Nigerian Oil and Gas companies win big with Intellectual Property and crude oil lifting contracts…


Introduction

It is commendable that the Federal government through the Nigerian National Petroleum Corporation has decided to award nearly half of the 2012/2013 crude oil lifting contracts worth $60 billion to Nigerian companies, thus downsizing the contracts awarded to international oil traders.

I therefore congratulate the successful Nigerian Companies and I hope it will give Nigerian companies the needed leverage to grow and evolve into full fledged International Oil Companies.

The need for Innovation/Intellectual Property Commercialization

At the very minimum however these Nigerian companies need to pay a little more attention to research, development and the resulting innovation which should be protected by Intellectual Property possibly patents.

Oil and Gas Patents

Basically a patent is a document issued, upon application by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent

Patents in Nigeria are of limited duration, typically providing protection for a period of 20 years from the filing of the application for patent grant.

Patents cover things like cutting-edge technologies used in instrumentation, production data capture, horizontal drilling and multilateral wells.

 

The reality is that Patent Protection “fathered” the Oil Field Service Industry.

Besides, the logistics required to locate, extract, process and transfer crude oil or gas would probably make most companies think twice about even entering the business in the first place. So kudos to companies like Schlumberger Limited, Halliburton, Saipem, Transocean Ltd, Baker Hughes, Fluor, Weatherford International, BJ Services Company, Petrofac, China Oilfield Services Ltd and IBM.

It goes without saying that companies in the oil field service industry, would probably not have been formed and would not continue to exist today without protection of its Intellectual Property!

Commodity Sellers vs. Proprietary Industry…

If the products of Oil Field Service companies were not protected by patents, they would have been priced as a “commodity”.

If their products had been priced as a “commodity”, they may not have been developed and made available to the industry.

The thing is that Intellectual Property Rights are enforceable against the whole world while Contractual Rights are enforceable against only the parties that enter into contract with you!

Commercialisation of Patents and Trade Secret

Patents are public documents which disclose information about the invention (technology) in exchange for state protection, which is the exact opposite of trade secret protection. However commercialisation of patents and trade secret is always a desirable option. Sometimes trade secrets are licensed along with patent rights, in what is called a“hybrid” license.

Conclusion

Thus for our Oil and Gas companies to grow, they are going to have to take their innovation and resulting Intellectual Property like patents and trade secrets seriously, because that is what gave birth to the Oil Field Service Industry in the first place and that is what keeps them in business, the right to exclude others from selling or even using proprietary equipment without permission and hefty license fees!

Intellectual Property becomes a valuable asset to the oil and gas company, when it is registered and steps are taken to prevent competitors from accessing and using it for free.

Olufola Wusu Esq.

Copyright © 2012

Counsel with Megathos Law Practice

Okay that was a mouthful…

So let’s get started…Does Oil and Gas really need Intellectual Property?

Your thoughts anyone?

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by Olufola Wusu Esq

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8 Comments

Filed under Oil and Gas

8 responses to “Nigerian Oil and Gas companies win big with Intellectual Property and crude oil lifting contracts…

  1. Its a very great step in the right direction, although I doubt if any real capacity development would be achieved through contract awards.

    Innovation is the key to real development,

  2. OLUWASEUN OMONIYI

    The Oil and Gas sector does not need Intellectual Property?
    The simple way to explain intellectual property is to understand that all great expressions and products have an origin A work of music, art, writing, film, or computer software belongs to its creators.

    Your creative expressions and inventions have a lot of value and must be protected however; your ideas are not considered intellectual property.

    Anyone who tries to copy or “borrow” your work without permission is profiting from your hard work – your intellectual property – without any credit to you.

    Talking about the oil sector in Nigeria, we talk about the primary source of oil which are Bonnylite crude oil, forcados, LPFO or what have you…

    Its a natural resource and from my point of view, its not in the list of Industrial property (patents, trademarks, industrial designs, and geographic indications of source) and Copyright (literary and artistic works) / Rights related to copyright (performing artists, producers, and broadcasters).

    • Very well said sir!

      Interestingly a distinguished economist has recognized the Oil and Gas as a Knowledge Industry, that economist is
      Lester C. Thurow, who wrote:

      Needed: A New System of Intellectual Property Rights, HARVARD BUS. REV., Sept./Oct., 1997, at 95.

      He said:

      (“Consider the oil industry. The story in the famous James Dean movie, Giant, typified the old means of
      success in the oil business: luck and brawn.
      But new technologies such as three-dimensional acoustical sounding, horizontal drilling, and deep offshore drilling have turned the oil business into a knowledge industry. Luck and brawn have disappeared. Supercomputers have taken their place. The oil industry now has a big interest in intellectual property
      rights.”)

      Does anybody agree with this assertion?

      That is one way to look at it.

      I am sure there are many divergent opinions.

      Permit me to say this but its the classic argument Oil and Gas Commodity Market versus Innovation Driven Oil and Gas Industry!

      There are three industry-wide imperatives that nearly all stakeholders agree are the keys to building a smarter oil and gas industry in Nigeria:
      1. Enhance exploration and production
      2. Improve refining and manufacturing efficiency
      3. Optimize global operations

      I can bet twenty bucks that in between those imperative listed above lies tons of Intellectual Property

      Your thoughts folks!

    • Folks let me ask a question,

      Do you think the Oil and Gas industry is a Commodity Market or is it an Innovation Driven/Intellectual Property based Industry?

  3. toby

    Nice work Sir. In response to ur question above, I view the Oil industry now as more of a commodity market with global demand. From thhat perspective, it is obvious that any Oil Company involved in the sector (which is a ratherr matuure sector, with MOC’s) will merely be satisfies with prrofits from doin buusiness (of liffting petrolleum) as usual, with no real incentive to ennggage in researcch. Unless perrhaps such research can be shown to have reasonably certain commercial prrofit #medium term

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