Oil Majors Divestment and Petroleum Industrial Act (PIA) on Job Security & Survival of the Nigeria Oil and Gas Industry

Abstract

Nigeria is recently experiencing intense divestment in her oil and gas sector by the oil and gas majors. These divestments have led to a worrying decrease in oil production as well as fears of job security. The governance structure of the oil and gas sector in Nigeria had been blamed by the oil majors for their decision to divest from the country. In response to this the Nigerian Government decided to overhaul the oil and gas governance structure to make it more compliant to contemporary global business practices. The response ensued in the Petroleum Industry Act (PIA) which is yet to be implemented. This paper examines the impact the divestment and the PIA on job security as well as survival of the oil and gas sector in Nigeria. The paper adopted the Ordinary Least Squares (OLS) econometric methodology for the examination. Variables adopted for the analysis were oil production and unemployment. Results indicated that divestment and the current state of the PIA implementation, which was proxied by oil production, related negatively and significantly with unemployment with an R2 of 75%. The paper majorly recommends that government should address issues that encouraged
divestment and led to the reduction in oil production, including: marginal cost of production, community disturbances, institutional capacity, and legal lacunas; also, government should urgently implement the PIA to discourage divestment; and that government should not be hasty in entering agreements and conventions that seeks to discourage the country from fossil fuel exploration and expansion at least in the medium term.