International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue II, February 2022 | ISSN 2454–6186

The Mitigating Effect Of Supply Chain Risk Management In Marginal Field Oil And Gas Companies In Nigeria.

Vincent Oyovwevotu ERAKPOTOBO Ph.D., Justice Oborakpororo Omo OKEI Ph.D.
Department of Management Sciences,
Western Delta University. Oghara, Delta State , Nigeria

ABSTRACT

Historically, oil and gas was discovered in Nigeria in 1956 by Shell petroleum at Oloibiri now Bayelsa state. The oil and gas industry is divided into upstream, downstream and mid-stream respectively in Nigeria. Each of the petroleum sectors performs different functions in terms of exploration, refining and distributions and with respective supply chains. In course of the supply chain distribution, distractions in form of turbulence and disruption can occur which could have serious effects on operations and performance. Hence this study focused on the mitigating effect of supply chain risk management in marginal field oil and gas companies in Nigeria. It is field survey and case type of research. A total of 687 Management and Senior staff of nine marginal filed oil and gas companies constituted that population while 325 formed that sample size. The main instrument was questionnaire administration and analysed using descriptive statistics. The study found that application and proper management of supply, demand, information, transportation and monitoring risk mitigation strategies are critical factors enhancing reduction of risks in marginal field oil and gas in Nigeria. It therefore recommended that there should proper coordination of information, monitoring, demand and supply chain risk management in order to reduce vulnerability of disruptions and distraction in operations.

Keywords: Supply Chain, Risk Management and Marginal Field Oil and Gas

1 Introduction
The issue of oil and gas in Nigeria is traced to the year 1956 when Shell petroleum discovered oil in large quantity at Oloibiri in Bayelsa state. As at today, Nigeria is among the first five largest producer of oil in Africa such the country is seen as a mono-culture nation. The petroleum industry supply chain focus in Nigeria consists of the upstream sector, the midstream sector, and the downstream sector (Aminu & Olawore, 2014; Amor & Ghorbel, 2018). Each of the sectors performs important role in the oil and gas industry. The Marginal field oil and gas is part of the upstream sector majorly of maritime firms charged with exploration, exploitation, and production of crude oil. The oil and gas industry is prone to high risk and any occurrence of risk can equally disturb operational performance of the supply chain (Bhatti & Ali, 2019). Supply chain risk could take form of disruption or turbulence risks like natural disasters, labor strike, political unrest, lockdown during pandemic outbreak, and, related trade bans, droughts, port disruptions, cargo theft, and industrial fires (Jaclyn, 2019). Supply chain risk management is advantageous for the firm in order to reduce cases of disturbances in the supply chain and as well reduce possible operational unforeseen losses (Shou Hu, Kang & Park, 2018). This is because disruptions could have negative impact on the performance of firms. Nevertheless, extra investment in form of added inventories, alternative transport, additional suppliers, and further competencies is essential and needed to implement supply chain risk management (Bhatti & Ali, 2019; Shou et al., 2018) and thus it may have a strong impact on the financial performance. Supply chain risk management has become increasingly challenging due to two factors, like the dynamic and prone to disaster nature of the environments in which supply chains operate; and top three disruptions such as information technology (IT) outages, natural disasters and supplier service issues (Glendon & Bird, 2013). In Nigeria, Sunflag Textile Manufacturing Company in Lagos supply experienced fire outbreak which later disrupted their operation in 2013. Several disruptions like oil pipeline vandalism by Niger Delta militants, Oil workers ‘union strike in 2016, major fire disaster engulfing oil tankers, tank farms and gas depots and other acts of nature in Nigeria. However, between December, 2019 and November, 2020, companies all over the world lost Billions of US Dollars due to disruption from Covid 19 lockdown which affected supply chain (Helper & Evan, 2021; Meyer, 2021).
Most studies on supply chain risk management were conducted in developed countries like US, Uk, while scant studies were from developing countries like Nigeria. For instance, Agorzie, Unam, and Aderemi (2017) examined supply chain risk factors’ assessment in the Nigerian pharmaceutical industry while Ireoegbu, Ogbo and Kifordu (2018) examined the effect of supply chain management on managerial performance of the Private Manufacturing Enterprises (PMEs) In South-East, Nigeria, while Nsikan, Ekeins-Wilson, Ayandike, and Ortencia (2019) examined petroleum supply chain disruption in Nigeria oil and gas industry by identifying the drivers of disruption and determining mitigation strategies. To the best of researchers’ knowledge, studies from Nigeria have not really dwelled much on the mitigating effect of supply chain risk management using case of marginal field oil companies in Nigeria. The specific objectives are to determine the influence of transportation, information, demand, monitoring risk mitigation in supply chain of business operation using case of Marginal Field oil companies in Nigeria.

2 Conceptual Review

Supply Chain Risk Management
Risks are unforeseen circumstances that can occur in course of doing business or activity. Supply chain risks relate to unforeseen circumstances that can disrupt business activities. Risk is divided into two, namely “macro risks and micro risks (catastrophic and operational” (Sodhi, Son & Tang (2012). Macro risks are external in nature and have adverse negative effects on companies operation. Macro risks include natural disasters (earthquakes, Tornado, drought) and man-made risks (e.g., war and terrorism, and political instability). Micro risks are risks associated with internal operation of the company or relationships within partners in the supply chain. Between the two risks, macro risk has more negative effect on firms compare to micro risks. However, micro risks are into four sub-categories: demand, manufacturing, supply, and infrastructural risk(Wu, Blackhurst & Chidambaram., 2006).