History of Crude Oil In Nigeria

The history of crude oil in Nigeria involves the various events that led to the discovery of petroleum in the country up until these modern times. Before crude oil was discovered in Nigeria in the year 1956 in Oloibiri, Bayelsa State, and before there were any oil producing states in Nigeria, the Nigerian Bitumen Corporation was the body in charge of the affairs of oil exploration in the country since 1907. However, this seized during the first World War as the war and everything concerning it took centre stage, effectively bringing oil exploration in Nigeria to a stand still.

By the time World War I was over, oil exploration licences were given to the D’Arcy Exploration Company and Whitehall Petroleum but these companies failed to find crude oil of commercial value for the country, hence, their licences were returned in 1923. Ten years on from 1923, Shell D’Arcy Petroleum Development Company of Nigeria, a consortium of Shell and British Petroleum, which was known at that time as the Anglo-Persian Oil Company, commenced oil exploration work, effective after being licenced to do it, a job that spanned 920,000 square kilometres (357,000 square miles).

In 1951, drilling activities began in earnest with the first test well drilled in Owerri. Crude oil was eventually discovered at Akata, near Eket in 1953 but not in commercial quantity. It is noteworthy to mention that the exploration for the oil discovered near Eket in non-commercial quantities already cost over six million pounds but this did not deter the oil explorers, Anglo-Persian Oil Company from continuing their search for crude of commercial quantity in the Niger-Delta region. Their work finally paid off when crude oil was discovered in commercially quantities in Oloibiri, Bayelsa, Nigeria, and this has given a head way to more discoveries in the last 60 years.

Initially, Shell-BP was the only company which explored oil in Nigeria but all that changed in 1960 when other oil companies were given exploratory rights in the onshore and offshore areas adjoining the Niger Delta. This has seen Chevron and a host of other foreign oil exploration companies come into Nigeria to explore the vast expanse of land in the Niger-Delta Region for as long as possible.

In 1965, Shell discovered the EA field in the shallow waters of Warri in present day Delta State and after the Nigerian Civil War in 1970, oil prices in the country skyrocketed, ushering Nigeria into the first oil boom era, giving Nigeria the status of a wealthy nation, recognized not only in Africa but the world at large. Nigeria instantly benefited from its new found oil wealth and a year later, in 1971, the country joined the Organization of Petroleum Exporting Countries (OPEC).

On April 1, 1977, the Nigerian National Petroleum Corporation (NNPC) was established as an indigenous oil company, owned by the Federal Government of Nigeria and involved in the upstream and downstream oil sectors. The company was given operational interests in refining, petrochemicals and products transportation as well as marketing.

In the late sixties and early seventies, Nigeria produced over 2 million barrels of crude oil per day and as at 2020, Nigeria produces about 2.5 million barrels of crude oil per day, making it the largest oil producer in Africa and the sixth largest producer of crude oil in the world.

In 2010, Nigeria provided about 10% of overall crude oil imports of the United States and ranked as the fifth-largest source for oil imports in the United States. Nigeria however, ceased exports to the United States in July 2014 due to the impact of shale production in America. Presently, India is the largest consumer of Nigeria’s crude oil. Other countries that Nigeria exports crude oil to include the United Kingdom, Germany and China.

There are currently six petroleum exportation terminals in Nigeria, two are owned by Shell, while Mobil, Chevron, Texaco, and Agip own one each. Shell also owns the Forcados Terminal, which is capable of storing 13 million barrels (2,100,000 m3) of crude oil in conjunction with the nearby Bonny Terminal. Mobil operates primarily out of the Qua Iboe Terminal in Akwa Ibom State, while Chevron owns the Escravos Terminal located in Delta State and it has a storage capacity of 3.6 million barrels (570,000 m3). Agip operates the Brass Terminal in Brass, a town 113 kilometres (70 miles) southwest of Port Harcourt and has a storage capacity of 3,558,000 barrels (565,700 m3) while Texaco operates the Pennington Terminal.

Below is the timeline of major events regarding the history of crude oil in Nigeria:

• 1908: Nigerian Bitumen Company and British Colonial Petroleum began operations around Okitipupa in present day Ondo State.
• 1938: Shell D’ Arcy was granted exploration licence to search for oil throughout the country.
• 1955: Mobil Oil Corporation commenced operations in Nigeria.
• 1956:  First successful oil well drilled at Oloibiri in present day Bayelsa State by Shell D’Arcy
• 1956: Shell D’Arcy 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 and Texaco Overseas commenced operations in Nigeria.
• 1962: Elf and Agip Oil began operating in Nigeria.
• 1963: Elf discovered Obagi field and Ubata gas field
• 1965: Agip discovered its first oil at Ebocha and Phillips Oil Company commenced operations in Bendel State
• 1966: Elf began oil production in Rivers State with 12,000 barrels per day
• 1967: Phillips drilled its first well (Dry) at Osari – I and made its first oil discovery at Gilli-Gilli -I
• 1968: Mobil Producing Nigeria Limited was established and the Gulf’s Terminal at Escravos was commissioned
• 1970: Mobil commenced production from 4 wells at Idoho Field and Agip started production as the Department of Petroleum Resources Inspectorate commenced operations.
• 1971: Shell’s Forcados Terminal and Mobil’s terminal at Qua Iboe were commissioned
• 1973: First Participation Agreement; Federal Government acquires 35% shares in the Oil Companies. Ashland started PSC with then NNOC (NNPC). Pan Ocean Corporation drilled its first discovery well at Ogharefe – I
• 1974: Second Participation Agreement, Federal Government increases equity to 55% and Elf formally changed its name from “Safrap.” Ashland’s first oil discovery at Ossu –I
• 1975: Agip carried out its first Oil lifting from Brass Terminal and the Department of Petroleum Resources was upgraded to the Ministry of Petroleum Resources
• 1976: MPE renamed Ministry of Petroleum Resources (MPR) and Pan Ocean commenced production via Shell-BP’s pipeline at a rate of 10,800 barrels per day
• 1977: The Federal Government established the Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC & MPR extinguished).
• 1979: Third Participation Agreement (throughout NNPC) increases equity to 60%; Fourth Participation Agreement; BP’s shareholding nationalised, leaving NNPC with 80% equity and Shell 20% in the joint Venture
• 1984: Agreement consolidating NNPC/Shell joint Venture
• 1986: Signing of Memorandum of Understanding (MOU)
• 1989: Fifth Participation Agreement; (NNPC=60%, Shell = 30%, Elf=5%, Agip=5%).
• 1991: Signing of Memorandum of Understanding and Joint Venture Operating Agreement (JOA)
• 1993: SNEPCO signed the Production Sharing Contracts in a Sixth Participation Agreement with the likes of NNPC=55%, Shell=30%, Elf= 10% and Agip=5%. It was this year the Elf’s Odudu blend, offshore OML 100 came on-stream
• 1995: SNEPCO starts drilling 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 and the downstream oil sector was liberalised. This same year, NNPC commenced its retail outlet scheme.