ABSTRACT
The aim of this study is to identify the contributions of the oil industry to Nigerian economic growth and development with a view to project their socio-economic and technological contributions. Oil industries in the course of their operations move capital, create employment opportunities, skills acquisition, know-how, goods and services and other resources to their various host countries. In order to aggravate the foregoing objectives, the survey method of research was employed in this study. Both primary and secondary source of data were used in collecting relevant data. The primary sources consist of the questionnaire and oral interview while the secondary sources were gathered from existing literature on the subject matter of this study. Tabular presentation of data analysis were used whereby the effects and relationships of one data with another was being quantified by simple percentage presentation. This study has proved that the oil industries are contributing to the socio-economic and technological growth and development of Nigeria. It further recommends that the oil industries should beef up their level of social responsibilities and commitments to their host countries as well as establish a platform that would place the repatriation of profits at par with their host countries. The study made a case for the development of proper technology transfer mechanism. Finally, the problems of Niger Delta region of the country with the oil industries should be given serious attention and the effort of the present administration should be supported to sustain it.
TABLE OF CONTENTS
PAGES
Title
Page ii
Certification iii
Dedication iv
Acknowledgement v
Abstract vi
Table of contents vii
CHAPTER ONE: INTRODUCTION
1.1 Background of the study 1
1.2 Statement of the problem 4
1.3 Objectives of the study 5
1.4 Research questions 5
1.5 Research Hypothesis 6
1.6 Significance of the study 7
1.7 Scope of the study 8
1.8 Limitations of the study 8
1.9 Definition of terms 9
References 11
CHAPTER TWO:
LITERATURE REVIEW
2.1 History of crude oil in Nigeria 12
2.2 Discovery of crude oil by Shell D’Arcy Petroleum 13
2.3 Discovery of oil in the Niger Delta, the civil war and the oil boom
13
2.4 The Nigerian national oil corporation 15
2.5 The Nigerian National Petroleum Corporation 16
2.6 Sectors of the Nigerian oil industry and their performances 18
2.7 Oil Refineries in Nigeria 19
2.8 Capacities of the Nigerian oil refineries 20
2.9 Monetization of oil revenue 21
2.10 Contributions of the oil industry to the Nigerian economy 22
2.10.1 Creation of employment opportunities 22
2.10.2 Contribution to Gross Domestic Product (GDP) 23
2.10.3 Local expenditure on
goods and services 24
2.10.4 Contributions to government revenues 25
2.10.5 Foreign exchange reserves 26
2.10.6 Contribution to energy supply 27
2.11 Positive contributions of the oil industry in Nigeria 30
2.12. Challenges in the Nigerian oil sector 32
2.12.1 Public control and
bureaucracy 32
2.12.2 Poor funding of investments 33
2.12.3 Communal disturbances 33
2.12.4 Fraudulent domestic
marketing practices 33
2.12.5 Poor adulteration 34
2.12.6 Corruption and mismanagement 34
2.13 Environmental factors
affecting the Nigerian oil industry
35
2.14 Niger Delta crisis and the
oil industry in Nigeria 36
References 40
CHAPTER THREE:
RESEARCH METHODOLOGY
3.0 Introduction 42
3.1 Research Design
42
3.2 Area of study
42
3.3 Sources of Data
42
3.3.1 Primary Data
43
3.3.2 Secondary data 43
3.4 Population of the study
43
3.5 Sampling technique
43
3.6 Determination of sample size
44
3.7 Method of administering questionnaire 45
3.8 Data presentation and analysis
46
3.9 Validity and Reliability of measuring instrument 46
References
47
CHAPTER FOUR:
DATA PRESENTATION AND ANALYSIS
4.1 Introduction 48
4.2 Presentation and analysis of data 48
4.3 Tabular presentation of data
49
CHAPTER FIVE:
SUMMARY OF FINDINGS,
RECOMMENDATIONS AND CONCLUSION
5.1 Summary of findings 55
5.2 Conclusions 57
5.3 Recommendations 58
Bibliography 61
Appendices – Questionnaire 63
CHAPTER
ONE
INRODUCTION
1.1 BACKGROUND OF THE STUDY
Oil is a major source of energy in Nigeria and the
world in general. Oil being the mainstay of the Nigerian economy plays a vital
role in shaping the economic growth and development of the country. Although Nigeria’s oil industry was founded at the
beginning of the century, it was not until the end of the Nigeria civil war (1967 –
1970) that the oil industry began to
play a prominent role in the economic life of the country. According to Genova (2003:133), Nigeria
can be categorized as a country that is primarily rural, which depends on primary product exports (especially oil
products). Robinsoll (1964:219) assert that since the attainment of
independence in 1960 Nigeria has experienced ethnic,
regional and religious tensions, magnified by the significant disparities in
economic, educational and environmental development in the south and the north.
