Rethinking the ‘patron–client’ politics of oil block allocation, development and remittances in Nigeria

ABSTRACT

This research adopts qualitative method and patron–client analysis to underscore the political economy of oil block allocation, development and receipts/remittances in Nigeria. It contests Wilson’s (1961) and Scott’s (1972) claims on the superiority of the patron over clients, and argues that ‘clients’ in Nigeria (indigenous oil block awardees) maintain some degree of control over the patron (ruling elite), enjoy more economic returns/oil rents, and possess some leverage over the patrons’ decision-making power. The ruling elite’s personalisation of oil block allocation/rents results in poor development of the upstream oil sector by ‘clients’, defaults in oil remittances and a consistent decline in oil production. The author recommends that the bidding process for oil block allocation be carried out in a more transparent and competitive manner.

RÉSUMÉ

Cette recherche adopte une méthode qualitative et une analyse patron-client pour mettre en évidence l’économie politique de l’attribution des blocs pétroliers, du développement et des recettes/envois de fonds au Nigeria. Elle conteste les affirmations de Wilson (1961) et de Scott (1972) sur la supériorité du patron sur les clients, et soutient que les « clients » au Nigeria (les attributaires de blocs pétroliers indigènes) maintiennent un certain degré de contrôle sur le patron (l’élite dirigeante), bénéficient de plus de retours économiques/rentes pétrolières, et possèdent une certaine influence sur le pouvoir décisionnel des patrons. La personnalisation par l’élite dirigeante de l’attribution des blocs pétroliers et des rentes pétrolières se traduit par un faible développement du secteur pétrolier en amont par les « clients », par des défauts dans les transferts de fonds liés aux revenus pétroliers et par un déclin constant de la production pétrolière. L’auteur recommande que le processus d’appel d’offres pour l’attribution des blocs pétroliers soit mené de manière plus transparente et competitive.

KEYWORDS:

• Patron–client relations
• oil block allocation
• oil exploration
• international oil companies
• crude oil production
• remittances

MOTS-CLÉS:

• Relations patron-client
• attribution des blocs pétroliers
• exploration petrolière
• entreprises pétrolieres internationales
• production de pétrole brut
• redevances

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Remittances here refer to royalty fees which oil companies pay to the federal government on their offshore operations. The royalty rate is based on the chargeable volume of crude oil and condensates or hydrocarbon resources produced from the deep offshore area for a particular period. Remittances also refer to the ‘signature bonus’, which is a single, non-recoverable lump sum payment by oil contractors/licensees to the government upon signature of the agreement in order to obtain the petroleum exploration/production licence.

2 ‘Prompt’ is used here to specify oil firms/contractors that promptly commence drilling actions in their marginal field, as some who have been awarded marginal oil fields leave it for a very long time without drilling it. It is therefore a significant consideration in analysing performance.

3 The figures used in Appendices 2, 3 and 4 are taken from the Nigerian National Petroleum Company’s Annual Statistical Bulletins for the years 2007 to 2018. They can be downloaded from the company’s website at https://nnpcgroup.com/Public-Relations/Oil-and-Gas-Statistics/Pages/Annual-Statistics-Bulletin.aspx.

Additional information

Notes on contributors

Victor Chidubem Iwuoha

Victor Chidubem Iwuoha is a senior lecturer in the Department of Political Science at the University of Nigeria, Nsukka. He undertakes research projects for UNESCO, and has worked as data specialist for Médecins Sans Frontières (MSF), Belgium. His research interests include foreign relations, development studies, diplomacy, peace and conflict studies, international political economy, strategic studies and nuclear politics.