Subcontracting and Performance of Oil and Gas Industries in Nigeria (Study of Addax Petroleum Development Nigeria Limited)

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Subcontracting and Performance of Oil and Gas Industries in Nigeria (Study of Addax Petroleum Development Nigeria Limited)

Ononokpono, Nyong Joe, Osademe, Gloria Chinagozi, & Prof. Akewushola Raheem Olasupo
Lagos State University, Ojo, Lagos State, Nigeria


IJRISS Call for paper

Received: 02 March 2023; Accepted: 09 March 2023; Published: 18 May 2023


Abstract: The oil and gas industry is no doubt the nucleus of our mono-product Nigeria economy. The economy and operators, the industry are vulnerable to the characteristic turbulence of the product market in terms of volatile prices, marginal oil fields, extreme locations, new global business trends among others. Hence, subcontracting is one of the pragmatic management techniques that is gaining currency in literature and its being adopted by firms in the industry. Organisations attempt to concentrate more on their core competence production facts and engage other allied firms to argument the rest via subcontracting. The study adopted a survey research design. The study population is made up of (107) one hundred and seven professionals, contractors, consultants, project managers engaged by Addax Petroleum Development Nigeria Limited. The study considered and enumerated the total population as the sample for the study. Content validated structured questionnaire was used as the research instrument. The coefficient alpha of the scale items was 0.17. A combination of both descriptive and regression analysis were employed to analyse the data collected. The research findings depict that subcontracting positively affect the optimum performance of the firm and minimizes overhead running cost. However, for product quality assurance, contracting firms should not concede to the lowest price bidder. Also, it’s imperative that the payment terms should be agreed upon and be favourable to both parties before the engagement activities commence.

Keywords: Subcontracting, Performance, Oil and Gas Industry, core competence.

I. Introduction

Business often require subcontractors for assistance on large, specialised or diversified projects when they do not have their sources on hand or need additional expertise. In these instances, hiring an expert to work on one or more short-term projects can beneficial in terms of cost quality and efficiency. According toTafti (2021) hiring subcontractors is much cost effective than bringing on new, few full-time employees. It also helps avoid risk by hiring a reliable and safe firm with substantial niche experience.