IMPACT OF OIL DEPENDENCE ON THE NIGERIA’S ECONOMIC GROWTH
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IMPACT OF OIL DEPENDENCE ON THE NIGERIA’S ECONOMIC GROWTH
Chapter One: Introduction.
1.1 Background of the Study
Crude oil, also known as “black gold,” has been of strategic importance to the world since the second half of the twentieth century, as underlined by Mikelson (1972), Tugendhat and Hamilton (1975), Odell (1979), and the OPEC report (1984). It is the most essential source of energy as well as the most widely traded commodity on the international market.
As Tugenhat and Hamillton (1975) noted, our society relies on oil more than any other single commodity.
The quest for oil in Nigeria began in 1903, when the colonial administration established the Mineral Survey Corporation. However, no substantial results were achieved.
In 1907, oil seepage was discovered at Aruromi in Abeokuta province, prompting a German company, Nigerian Bitumen Company, to secure a licence to develop oil reserves. This year marks the 105th anniversary of Nigeria’s oil business, which began with the first effort to locate oil in 1908. From 1908 until 1914, fifteen wells were drilled without success.
By 1937, a second attempt had been undertaken, this time by an Anglo-Dutch company called Shell D’Arey. Unfortunately, the start of World War II halted the attempt. Shell D’ Arey rebranded itself as Shell BP Petroleum Development Company of Nigeria in 1947, drilling two exploratory wells between 1951 and 1955.
Commercial oil was discovered at OLOIBIRI FIELD in 1956, and by 1958, Nigeria was exporting approximately 17,000 barrels of oil per day (BOPD). Between 1961 and 1962, several firms such as Texaco Tenneco, Gulf (Chevron), Satrap (Elf), and Agip were granted the permission to explore for oil.
Initially, all crude oil produced in Nigeria was exported without further processing. Nigeria did not have a refinery, hence the majority of petroleum byproducts were imported.
Nigeria’s first oil refinery, located in Port-Harcourt, was commissioned in 1965. Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971. This same year, Shell BP, GULF (Chevron), Mobile, Satrap (Elf), and Agipac purchased a 35% stake in commercial discovery.
The Nigerian National Oil Company (NNOC) was founded in 1973, and the Nigerian National Petroleum Corporation (NNPC) was formed in late 1977 by combining the activities of the NNOC and the Department of Petroleum Inspectorate.
The Warri refinery was later commissioned in 1978, followed by the Kaduna refinery in 1980.
The Port-Harcourt refinery is the oldest, having a capacity of 35,000 barrels of crude oil per day.
It produces petroleum gases (LPG), petrol (Petroleum) for automobiles, dual-purpose kerosene (DPK) for cooking, automotive petrol oil (AGO) for trucks and fuel oil in two grades: low power point (LPPO) and high power point (APPO).
The Warri refinery processes two indigenous crude oils, Chevron Escravo and Shell’s Ughelli quality control centre crude, and produces the same products as Port-Harcourt. Its capacity is 100,000 barrels of oil per day. It has now been upgraded to around 200,000 barrels per day.
In 1989, a fourth refinery was created in Eleme, Port Harcourt, with a capacity of around 150,000 barrels per day. It has been adjusted to approximately 300,000 barrels per day. Since 2009 to 2010, Nigeria has supplied approximately 1.9 million to 2.0 million barrels per day, according to Network News from Radio Nigerian given by OPEC.
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