NOTE CONTENT
1. Development of Petroleum Industry
2. Contribution of Petroleum to the Nigerian Economy
3. Role of NNPC and OPEC in the exploration, production, refining, marketing and distribution of petroleum products
[1]DEVELOPMENT OF PETROLEUM INDUSTRY
Oil exploration in Nigeria dates back to 1908 with the appearance of oil in the present Ondo state. Another exploratory activity took off in 1937 by an Anglo Dutch consortium that served as a fore-runner of the present-day Shell Petroleum Development Company of Nigeria Limited, Shell D’Arcy. Oil was first discovered at Oloibiri in Rivers state in 1956.The most important landmarks in the history of oil development in Nigeria were the Hydro-Carbon oil refinery Act of 1965 and the Petroleum Decree of 1967. The Hydro –carbon Act of 1965 approved the license for the first refinery at Elese Eleme near Port-Harcourt, while the Petroleum Decree (1967) gave the right to fix petroleum prices to government. Nigeria has since returned to this status quo since December 1998. The Shell BP undertook the preliminary geological reconnaissance and intensified its geophysical survers in the 1946 -1951 period. In order to increase the pace of oil exploration and to ensure that the country was not dependent on one oil company or nation, Shell’s sole concession right over the country was reviewed and exploration rights were granted to companies of other nationalities. Examples of oil companies are Mobil, Gulf, Agip, Tenneco and Texaco/Chevron. They were allowed to join the explorers for oil in the onshore and offshore area of Nigeria.The period 1975 – 1980 was considered as the golden era of the oil industry in Nigeria.
In 1977, the Nigerian National Petroleum Corporation (NNPC) was established by the NNPC Act No 33 through the merger of the Nigerian National Oil Company (NNOC) and the then Ministry of Petroleum Resources. This new body, NNPC started to perform both operational as well as regulatory functions. In 1979, Nigeria nationalized the Nigerian subsidiary of British Petroleum because it was supplying crude oil to South Africa.
[2] Contribution of Petroleum to the Nigerian Economy.
Positive Contributions of Petroleum to the Nigerian Economy:
1. It increases Nigeria’s National Income greatly.
2. There is increment in the income per capita of Nigerians.
3. When the first commercial shipment of oil was made in 1958, petroleum has become a major foreign exchange earner.
4. As a result of provision of more employment opportunities, increase in per capita income, development of basic infrastructures, etc the standard of living of the people of Nigeria has improved.
5. Oil has played a significant role in shaping Nigeria’s foreign policy since she gained independence in 1960.
NEGATIVE EFFECTS OF PETROLEUM TO THE NIGERIAN ECONOMY
Although there were positive contributions of petroleum to the Nigerian economy, there are also negative effects which include the following among others.
1. One of the political woes of the discovery of oil in Nigeria is political instability. All the frequent coups, change of government that occurred in Nigeria had oil undertone.
2. As a result of oil exploration, together with the fear in many quarters of possible earthquake occurring in those areas, many oil producing areas in Nigeria have been eroded.
3. There is shortage of raw materials as another negative effect of the neglect of agriculture as a result of the discovery and exportation of petroleum in Nigeria.
4. Oil exploration in Nigeria has caused soil, water and air pollution in many parts of the country.
5. One of the immediate consequences of the neglect of agriculture in Nigeria as a result of the discovery and exportation of oil is the decline in food production.
[3] NIGERIAN NATIONAL PETROLEUM CORPORATION (NNPC)
In order for government to strengthen and establish its control in the oil industry, the Nigerian National Oil Corporation (NNOC) was established by a decree in 1971. In the same year, Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) as the 11th member country. At that time, the Ministry of Petroleum Resources whose functions were mainly regulatory was also running concurrently with the NNOC. It was not until 1st April, 1977 that a merger between the NNOC and the Ministry of Petroleum Resources created the Nigerian National Petroleum Corporation (NNPC).
THE ROLE OF NNPC AND OPEC IN THE EXPLORATION, PRODUCTION, REFINING, MARKETING AND DISTRIBUTION OF PETROLEUM PRODUCTS.
1. Oil refining in Nigeria is done under the watchful eagle eye of NNPC
2. In the area of man-power training of Nigerians, crucial role was played by NNPC in order to ensure that they occupy managerial, professional and supervisory grades in all the oil companies operating in the country.
3. Their product movement section is responsible for planning operations to pump products from the source of supply to various destinations in a safe, economic and controlled manner and ensuring adequate stocks in the depots to meet tanker-truck loading demands.
4. They oversee all the activities of all other companies licensed to engage in oil activities in the country to ensure compliance with the laws and regulations relevant to the oil industry.
ORGANISATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)1. Oil refining in Nigeria is done under the watchful eagle eye of NNPC
2. In the area of man-power training of Nigerians, crucial role was played by NNPC in order to ensure that they occupy managerial, professional and supervisory grades in all the oil companies operating in the country.
3. Their product movement section is responsible for planning operations to pump products from the source of supply to various destinations in a safe, economic and controlled manner and ensuring adequate stocks in the depots to meet tanker-truck loading demands.
4. They oversee all the activities of all other companies licensed to engage in oil activities in the country to ensure compliance with the laws and regulations relevant to the oil industry.
In reaction to the outrageous and unprecedented exploitation by the oil extracting multinational companies, which at that time were controlling oil operations in the oil industry in the host countries? The outcome of the meeting of Iran, Iraq, Kuwait, Saudi Arabia, Venezuela from September 10-14, 1960 aimed at protecting their mutual interest and to counter the atrocious act of foreign oil companies who sell oil in their own interest was the formation of the Organisation of Petroleum Exporting Countries (OPEC). Nigeria joined the organization in 1971. Its membership has risen to thirteen as at date. There are some roles played by OPEC in the production, refining and marketing of petroleum.
The Roles of OPEC in the Production, Refining and Marketing of Petroleum Products.
1. OPEC has been able to maintain relatively stable price of petroleum.
2. OPEC played direct role in the exploration and production of oil by directing its members in June, 1968 in order to acquire participating interest in such activities in their territories.
3. Another major role played by OPEC is re-directing the political imbalance between the Third World countries and the so-called First World nations.
4. Through the activities of OPEC, it has been able to make improvement in energy efficiency particularly in major industrialized countries.
5. Also, OPEC ensures efficient and regular supply of oil to the world market.
