Seplat Petroleum Case Study

The Global Oil and Gas industry has experienced difficulties in recent years occasioned by the fall in the global oil prices. My current employer, Seplat Petroleum Development Company, operates in the Nigeria oil and gas industry and is not immune from the global problems mentioned. However, the company also face numerous challenges that locally imposed in addition to globally identified issues. The key issues that the company will face in the next five years are discussed in this essay.
Perhaps the biggest issue that Seplat will face in the next five years is funding. Companies operating in the petroleum industry Nigeria are in Joint Venture (JV) agreement with the Nigerian National Petroleum Corporation (NNPC), a relationship that ensures that costs and benefits are shared according to pre-determined ratio. Due to the bureaucracy of government, bribery and corruption etc. the NNPC’s share of project funding remain unpaid for several years. This has proven has a major stumbling block to the growth and development of companies in JV with the NNPC and Seplat is not an exception. This shortfall in the cash call of the NNPC’s share is a critical issue as it will affect the ability of the company to grow its reserve as well as increase production in the long run.
The Nigerian petroleum industry is highly regulated to ensure that operating companies are conducting their business with globally accepted best practice and that the government is deriving maximum benefit for exploited resources for the good of its populace. However, successive government has used regulations and vetoes to formulates policies that serve to benefit the privilege few in the corridors of power. These Adhoc policies (in most cases) puts the operating companies at a disadvantage and in extreme cases, renders their projects