OIL service companies, which are worst hit by hostage-taking in the Niger Delta, are reportedly turning down new contracts awarded to them by the major firms in the industry.
The Guardian learnt that some oil service companies from the United States (U.S.) and the United Kingdom (UK) have been rejecting contracts that border on exploration and exploitation of oil and gas resources in Nigeria since the kidnap of foreign workers by militants assumed a disturbing dimension.
Similarly, the recent abduction and attacks on Asian citizens have compelled companies from those parts of the world to be retracing their steps in accepting contracts from the producing companies.
The affected companies perform more than 85 per cent of all activities in production of oil and gas in Nigeria. Industry officials claimed that the oil service companies had shifted their attention from Nigeria to Angola and Gabon as well as the Gulf of Guinea with reference to Nigeria, Sao Tome and Principe joint development zone.
The senior oil firm executives, who spoke with The Guardian on the development, attributed the problem to incessant hostage-taking in the Niger Delta, which forces the firms to believe that the region was no longer safe for their employees.
One of the company chiefs said that all the drilling activities slated for the second quarter of this year had been put off as the contractors had turned down all new contracts coming from Nigeria.
“We have drilling jobs now but the contractors have told us they were not coming to Nigeria to work. I am in a fix,” one of them said.
Another chief executive officer said there was a clear instruction from his company’s headquarters in (UK) that no employee should go to Port Harcourt, Rivers State, with a warning that if they must go there, there must be a clearance from the London office.
“In our own case, there was a clear instruction from our headquarters not to allow any of our staff to go Port Harcourt. Whoever does that without clearance will have to take the blame for any sad occurrence”, he said.
According to him, the stance of most oil service companies was that all meetings for project review and contract monitoring must now be held in Lagos.
“Most companies now ask their officials to come to Lagos for such meetings because Port Harcourt and Warri have been classified as security risk areas for the multi-nationals,” he said.
The Guardian further learnt that appraisal of drilling and development wells now face set-back as the rigs were no longer easy to access by the owners and operators.
And to remain in business, the companies have allegedly turned their searchlight on countries such as Angola and Gabon where oil and gas operations are being carried out without major hindrance.
The sources noted that many companies were finding it difficult to even extend some of the contracts they had with oil producers and where such jobs were re-negotiated the cost was usually double the initial contract sum as various cost elements, including provision of security personnel or mobile policemen to each foreign worker on 24-hour basis were now included.
With these extra costs, the cost of doing business in Nigeria is adjudged far above what obtains in other parts of the globe.
They said the implication of this was that the government paid more because it controls majority shares in the Joint Venture (JV) projects as well as the Production Sharing Contract (PSC).
“Where there are no results, we should admit that we have to sit down and solve the problems properly. It is either there is peace in the Niger Delta or there is no peace. Where there is no peace, the industry is at risk and, therefore, only positive results will be acceptable,” one of them said.
The Managing Director of Platform Petroleum, Mr. Austin Avuru, in an exclusive interview with The Guardian recently had stated that the crisis in the Niger Delta, leading to hostage-taking by the youths, had affected his company’s operations negatively.
“Let me tell you, in 1986, technical cost per barrel of oil was about $1.80. Today, it is in the range of $7 to $10 per barrel. Elsewhere barring inflation, and this cost actually drop with time because of improvement in technology.” Avuru said.