The Impact of ICT in Nigerian Oil and Gas Sector

The Impact of ICT in Nigerian Oil and Gas Sector

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Information and communications technology (ICT) refers to all the technology used to handle telecommunications, broadcast media, intelligent building management systems, audiovisual processing and transmission systems, and network-based control and monitoring functions. The information revolution and the extraordinary increase in the spread of knowledge have given birth to a new era-one of knowledge and information which affects directly the economic, social, cultural and political activities of all regions of the world, including Africa. The Nigerian economy is currently supported by oil, which is the major non-renewable energy source. ICTs play an important role in increasing productivity and efficiency in many sectors of the economy. With the expectation of high oil prices, the question arises as to whether increased production and more equitable distribution of useful oil and gas energy resources are possible, through the use of modern ICTs. This applies mostly to developing countries like Nigeria. Oil exporting countries try to maximize the advantages of using ICTs, while oil-importing countries are interested in using oil and gas more effectively (Dike, Adoghe, &Ademola, 2013). Thus, determining the impact of ICTs in the Nigerian oil and gas sector can be used to better access the future economic development of developing countries. ICTs provide a means to improve both upstream operations (crude oil production and exploration) and downstream operations (transportation, refining of crude oil and distribution of oil products).

Oil companies, in particular, adopt ICTs to improve the efficiency and effectiveness of their operations, as well as to aid management decision making. This helps to strengthen their competitive positions in rapidly changing environments. Environmental, organizational, and technological factors are creating a highly competitive business environment in which customers are the focal point (Efraim, Dorothy, Ephraim, James, 2009). Furthermore, these factors can change very quickly. Thus, the growth of any company is tied to retaining loyal customers, improving productivity, reducing costs, increasing market share, and providing a timely organizational response (Matthew, Luka & Frank 2012). ICT is a major tool for dealing with these issues. Due to the degree of uncertainty in today’s competitive oil industry, oil companies in Nigeria are operating under increasing pressures to produce more with minimum resources. To succeed in this dynamic environment, oil companies must undertake innovative activities such as improving operational processes and continuously reviewing competitive strategies. ICT has a high impact on oil and gas operations. For example, in upstream operations, ICTs and related technologies may provide possibilities for expanding proven crude oil reserves, improving the rate of crude-oil extraction from existing wells, and providing further means to discover new wells (UNCTAD, 2006).

A growing number of corporate organizations have recognized the high potential of information and communication technologies (ICTs) to contribute to national and social development. Information and communication technologies have a critical role to play in development efforts around the world. There was a time when the benefits of applying ICT in fighting poverty and promoting economic growth were not widely understood. Many in the developing community questioned how communication technology could be used to alleviate such dire challenges as starvation, homelessness and lack of basic education and health services. Recently, this view has given way to an understanding of ICT as an essential component of border efforts to harness the free flow of information, accountability and economic development in the world. In recent times, both the developing countries and the international communities have started taking concrete actions to incorporate ICT into their economic policies and development agenda (Kunti, 2006).

Therefore, the researcher considered it necessary to investigate the impact of Information and Communication Technologies (ICTs) in the management of the Nigerian Oil and Gas industry in Nigeria. The advent of information and communication technologies has a huge impact on the way organizations of all types and users perform their work (Kunti, 2006). What has become known as the Information and Communication Technologies (ICTs) revolution has improved efficiency and effectiveness in most sectors of the economy. By allowing organizations to create and analyze important new information, it changed the way major decisions were made (Rocheleau, 2009).

1.2 STATEMENT OF THE PROBLEM

Considering the enormous benefits that are experienced with the impact of ICT in the Nigerian oil and gas sector, the Nigerian economy still experiences some obstacles or hindrances in the effective and efficient use of the ICT resources in the sector. Today, ICT acquisition and implementation are facing a lot of problems. This research work is being conducted to expose some of the inhibiting factors that are hindering the impact of ICT in the management of the oil sector in Nigeria.

