Difference between consortium agreement and joint venture


The Nigerian gas and oil prices industry is the main source of revenue for your government and has now an industry price of about $20 billion. It is Nigeria’s main way to obtain export and foreign currency earnings as well as a major employer of labour. A combination in the crash in crude oil price to below $50 per barrel and post-election restiveness in Nigeria’s Niger-Delta region generated the promise of force majeure by many international oil companies (IOC) operating in Nigeria. The commitment of force majeure led to shutdown of operations, abandonment or selling of interests in oil fields and laying off of staff by foreign and indigenous oil companies. Although the above occurrences contributed to the drag inside Industry, perhaps, the most important cause would be the unfruitful presence in the Federal Government of Nigeria (FGN) since the dominant player inside the Industry (owning about 55 to sixty percent interest inside OMLs).

While, it can be unfortunate that numerous IOC’s playing inside Industry divested their interests in oil mining leases (OMLs) and oil prospecting leases (OPLs) granted for them by the FGN; then again, it really is a positive development that indigenous companies acquired the divested interests from the affected OMLs and OPLs. Hence, domestic investors and firms (Nigerians) now take over the opportunity and significant role to play from the sustainable advancement of Nigerian coal and oil industry.

This paper x-rays the roles expected of Nigerians plus the extent they have successfully discharged same. It also blogs about the challenges which might be inhibiting the sustainable development on the industry. This paper finds that this chief factor limiting domestic investors from efficiently playing their role inside the sustainable continuing development of the companies are the overbearing presence in the FGN inside Industry as well as inability to fulfil its obligations to be a dominant player from the Industry.

In the beginning, this paper discusses the roles of domestic investors, and inside second part, this paper looks at the challenges and factors that inhibit domestic investors in sustainably performing the identified roles.


The roles domestic investors play to promote sustainable rise in the gas and oil prices industry include:

Providing Capital
Enhancing Personnel and Technical Capacity Development
Promoting Technological Capacity and Transfer
Supporting Research and Development
Providing Risk Insurance

Capital Injection/Provision

Oil and gas projects and services are capital intensive. Hence, financial capacity is vital to drive growth inside the industry. Given the increased participation of domestic investors in Nigeria’s coal and oil industry, naturally, to remain saddled while using responsibility to deliver the capital required to push industry growth.

As at 2012, Nigerians had acquired from IOC’s about 80 from the OMLs/OPLs (30 percent with the licences) and approximately 30 on the oil marginal fields awarded within the Industry. Dangote Group is now undertaking a $14 billion refinery project, partly sponsored by way of a consortium of Nigerian banks. Another Nigeria company, Eko Petrochem & Refining Company Limited, can be undertaking a $250 million modular refinery project. In the midstream sector in the industry, there are lots of indegenous owned transport vessels and storage facilities; and within the downstream sector, domestic investors are actively involved inside marketing and sale of refined crude oil as well as its by-products with the filling stations located across Nigeria, which filling stations are mainly owned and funded by Nigerians.

Capital is also necessary to fund education and training of Nigerians from the various sectors on the Industry. Education and training are crucial in filling the gaps inside the country’s domestic technological and technical know-how. Thankfully, Nigeria is now offering institutions solely for gas and oil prices industry related studies. Furthermore, indigenous coal and oil companies, in partnership with IOC’s, now undertake waste training for Nigerians in several areas in the industry.

However, funding in the domestic investors isn’t adequate as compared to the financial needs on the Industry. This inadequacy will not be a function of financial incapacity of domestic investors, but a result of the overbearing presence with the FGN over the Nigerian National Petroleum Corporation (NNPC) being a player inside the industry; together with regulatory bottlenecks for instance pump price regulations that inhibit the injection of capital inside downstream sector.

Personnel and Technical Capacity Improvement

Oil and gas projects in many cases are highly technical and sophisticated. As a result, there exists a high demand for technically skilled professionals. To sustain the growth in the industry, domestic investors must fill the capability gap through training, hands-on experience inside execution of industry projects, management or operation of already established facilities and receiving the necessary international certifications for example ISO certification 2015 and American Society of Mechanical Engineers (ASME) certification. There are currently domestic firms that undertake projects including exploration and manufacturing of crude oil, engineering procurement construction, drilling, fabrication, installations, oil by-products shipping and logistics, offshore fabrication-vessel building and repair, welding and craft advertising and marketing. Recently, Nigerians participated inside the in-country fabrication of six modules in the Total Egina Floating Production Storage Offloading (PSO) vessel and integration with the modules within the FPSO for the SHI-MCI yard.

Technological Capacity and Transfer

Technological capacity in the gas and oil industry is primarily linked to managerial competence in project management and compliance, the assurance of international quality standards in project execution and operational maintenance. Hence to create technological competency starts off with in-country growth and development of management capacities to build the pool of skilled personnel. A particular research found that there’s a vast knowledge gap between domestic companies and IOC’s. And ‘that indigenous oil companies experienced fundamental not enough quality management, limited compliance with international quality standards, and poor preventive and operational maintenance attitudes, which cause poor repair of oil facilities.’

To effectively play their role in enhancing the technological capacity inside Industry, domestic companies started partnering with IOC’s in project construction and execution and operational maintenance. For instance, as said before, domestic companies partnered through an IOC within the successful realization in-country fabrication of six modules on the Total Egina Floating Production Storage Offloading (FPSO) vessel and integration from the modules around the FPSO for the SHI-MCI yard. Other instances include: the primary assembled-in-Nigeria Subsea Horizontal Xmas Tree plus the fabrication; installing of subsea equipment like flexible flowlines, umbilicals and jumpers on Agbami Phase 3 project; Installation of 32km 24″ Sonam to Okan NWP pipeline; the fabrication and load-out from the Okan PRP Topsides; Bridge Fabrication of Okan PRP jacket, as well as others.

It is typical knowledge that considering that the enactment on the Nigerian Oil and Gas Industry Content Development (NOGICD) Act this year, all projects executed over the sectors on the Industry have experienced the active involvement of Nigerians. The Act ensured an increase in technological and technical capacities, but in addition a gradual means of technology transfer through the IOC’s to Nigerians. The Act in the Schedule reserved specific Industry services to domestic companies. The rate of involvement along with the quality of services of Nigerians has grown tremendously with all the result that these days there are many domestic oil servicing firms.

Leave a Reply

Your email address will not be published. Required fields are marked *