THE IMPACT OF OIL SECTOR ON THE NIGERIAN ECONOMY

Nigeria is a major of crude oil and importance or of this commodity has been highly manifested in the nation’s economy. Starting from the early 70’s, the petroleum industry has become the dominant industry in the economy following quickly after the agriculture the dominant industry before the discovery of crude oil. It has dictated the pace of economic, political, social and cultural progress in the country.

1.1 Background of the Study

Crude oil, a commodity otherwise referred to as “black gold” is of strategic importance in the world, particularly since the second half of the twentieth century as noted by Mikelson (1972), Tugendhat and Hamilton (1975), Odell (1979), OPEC bulletin (1984). It is both the most important source of energy and the largest internationally traded commodity.

Thus, as Tugenhat and Hamillton (1975) have observed, out civilization depends on oil more than any other single commodity.

The search for oil in Nigeria was dated back to 1903 when the colonial government set up mineral survey corporation, No significant result was achieved.

In 1907, oil seeped was observed at Aruromi arsssound Abeokuta province which led to a German company, Nigerian Bitumen Company to obtain license to exploit oil deposits. The Nigerian oil industry is 105 years old this year because the very first attempt to find oil in Nigeria was made in 1908. Fifteen wells were drilled between 1908 and 1914 without success.

By 1937, the second attempt was made and this time by an Aglo-Dutch consortium called Shell D’Arey. Unfortunately, the outbreak of the Second World War interrupted the attempt. By 1947, Shell D’ Arey came back as Shell BP Petroleum Development Company of Nigeria and drilled two exploratory wells between 1951 and 1955. Commercial oil discovery was made at OLOIBIRI FIELD in 1956 and in 1958 Nigeria was exporting about 17,000 barrel of oil per day (BOPD). Between 1961 to 1962, the right to explore oil were granted to other companies like Texaco Tenneco, Gulf (Chevron), Satrap (Elf) and Agip.

Initially, all crude oil produced in Nigeria was exported without being processed. Most of the by-product of petroleum was imported because Nigeria had no refinery. By 1965, the first oil refinery was commissioned in Nigeria at Port-Harcourt. Nigeria joined organization of petroleum exporting countries (OPEC) in 1971. This same year, that Shell BP, GULF (Chevron), Mobile, Satrap (Elf) and Agipacquired 35% equity interest in commercial discovery.