Therefore, the trust of this study is on the nature of magnitude of the adoption of Information and Communication Technologies in the management of the Nigerian Oil and Gas Industry. It is increasingly recognized that the development, adoption of ICTs are key determinants to the success or failure in the management of the Nigerian Oil and Gas industry. In this study, it became pertinent to find out if Oil and Gas industries are capable of developing technologically in their operational activities in the context of the policies and institutional arrangements that have assisted the advanced countries to achieve technological capability in the management of the industry.

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to examine the impact of information and communication technology in the Nigerian oil and gas sector. The specific objectives include:

1. To evaluate the impact of ICT in the Nigerian Oil & gas sector.

2. To evaluate the output of the Nigerian oil & gas industry as measured by operational efficiency.

3. To examine the nature and degree of adoption of innovative technologies in enhancing prospects.

4. To evaluate the acceptability of ICT in the oil & gas industry.

1.4 RESEARCH QUESTIONS

The following research questions were stated to guide this study:

1. What is the impact of ICT in the Nigerian Oil & gas sector?

2. What is the output of the Nigerian oil & gas industry as measured by operational efficiency?

3. To what extent does the nature and degree of adoption of innovative technologies enhance prospects?

4. Has the acceptability of ICT in the oil & gas industry increased productivity in Shell Company?

1.5 RESEARCH HYPOTHESES

To achieve the objectives of this study, the following hypotheses were formulated to guide this study:

Hypothesis 1

H0: There is no significant difference between the impact of Information and Communication Technology and the Nigerian Oil & gas sector.

H1: There is a significant difference between the impact of Information and Communication Technology and the Nigerian Oil & gas sector.

Hypothesis 2

H0: There is no significant difference between the acceptability of the ICT oil & gas industry and the increase in productivity in Shell Company.

H1: There is a significant difference between the acceptability of the ICT oil & gas industry and the increase in productivity in Shell Company.

1.6 SIGNIFICANCE OF THE STUDY

The significance of this study cannot be over-emphasized, when one considers the resultant effects of inadequate access to Information and Communication technologies in the Nigerian Oil and Gas Industry. The study will help to put the theory of adoption of ICTs into practical application. This process might help to verify the claims of the theory and consequently come out with the strength and weaknesses of the theory. This study is hoped to break an academic exposure, thereby closing a gap in academic literature and as such a major contribution to knowledge. The study is also significant because it will create much-needed awareness of adoption principles as a management concept that the management of the Nigerian Oil and Gas industry should embrace to improve the quality of their services.

This study is also important as it encourages the spirit of the adoption of new approaches that undoubtedly provide long-term benefits and enhance local prospects and development. The outcome of this study would serve as a blueprint for policy-makers and stakeholders to chart the right course of action on the development of ICTs facilities and infrastructure in the oil sector. In addition, the study is expected to provide the basis for comprehensive information on the process of acquisition, availability and use of ICTs gadgets in the oil and gas industry.

1.7 SCOPE OF THE STUDY

The study is concerned about the impact of information and communication technology with specific reference to Shell Oil Company, Nigeria. The study will look at ICT impact on the oil and gas sector and its upstream operation in Nigeria.

1.8 LIMITATIONS OF THE STUDY

As it is expected with written work of this kind, the completion of this project was not possible without problems encountered in the course of writing this project which includes difficulties in obtaining relevant and up-to-date information, data due to Nigeria’s poor nature of data collection and storage facilities. Also, the dwindling state of the economy has made it difficult for people to save and thereby little capital accumulation for investment.

Finally, the Nigerian government, oil and gas sector and the non-oil sector should use the recommendations of this research to provide and adopt the use of ICT to enhance the operations and provide better services to both government and shareholders of the company.

1.9 DEFINITION OF TERMS

a) Information and Communication Technology: Information and communications technology (ICT) refers to all the technology used to handle telecommunications, broadcast media, intelligent building management systems, audiovisual processing and transmission systems, and network-based control and monitoring functions.

b) Computer: Is an electronic device capable of taking input, processing it, and produces the output in a pre-defined form.

c) Technology: Managing the applications of science recovery.

d) Information: This is defined as processed data; data is n0t information until it is given some meaning by way of definition.

e) Internet: This is the international networking of computers through which anyone at any place in the world has access to information needed.

f) Information Technology: Information Technology (IT) is the automation of processes, controls, and information production using computers, telecommunications, software and ancillary equipment.