SS2 Third Term Economics Lesson Note – Petroleum and the Nigerian Economy

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WEEK 8

TOPIC:   PETROLEUM AND THE NIGERIAN ECONOMY

CONTENT:

• Development of Petroleum Industry
• Contribution of Petroleum to the Nigerian Economy
• Role of NNPC and OPEC in the exploration, production, refining,
• Marketing and distribution of petroleum products

Sub-Topic 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 surveys 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.

EVALUATION

1. Trace the history of the Petroleum Industry in Nigeria from 1908 to 1937.
2. Write NNPC in full. When was it established?

Sub-Topic 2: Contribution of Petroleum to the Nigerian Economy.

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