Given the news of a major restructuring of the Nigerian national oil company and authorities, this week's offshore rig review will be taking a look at the rig activity offshore Nigeria.

Leading Operators
With the impending changes in the Nigerian oil sector, the companies that are most likely to feel an impact are the major international operators that dominate the production of Nigerian oil. With the potential reform of the state-run oil company, Nigeria could begin to operate more of its own production and take larger shares, if not outright leadership, in future offshore developments.

The leading operators with the most rigs working offshore Nigeria are shown in the table below. These companies are some of the biggest players in the Nigerian oil industry. Worth noting is the fact that Shell has an additional 6 non-competitive barge rigs that the company owns and manages, and which are not shown in the list below. If these rigs were included in the count, Shell would top the list with 8 rigs working in Nigeria.

Leading Rig Managers
While operators face a possible competitive threat from a streamlined and revitalized Nigerian national oil company, rig managers working offshore Nigeria could stand to benefit from the introduction of a powerful new player in the industry.

The big question that looms is what role will the company take in terms of contracting offshore rigs and operatorship of offshore fields. Assuming that it will begin to play a significant role within the next several years, rig managers could see some changes in contract rates in Nigeria. If the Nigeria Oil Company simply adds to the overall demand in the market, it could serve to pull more rigs into the country where utilization currently stands at 100%, and by so doing, it would like push day rates somewhat higher. However, over the longer term, if the company comes to dominate the Nigerian offshore oilpatch, it could exert its influence to force lower contract day rates. This would be along the lines of what Petrobras has accomplished in the Brazilian offshore oil industry where it is the dominant player in its region and pays some of the lowest day rates of any operator in the world for the types of rigs that it hires.

The list below provides a summary of the leading rig managers currently working offshore Nigeria and how they have been doing in terms of contract lengths and day rates.

In Conclusion
Over the course of the next six months, the Nigerian government will be implementing its plan for reorganizing its oil industry, but the actual results of that reorganization will likely take several years to truly impact the industry. While these changes have the potential to curb corruption, improve efficiencies, and bring some of the benefits of Nigeria's oil wealth to its people, whether those laudable goals will actually be achieved is still very much in question. One would hope that this process can help to alleviate some of the tensions that have plagued the Niger Delta for so many years by bringing more of the benefits of the industry to the residents of this restive area. But even as such, Nigeria will likely continue to be a comparatively difficult and dangerous place to operate for many more years to come.