Nigeria is a leading oil producing country in Africa; she is the second longest producer of oil after Libya, while she ranks as the eight leading produce in the world. Since Nigeria’s first export of crude oil in 1959 the community has became the centre price of the country’s foreign exchange.
Nigeria has become heavily dependent on her oil revenue to the neglect of her agricultural sector, which preciously was the main stay of the country’s economy.
Before Nigeria was declared a major oil producer in 1973. Principal agricultural products such as Coca, Palm produce and Groundnut flourished through regional specialization of production.
Northern Nigeria featured prominently in groundnut production Eastern Nigeria was noted for palm produce production while Western Nigeria were also noted for Cocoa production. Export of these products contributed 70-80% of the country’s foreign exchange. Apart from these export crops, cultivation of cassava, rice, millet yam, beans etc, where heavily emphasized all over the country. Domestic production of these crops virtually satisfied domestic consumption.
The evident of oil brought about the relegation of export crops and domestic agricultural products whose markets were not as stable and lucrative as that of petroleum. Cocoa, palm oil and groundnuts are now contribute less than 70% of foreign exchange earnings.
The story of oil in Nigeria began in 1938. In the year shell-Arcy petroleum company of Nigeria, a subsidiary of shell Petroleum Company and British petroleum company acquired the first mineral oil concession from the British colonial government.
The company immediately began both geological and geographical investigations but this was interrupted by the outbreak of the Second World War the following year. Further explorations were therefore shelved and did not resume until 1946.
Exploration for oil was centred at that time in the Southern portions of the country. Shell exercise exclusive jurisdiction over the oil fields and literally roamed the length and breadth of the country unchecked in its search for oil as British colonial policy barred capital participation Nations.
The policy continued until the mid-50s.
It was only in December 1977 that Nigeria began commercial production of crude oil. The first shipment of crude oil from Nigeria to Europe was in 1958.
Export of oil meant, theoretically money and foreign exchange for Nigeria until quite recently, Nigeria oil was extracted and marketed by the companies involved in the oil industry. The royalties from oil were assessed from the value of crude oil at the place of extraction, transport and storage.
All of these costs were determined by the multinational oil companies who, of course manipulated figures to their own benefits the equipment used for extraction came from their various countries. Prices of these equipments were inflated to raise the cost of extractions.
Transportation costs were distorted with deviations of up to 50% above the actual costs. Ownership of the storage facilities gave the companies the opportunity to manipulate that is inflate, storage costs to their advantages.
TABLE OF CONTENT
TABLE OF CONTENTS(v)
1.1 OBJECTIVE OF THE STUDY
1.2 SIGNIFICANCE OF THE STUDY
1.3 SCOPE OF THE STUDY
1.4 LIMITATION OF THE STUDY
1.5 DEFINITION OF TERMS
2.3 WAY OF REGULATING THE ACTIVITIES
3.1 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
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