Nigerian legislation imperils E&P operations

Dormant legislation has been revived in the Nigerian Congress to require “Nigeria Content” in oilfield services, including drilling services. This is primarily a political response to unrest in the Niger River delta area, where armed insurgents are demanding a greater share of the country’s oil revenue and jobs. The legislation would require minimum levels of local materials content, as well as local employment. In both circumstances, foreign providers of oilfield services would find it virtually impossible to comply.

IADC and Halliburton representatives have met with the US State Department and the Nigerian Embassy in Washington, D.C., to object to the legislation as written. They pointed out practical problems of local hire capacity and the lack of infrastructure to provide computer services, steel products and other materials necessary to sustain E&P in the country, which is already suffering a steep production decline. IADC senior vice president – government affairs Brian Petty described the sophistication and cost of offshore drilling rigs needed to explore for new resources offshore Nigeria. He also pointed out that, in the current market, drilling companies have many other options where they can crew their rigs with the best personnel, often of different nationalities, who are selected for their expertise to manage the rig asset and, above all, to avoid injury to personnel and the marine environment.

“Nigerian Oil and Gas Industry Content Development Bill 2008” (SB.81) is now in the Senate and poised to move into the Nigerian House of Representatives. IADC is concerned that its passage could complicate operations in other West African countries that might follow Nigeria’s lead. The US government is concerned about potential damage to Nigerian oil exports to the US and Europe. IADC member companies active in Nigeria should express opposition through local oilfield organizations OPTC and OSTC.

For more information, contact Brian Petty at 1/202-293-0670 (brian.petty@iadc.org).