These could be partly attributed to the major discovery of oil in the country
which affects and is affected by economic and social components.
According to Falola (1999:145),
oil exploration in Nigeria
dates back to 1908 with the appearance of oil at Araromi in the present Ondo State.
A German company – Nigeria
– Butmen Corporation started this pioneering effort that was short-lived as a
result of the outbreak of the 1914-1918 First World War. Another exploratory
activity took off in 1937 by an Anglo-Dutch consortium that served as a
forerunner of the present-day Shell D’Arcy. The exploratory activity started in
1937 after Shell D’Arcy had been awarded the sole concession rights that
covered the whole territory
of Nigeria. The company
operated under the Mineral Oil Ordinance of No. 17 of 1914 and its amendments
of 1925 and 1950 which allowed only companies registered in Britain or any of its protectorates the rights
to prospect for oil in Nigeria
and further provided that the principal officers of such companies must be
British
Odeniyi (2005:15), asserts that oil was first
discovered in Nigeria
in 1908, and exploration proceeded during the 1930s in the form of the Shell-BP
Petroleum Development Company of Nigeria Ltd. (Shell-BP), under the control of
Shell and British Petroleum (BP). Commercial exploitation of the country’s
reserves, however, did not begin until the late 1950s. According to Madujibeya
(1976:284), the Nigerian government introduced its first regulations governing
the taxation of oil industry profits in 1959 whereby profits would be split
50-50 between the government and the oil company in question, and the industry
grew during the 1960s as export markets were developed, predominantly in the United Kingdom and Europe.
By the mid-1960s, Nigeria
began to consider ways in which the resources being exploited by Western oil
companies could better be harnessed to the country’s development, and
formulated its first agreement for taking an equity stake in one of the
companies producing there, the Nigerian Agip Oil Company, jointly owned by Agip
of Italy and Phillips of the United
States. The option to take up an equity
stake–in effect the first step toward the creation of the NNPC–was not,
however, exercised until April 1971.
All crude oil produced before the mid sixties
were exported because of non-availability of local refineries; while domestic
demand of petroleum products was met by imports. However, the need to conserve
foreign exchange, create job opportunities to some extent and other benefits
derivable from setting up refineries locally prompted the government of Nigeria
to establish and commission a refinery in Port Harcourt in 1965. The refinery
had a processing capacity of 35,000 barrels per day, which was later increase
to 60,000 bpd to meet increasing domestic demand while excess fuel oil was
exported.
The demand for oil products continued to outstrip supply, which made
the government to officially open the Warri refinery in 1978 with a total
capacity of 100,000 bpd, thereby giving the country its present day potential
capacity of 260,000 bpd. The refinery was designed to refine 50 percent
Nigerian light crude and 50 percent medium crude. As the output from all the
refineries will then exceed demand, there will be a surplus available for
export.
Given the fact that the oil sector is a very crucial sector in the Nigeria economy, there is the dire need for an appropriate and desirable production and export policy for the sector. In Nigeria, though crude oil has contributed largely to the economy, the revenue has not been properly used. Dickie (1966:27) asserts that considering the fact that there are other sectors in the economy, the excess revenue made from the oil sector can be invested in them to diversify and also increase the total GDP of the economy.
STATEMENT OF THE PROBLEM
THE CONTRIBUTIONS OF THE OIL INDUSTRY TO NIGERIAN ECONOMIC GROWTH AND DEVELOPMENT
