The petroleum industry in Nigeria is the largest all over
the African continent. As of 2014, Nigeria̢۪s petroleum industry contributes
about 14% to its economy. Therefore, though the petroleum sector is important,
it remains, in fact a small part of the country’s overall diversified economy
The Crude oil found
in Nigerian is mostly from the delta basin and they come in two types: light,
and comparatively heavy types of crude oil. Both types of crude oil are also
said to be paraffinic and they are equally low in their sulfur content.
Drilling began in
Nigeria in 1951 and the very first test well was drilled in the Owerri area of
the Niger Delta. Oil was discovered in non-commercial quantities at Akata, near
Eket in 1953. Before the discovery at Akata, the company had spent around 6
million pounds in exploratory activities in the country. Shell-BP in the
pursuit of commercially available petroleum found oil in Oloibiri, Nigeria in
1956.
Other important oil
wells discovered during the period were Afam and Bomu in Ogoni territory.
Production of crude oil began in 1957 and in 1960, a total of 847,000 tonnes of
crude oil was exported. Towards the end of the 1950s, non-British firms were
granted license to explore for oil; Mobil was granted in 1955, Tenneco was
granted in 1960, Gulf Oil and Chevron were granted in 1961, Agip was granted in
1962, and Elf was granted in 1962.
Prior to the discovery of oil, Nigeria strongly relied on
agricultural exports to other countries to supply their economy. Many Nigerians
thought the developers were looking for palm oil. But after nearly 50 years
searching for oil in the country, Shell-BP discovered the oil at Oloibiri in
the Niger Delta. The first oil field began production in 1958.
After that, the
economy of Nigeria should have seemingly have experienced a strong increase.
However, competition for the profits from oil created a great level of terror
and conflict for those living in the region. Many citizens of Nigeria believe
that they haven’t been able to see the economic benefits of oil companies in
the state. Additionally, Nigerian government officials have remained majority
shareholders in the profits created by the production of Nigerian oil, leading
to government capturing of nearly all oil production, and citizens are not
seeing socioeconomic benefits, and insist that oil companies should compensate
people.
Nigeria has a total of 159 oil fields and 1481 wells in
operation according to the Department of Petroleum Resources. The most
productive region of the nation is the coastal Niger Delta Basin in the Niger
Delta region which encompasses 78 of the 159 oil fields. Most of Nigeria’s oil
fields are small and scattered, and as of 1990, these small unproductive fields
accounted for 62.1% of all Nigerian production. This contrasts with the sixteen
largest fields which produced 37.9% of Nigeria’s petroleum at that time.
As a result of the numerous small fields, an extensive and
well-developed pipeline network has been engineered to transport the crude oil.
Also because of the lack of highly productive fields, money from the jointly
operated companies is constantly directed towards petroleum exploration and
production. Nigeria’s petroleum is classified mostly as light and sweet, as the
oil is largely free of sulphur. Nigeria is the largest producer of sweet oil in
OPEC. This sweet oil is similar in composition to petroleum extracted from the
North Sea. This crude oil is known as Bonny light. Names of other Nigerian
crudes, all of which are named according to export terminal, are Qua Ibo,
Escravos blend, Brass River, Forcados, and Pennington Anfan.
As recently as 2010, Nigeria provided about 10% of overall
U.S. oil imports and ranked as the fifth-largest source for oil imports in the
U.S. However, Nigeria ceased exports to the US in July 2014 because of the
impact of shale production in America; India is now the largest consumer of
Nigerian oil.
There are six petroleum exportation terminals in the
country. Shell owns two, while Mobil, Chevron, Texaco, and Agip own one each.
Shell also owns the Forcados Terminal, which is capable of storing 13 million
barrels of crude oil in conjunction with the nearby Bonny Terminal.
Mobil operates
primarily out of the Qua Iboe Terminal in Akwa Ibom State, while Chevron owns
the Escravos Terminal located in Delta State and has a storage capacity of 3.6
million barrels. Agip operates the Brass Terminal in Brass, a town 113
kilometres southwest of Port Harcourt and has a storage capacity of 3,558,000
barrels. Texaco operates the Pennington Terminal
The people of the delta states live in extreme poverty even
in the face of great material wealth found in the waters by their homes.
According to Amnesty International in 2006, 70% of the people in the Niger
River Delta live on less than US$1 per day. For many people, this means finding
work in a labour market which is in many instances hostile to them.
Much of the labour in the past has been imported. To a
growing degree, the labour force for the oil companies is coming from Nigeria.
But discrimination is rampant, and for the most part, locals are discriminated
against.
This leads to a situation where the men in the community
have to search for temporary employment. This has two negative effects on the
community. First it takes the men out of the community as they go in search of
work. The second is the nature of temporary employment sets up unsustainable
spending habits. They earn some money and spend it thinking it will be easy to
earn more, when in many cases this does not turn out to be the case.
As the government
officials siphon off all the money generated from oil sales the infrastructure
suffers. Most of the villages do not have electricity or even running water.
They do not have good access to schools or medical clinics. For many, even
clean drinking water is difficult to come by.
The deterioration of the infrastructure in the Delta States
is so severe it is even a problem in the more urban areas. One example of this
is the airport at Port Harcourt. Part of a fence was not properly maintained
and an Air France flight hit a herd of cattle on the runway in 2005. The airport
was closed and still had not reopened by 2007.
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