Essay: Oil exploration in Nigeria

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  • Subject area(s): Geography essays
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  • Published on: November 16, 2017
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  • Oil exploration in Nigeria
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For about 50 years are the big multinationals and the Nigerian government exploiting the Niger delta. Companies like Shell earn lots of money with this. The country earned billions with it, but the majority of the civilization are suffering from the exploitation of the Niger delta. Their social and economic rights are ignored and many people live in the bad conditions.
 
History of oil exploration

The history of oil exploration in Nigeria dates back to 1907 when Nigerian Bitumen Corporation conducted exploratory work in the country; however, the firm left the country at the onset of World War I. Thereafter, licenses were given to D’Arcy Exploration Company and Whitehall Petroleum. However, neither company found oil of commercial value and they returned their licenses in 1923. A new license covering 357,000 square miles (920,000 square kilometers) was given to a new firm called Shell D’Arcy Petroleum Development Company of Nigeria. The new firm was a consortium of Shell and British Petroleum (then known as Anglo-Iranian). The company began exploratory work in 1937. The consortium was granted license to explore oil all over the territory of Nigeria but in 1951 and then between 1955 and 1957, the acreage allotted to the company in the original license was reduced. Drilling activities started in 1951 and the first test well was drilled in Owerri area. Oil was discovered in non-commercial quantities at Akata, near Eket in 1953. Prior to the Akata find, the company had spent around 6 million pounds in exploratory activities in the country. Shell-BP in the pursuit of commercially available petroleum found oil in Oloibiri, Nigeria in 1956. Other important oil wells discovered during the period were Afam and Bomu in Ogoni territory. Production of crude oil began in 1957 and in 1960, a total of 847,000 tons of crude oil was exported. Towards the end of the 1950s, non-British firms were granted license to explore for oil: Mobil in 1955, Tenneco in 1960, Gulf Oil and later Chevron in 1961, Agip in 1962, and Elf in 1962. Prior to the discovery of oil, Nigeria (like many other African countries) strongly relied on agricultural exports to other countries to supply their economy. Many Nigerians thought the developers were looking for palm oil. But after nearly 50 years searching for oil in the country, Shell-BP discovered the oil at Oloibiri in the Niger Delta. The first oil field began production in 1958.

After that, the economy of Nigeria should have seemingly have experienced a strong increase. However, competition for the profits from oil created a great level of terror and conflict for those living in the region. Many citizens of Nigeria believe that they haven’t been able to see the economic benefits of oil companies in the state. Additionally, Nigerian government officials have remained majority shareholders in the profits created by the production of Nigerian oil, leading to government capturing of nearly all oil production, and citizens are not seeing socioeconomic benefits, and insist that oil companies should compensate people.

Downstream

Nigeria’s total petroleum refining capacity is 445,000 barrels (70,700 m3) per day, however, only 240,000 barrels (38,000 m3) per day was allotted during the 1990s. Subsequently, crude oil production for refineries was reduced further to as little as 75,000 barrels (11,900 m3) per day during the regime of Sanni Abacha. There are four major oil refineries: the Warri Refinery and Petrochemical Plant which can process 125,000 barrels (19,900 m3) of crude per day, the New Port Harcourt Refinery which can produce 150,000 barrels (24,000 m3) per day (there is also an ‘Old’ Port Harcourt Refinery with negligible production), as well as the now defunct Kaduna Refinery. The Port Harcourt and Warri Refineries both operate at only 30% capacity. It is estimated that demand and consumption of petroleum in Nigeria grows at a rate of 12.8% annually. However, petroleum products are unavailable to most Nigerians and are quite costly, because almost all of the oil extracted by the multinational oil companies is refined overseas, while only a limited quantity is supplied to Nigerians themselves.

The problem

The Niger delta in Nigeria is one of the biggest Niger deltas and also one of the most crowded places in Africa. In 1958 the oil-industry began to produce it commercially after Shell had found raw oil two years early. SPDC, a daughter company, is responsible for the drilling. The arrival of these big companies have brought more bad than good for the locals. Leaking oil pipes have an devastating effect on the nature of Nigeria and they undermine the social economic rights of the Nigerians. De inhabitants of an certain area have the right to have clean drink water and healthcare, because of diseases caused by the oil. The Nigerians cannot fish anymore, because the water is contaminated and therefore all the fishes die.

Murder on Ken Sarowiwa

On the 10th of November in the year 1995 the Nigerian writer and environmentalist Ken Sarowiwa got executed together with eight other environmentalists from the Ogoni tribe. They got executed by the military government in Nigeria. De execution showed the world how bad it was going in Nigeria. The power the oil industry has in the Niger delta and the devastating effect shocked many people. 20 years after the execution there is still no solution. Shell can still do whatever it wants.

