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 has given birth to a new era-one of knowledge and
information which affects directly 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 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. In order 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 in 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 boarder 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 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 is 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 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 its
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 future 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 future 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 Nigerian Oil & gas sector.
H1: There is a significant difference between
the impact of Information and Communication
Technology and Nigerian Oil & gas sector.
Hypothesis
2
H0: There is no significant difference
between the acceptability of ICT oil & gas industry and increase in
productivity in Shell Company.
H1: There is a significant difference between
the acceptability of ICT oil & gas industry and 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 of 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 Nigerian Oil
and Gas industry should embrace in order 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 blue print 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 in 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 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 an international networking of computers through which any one 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.