OIL AND GAS 1.1D INTRODUCTION (HISTORY)
HISTORY.
The occurrence and discovery of petroleum is no new phenomenon. It has been collected (usually from seepages) and used (for lubrication and waterproofing) in ancient times. It has been produced from bamboo-drilled wells in ancient China. The first oil well is alleged to have been dug in shush Iran about 500BC. The first truly modern and commercial drilling of oil is said to have begun in Pennsylvania, United States in 1859 (Edwin Drake’s well).
From the discovery by James Young in 1847[1], the invention of internal combustion engines, the need to fuel war vehicles, and so on, the demand for oil and gas grew. Sooner, oil replaced coal in powering locomotives. At present, about 100 million barrels of oil are needed to meet daily demands.
The Nigerian Positon: With the advent of colonialism, the British discovered the abundance of petroleum in Nigeria. In order to safeguard their interest, the Petroleum Ordinance 1889 followed by the Mineral Regulation (Oil) Ordinance 1907 were passed empowering only British subjects to exploit for oil. The German Bitumen Company was the first to explore in 1908 in Ondo state although the world war terminated its operations.
Concession was granted to Shell in 1938. It discovered oil in commercial quantity in Oloibiri in 1956. Drilling activities started in 1951. Production of crude oil began in 1957 and by 1960, about 847,000 tonnes of crude oil was exported. Shell exploited vast choice areas until 1959 when the concession was extended to other companies like, MOBIL, TENECO, ELF, AGIP and other International Oil Corporations.
In 1946, the Minerals Act was enacted and Section 3 of the Act vested petroleum ownership in the crown.
In 1959, the Petroleum Profit Tax Act was promulgated to tax the profits of oil companies engaged in exploration and disposal activities. (It has undergone several amendments).
Following the independence of Nigeria on October 1st 1960 and its severance from the umbilical cord of Britain in 1963, the Petroleum Act was enacted in 1969 which vested ownership of all Petroleum in the Federal Government of Nigeria.
In 1971, Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) and the Nigerian National Oil Corporation (NNOC) was established in the same year.
In 1977 the Nigerian National Petroleum Corporation (NNPC) was established as a result of the fusion of NNOC with Federal Ministry of Mines and Power.
There are four major oil refineries in Nigeria: The Warri refinery, the Old Port Harcourt Refinery, Old Port Harcourt Refinery and Kaduna Refinery. These notwithstanding, Nigeria still imports refined oil to meet its internal energy demands.
The volatility of oil prices has affected Nigeria in various ways. Nigeria has entered into various MOUs (Memorandum of understanding) with the foreign companies assuring them of a profit margin even if the price of petroleum drops. For example the MOUS of 1980s, 1991 and 2000.
There has been a lot of conflict resulting from ownership of petroleum and pollution from exploration activities… especially in the Niger Delta. Many lives have been lost and people displaced. These pollutions still continue till today.
Nigeria has over 1480 wells in operation and earns most of its revenue from crude oil export. In 2010, Nigeria was ranked as the fifth-largest supplier of crude oil for the United States. Nigeria no longer exports to the U.S following the discovery of shale oil by the U.S. India is now Nigeria’s largest customer.
Though Nigeria is a major exporter of petroleum, more than 60 percent of its population lives below the poverty margin. Over 40 percent have no access to clean water.
As at January 2016, the NNPC declared that Nigeria now produces about 6.7 million litres of petrol per day.
At present, various legislations govern Nigeria’s oil industry. For example the Petroleum Profits Tax Act, the Oil pipelines Act, the Petroleum Act 1969, the Petroleum (Drilling and Production) Regulation and so on.
In conclusion, petroleum has a very strategic place in the history of Nigeria and continues to play a significant role in the present day.
[1] James Young found a way to distil kerosene from petroleum.
