Nigeria is the largest oil and gas producer in Africa. Crude oil from the delta basin comes in two types: light, and comparatively heavy. Nigeria’s economy is heavily dependent on the oil sector, which replaced agriculture the then cornerstone of the nation’s economy, petroleum accounts for over 95 percent of export earnings and about 40 percent of government revenues, according to the International Monetary Fund. According to the International Energy Agency, Nigeria produces about 2.53 million barrels per day, well below its oil production capacity.
At the top of the oil industry is the federal government-owned parastatals, Nigeria National Petroleum Corporation (NNPC) operates a faint venture agreement with other foreign multinational oil companies in Nigeria to produce both the nation’s crude oil and gas.
Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of exploration. The discovery was made by Shell-BP when the sole concessionaire. Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream producing 5,100 bpd. After 1960, exploration rights in onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies. In 1965 the EA field was discovered by Shell in shallow water southeast of Warri. In 1970, the end of the Biafran war coincided with the rise in the world oil price, and Nigeria was able to reap instant riches from its oil production.
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Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971 and established the Nigerian National Petroleum Company (NNPC) in 1977, a state-owned and controlled company which is a major player in both the upstream and downstream sectors. Following the discovery of crude oil by Shell D’Arcy Petroleum, pioneer production began in 1958 from the company’s oil field in Oloibiri in the Eastern Niger Delta. By the late sixties and early seventies, Nigeria had attained a production level of over 2 million barrels of crude oil a day.
Although production figures dropped in the eighties due to the economic slump, 2004 saw a total rejuvenation of oil production to a record level of 2.5 million barrels per day. Current development strategies are aimed at increasing production to 4million barrels per day by the year 2010.
Major Events in the history of petroleum in Nigeria
- 1908: Nigerian Bitumen Co. & British Colonial Petroleum commenced operations around Okitipupa.
- 1938: Shell D’ Arcy granted Exploration license to prospect for oil throughout Nigeria.
- 1955: Mobil Oil Corporation started operations in Nigeria.
- 1956: First successful well drilled at Oloibiri by Shell D’Arcy
- 1956 Changed name to Shell-BP Petroleum Development Company of Nigeria Limited.
- 1958: The first shipment of oil from Nigeria.
- 1961: Shell’s Bonny Terminal was commissioned. Texaco Overseas started operations in Nigeria.
- 1962: Elf started operations in Nigeria. (As Safrap) Nigeria Agip Oil Company started operations in Nigeria
- 1963: Elf discovered Obagi field and Ubata gas field Gulf’s first production
- 1965: Agip found its first oil at Ebocha Phillips Oil Company started operations in Bendel State
- 1966: Elf started production in Rivers State with 12,000 b/d
- 1967: Phillips drilled its first well (Dry) at Osari –I Phillips first oil discovery at Gilli-Gilli -I
- 1968: Mobil Producing Nigeria Limited) was formed. Gulf’s Terminal at Escravos was commissioned
- 1970: Mobil started production from 4 wells at Idoho Field Agip started production Department of Petroleum Resources Inspectorate started.
- 1971: Shell’s Forcados Terminal Commissioned Mobil’s terminal at Qua Iboe commissioned1995 SNEPCO starts drilling the first Exploration well.
- 1999: NLNG’s First shipment of Gas out of Bonny Terminal.
- 2000: NPDC/NAOC Service Contract signed
- 2001: Production of Okono offshore field.
- 2002: New PSCs agreement signed. Liberalization of the downstream oil sector. NNPC commences retail outlet scheme
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