In the late 1950s the British discovered oil in Nigeria. Since then petroleum production has become the biggest industry in Nigeria and a primary contributor to the country’s gross domestic product. The Nigerian oil industry has however been plagued by political and economic instability. Corrupt military regimes and environmental damage has had a negative impact upon Nigeria in general.
Nigerian oil reserves are estimated to be approximately 19.5 billion barrels. Some sources believe there are even more petroleum than that in reserve. In 2001 Nigeria oil production was around 2 million barrels per day. Nigeria has about 159 oil fields in operation.
Offshore oil drilling has also started to increase and there is still a lot of potential for growth in this sector. Offshore oil drilling has a few advantages over onshore drilling such as fewer restrictions, fewer raids by local militants and less chance of sabotage.
Oil exploration and production is almost completely a joint venture partnership between foreign oil companies and the Nigerian government. Local independent companies account for only a very small amount of petroleum production. Here are some of the foreign oil companies that are operating in Nigeria: Agip, Chevron, Exxon-Mobil, Royal Dutch Shell and Total.
Nigeria also has reserves of natural gas. Unfortunately, most of the natural gas that is uncovered during crude oil extraction is burned off. This may cost Nigeria millions of dollars each day in lost revenue.
Most of the country’s petroleum reserves are located in the area known as the Niger Delta. This is the area that surrounds the Niger river where it forms a delta before entering the Gulf of Guinea. There are also offshore oil reserves that are slowly being extracted by oil rigs.
You might be forgiven for thinking that the general population of Nigeria shares in the wealth that is generated by oil exports. Sadly, this is not the case. In fact, the opposite is true. Due to widespread corruption in the government the vast oil wealth is shared between only the top 1% of Nigeria’s population. The other 99% of the population has not shared in the wealth created by Nigerian oil revenue. Protests by the general population over social and economic disrepair are usually answered with the use of excessive force by the Nigerian government and military.
Numerous oil spills has already caused environmental damage to the Niger Delta. This includes the pollution of water supplies and the destruction of rain forest as well as mangrove forest. Oil spills may occur due to the corrosion of pipelines, insufficient inspection and repair routines or sabotage.
Nigerian oil is still being extracted even though there are unsolved environmental and human rights abuse issues connected to it.