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CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The Nigerian economy is currently supported by oil, which is the major non-renewable energy source. Information Communication Technology (ICT) plays 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. Thus, determining the impact of ICTs in the oil and gas industry 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). 

Through the use of online and e-commerce technology, ICT is being applied in creating awareness and sourcing the best way oil product can be refine electronically. 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. Furthermore, these factors can change very quickly. Thus, the growth of any company is tied to servicing loyal customers, improving productivity, reducing costs, increasing market share, and providing timely organizational response (Matthew & Ibikunle, 2012).

However, due to the degree of uncertainty in todays 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 also have recognized the high potential of information and communication technologies (ICTs) to contribute to national and social development. Many organizations have implemented the use of information and communication technology (ICT) in order to develop the products and services they offer to their customers. ICT signifies the technological standpoint of an information system (IS) and comprise computing, telecommunications and automation activities. Integrated information systems (IS) have taken center stage in changing organizations. Today, IS are found in several organizational operations e.g. production, marketing, communication, logistics, besides having greatly influenced present living. Modern enterprises largely depend on ICT for gathering and distribution of data and information. According to Kitur (2006) several organizations including banks, insurance companies, and service companies have adopted ICT and considers it as a key success factor for the reason that it has turned out to be the motivating force that is decisive in the production and delivery of goods and services in those industries.

According to Davis (1985), the adoption of ICT in the oil industry is not only applicable for multinational oil companies (MOCs) in their competitive drive to stay ahead in technological progress, but also has a direct proposition for the small local companies in the industry. Unlike in the 1990’s, the majority  of oil companies in the industry have developed and have buildup substantial financial resources and competence and are determined to compete with the industry major players in the use of ICT. However, they still have to tackle issues such as the lack of experienced human resources, and the need for improved awareness of cutting – edge technology expertise, and business processes.

In essence, the ability of any country to acquire oil technology depends on the degree of its openness to the inflow of foreign technology, and the training tailored to meet the specific technological needs of the oil and gas industries. It would be pertinent to find out if KRPC is 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 oil industry (Okoye, (2004).  Therefore, the researcher considered it necessary to investigate the impact of Information and Communication Technologies (ICTs) on the performance of the Oil and Gas industry in Nigeria.

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