Cleaning and compensation

The Nigerian is sadly failing in regulating the oil industry and protecting human rights of the inhabitants of the Niger delta. Oil companies are not doing enough to stop the massive oil leaks. The pipes are old and rusty and need to be replaced. Another problem is the supervision of the oil pipes. Almost nothing is done against people steeling the oil or sabotaging of the oil pipes. Oil companies are responsible of the cleanup of the oil leaks. The reasons after the leaks are unimportant, but many companies do use it as an excuse to leave it this way. The amount of oil that is wasted or stolen costs companies like Shell not enough in comparison to the costs of replacing all the pipes and payed supervision. Sometimes oil companies try to clean up a small part of an oil leak, but the quality of the cleanup is terrible. When the leaks are cleaned up, they should be removed entirely and it has to be done in an bigger scale. When the leaks are caused by oil companies, they need to pay compensation to the victims, but in reality they do not get that much. It is not enough to cover the costs the locals had because of the leaks. When money is payed it is mostly payed to the leader of a tribe, but in most cases it is not divided. This leads to big conflicts within the tribe. One time justice was done, the Bodo-community that sued Shell for contaminating the water near their living area. The community got 70 million euro and it changed the lives of the community in a good way.

Prospective resources

Nigeria and Sao Tomé have an agreement in which the Joint Development Authority was created to explore and produce oil in the waters between Sao Tome and Nigeria. Nigeria and Sao Tome share this area, called the Joint Development Zone, or JDZ. This area could contain up to, or over, 14 billion barrels of oil. In 2006,Chevron drilled an exploratory well called OBO-1 and news reports came out that they had discovered over a thousand million barrels of oil in block 1 alone. The news was reported on CNN and AP.

Although Libya has more reserves, there were 37.2 billion barrels (5.91×109 m3) of proven oil reserves in Nigeria as of 2011, ranking the country as the largest oil producer in Africa and the 11th largest in the world, averaging 2.28 million barrels per day (362×103 m3/d) in 2006. At current rates this would be 45 years of supply if no new oil was found. Pipeline vandalism, kidnappings, and militant takeover of oil facilities have reduced production, which could be increased to 3 million barrels per day (480×103 m3/d) in the absence of such problems. The Nigerian government hopes to increase oil production capacity to 4 Mbbl/d (640×103 m3/d) by 2010. Nigeria is the world’s eighth largest exporter of crude oil and no longer sends 43% of its exports to the United States due to the recent shale boom of the US. The Oil industry accounts for about 14% of Nigeria’s economy. Therefore, though the petroleum sector is important, it remains in fact a small part of the country’s overall vibrant and diversified economy. However, Nigeria’s foreign exchange is heavily dependent on the oil sector, which accounts for majority of its export revenues.[

UN-report

In 2011 an environment program showed the large scale of contamination of the Ogoniland, an area in the Niger delta. The UN-report showed how bad it really was and it proved that the organization that wanted Shell to take responsibility were not overreacting. The alarming scientific report showed the danger and it speeded the fight against oil companies up. The UN urged an emergency measure to improve the quality of drinking water. Many recommendations from the report that were for the Nigerian government or Shell have been ignored for the last 5 years. In 2015 Muhammadu Buhari was chosen to become the president of Nigeria. He said short after he was chosen that he wanted to speed some things up, in specific the recommendations the UN had given to the Nigerian government. An important step in the right direction was the trust fund he started to clean up the rivers and lakes. With this money he wanted to clean up the river in the best way possible and not the bad clean up that companies like Shell organized. Shell is also donating money to this fund, because they do not want to be seen as the bad one. Besides the money good surveillance is also important, because that way they can also prevent any future leaks. If there are not any new leaks it is easier to clean up. When there no more leaks they can clean the Niger delta par by part, without doing everything for nothing.

Amnesty

Amnesty is an group that helps locals to get a better life and they try to make it hard for the multinationals to continue their oil business. Amnesty is fighting the spreading of river contamination, because of the oil. They have tried to prevent the executions of environmentalist like Ken Sarowiwa and other Ogoni. The Ogoni are an ethic group and they are currently living in the Niger delta. In 2009 Amnesty published the report : Petroleum, Poverty and pollution in the Niger Delta. It was about the consequences of the water, ground and air pollution and the rights of the local inhabitants. Since then there have been many Amnesty research groups in the Niger delta. They give extra attention to the fact that big companies are responding with almost no attention to the massive oil leaks. Amnesty has given the victims an body and they are supporting them in the fight to get compensation for the damage that is done to them. Locals just want to have a good life and Amnesty helps them to get any kind of satisfaction.

Amnesty’s goal

Amnesty wants the Nigerian government to guarantee that the human rights and the environment is preserved and protected. They also want the government to give more attention to the leaks and to invest more in better supervision and good sanctions. Amnesty wants Shell to make the human rights policy reality and not just an idea. Shell also needs to monitor the consequences of their activities. Shell needs to clean up the mess they make, for example the massive gas leaks they create.

Current situation

Nigeria’s oil revenue has totaled $340 billion in exports since the 1970s and it is the fifth largest producer. Though Nigeria is a major oil exporter, it imports most of its gasoline, and when fuel subsidies were lifted in January 2012, fuel increased from roughly $1.70 per gallon to $3.50. Nigeria produces a form of oil ideal for the United States, has huge reserves, and has increased its production to 2.8 million barrels (450,000 m3) of oil a day. But this, some say, is all a resource curse that is hurting Nigeria and disadvantaging her people.

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