

However, the fluttering posture of the sector owing to strains which are not only perceivable domestically but also in the global front, are factors that have for long shown that basing the entirety of the Nigerian economy on the patterns of the oil and gas sector is an unreliable framework which is counterproductive to the desired growth and development needed for a virile economic status. The infusion of the domestic inconsistencies with the waving trends of the global markets owing to unavoidable events, have compounded over time to give the Nigerian economy a definition of waving character with disturbances that have pulled the economy into an ecosystem of dysfunction.

Reports from waving trends of global oil prices with excess supply and manifestations of several domestic inconsistencies which do find expression in terms of lowering productivity, oil theft, poor infrastructures, refinery deficiencies, among others are forces which have been pulling the economy aback so long as oil and gas remains the mainstay of the Country’s economy. These inconsistencies are thus, forces of destabilisation which may continue to subject the profile of the Nigerian economy to the vagaries of fluttering records in as much as growth and development are put into perusal.

The lastest data from the Nigerian National Petroleum Corporation (NNPC) revealed that Nigeria’s total crude oil and condensate production from January to October 2020 fell by 10.25 percent when compared to similar period in 2019. According to data contained in the NNPC monthly financial and operational report for November 2020 showed that for the eight months period, the total oil and condensate production for January to October 2020 was 553.59 million barrels. Further breakdown showed that the figure for January to October, 2019 was 616.87 million barrels. The report also revealed that production in September 2020 was 47.82 million barrels, a 23 percent decline from the 62.10 million barrels produced in September, 2019. The figures for oil and condensate production for August 2020 was 51.15 million barrels, a drop of 20.87 percent when compared to 64.64 million barrels produced in August 2019. For July 2020, production fell by 21.57 percent to 51.26 million barrels, compared to 65.36 million barrels recorded in July 2019. Also, oil and condensate production fell by 19.29 percent in June 2020 to 50.26 million barrels compared to 62.72 million produced in June 2019. The figure for May 2020 showed that oil and condensate production was 54.24 million barrels, a fall of 9.63 percent compared to 60.02 million barrels produced in May 2019. The report also showed that a total of 61.09 million barrels of crude and condensate was produced in April 2020, a rise 3.37 percent compared to 59.10 million for April 2019. The figure for March 2020 crude oil and condensate production was 63.19 million, a marginal rise of 0.7 percent compared to 62.75 million barrels in March 2019. The report also indicated that production in February 2020 rose by 7.87 percent to 60.02 million barrels compared to 55.64 million barrels. Also, the data for January 2020, showed that oil and condensate production rose by 5.05 percent to 64.26 million barrels compared to 61.17 million barrels produced in January 2019. NNPC had in the November MFOR explained that of the 49.94 million barrels of crude oil and condensate produced Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 30.73 percent and 38.77 percent respectively. While Alternative Funding, (AF) Nigeria Petroleum Development Company, (NPDC) and Independents accounted for 11.42 percent, 9.93 per cent, and 9.15 per cent respectively. It was contained that NPDC October 2019 to October 2020 cumulative production from all fields was 74,394,523 barrels of crude oil translating to an average daily production of 187,392 barrels per day.

The moving trends of domestic and global market conditions, project that the necessity for diversification is more demanding on the Country. The reality of oil market trends have had devastating blows on the Nigerian economy which make the thirst for accruals from other non-oil sources pressuring. Since, the level of development of other sectors have not assumed the virile level that could cater for the gaps occassioning from the oil sector, the economy has to suffer for the years of insensitivity to projections of the raining days.

Nevertheless, it is part of life that when problems pose along difficult lines, strategic measures must be taken to wade through the stormy challenges. The pressure brewing out of such atmosphere may not however, permit a luxury of condition to address such disturbances under green sensations. The prevailing conditions in this light, is thus one demanding strategic approaches with properly calculated pragmatic moves  prudent enough to drive the economy to the coast for safer haven. Hence, while the diversification of the economy as a whole to solidify the productivity profile of other sectors to the level of contributory virility, is not genuinely a course achievable overnight, it is imperative that efforts be directed towards proper management of the working fabrics of the oil & gas sector through strategic tools, such that every form of avoidable pattern of inconsistency domestically is shaped off the surface. It is therefore, important that conciliation of efforts be harmonised from private to government stakeholders, with the latter driving a deliberate course towards the ends of bridging all possible gaps responsible for short falls in the productivity of the sector. Gearing efforts towards this end should not however, be a ticket to turn away from the diversification of the economy, which still remains the clear path to the course of developing a virile economy on solid grounds.