The search for oil in Nigeria officially started in 1903.
Two companies, Nigeria Properties (Limited) and the Nigeria and West African Development
Syndicate (Limited) commenced exploration for bitumen, coal and oil in concessions covering 400 m2
in the Agbabu-Mulekangbo area in the
Lekki Lagoon region of Lagos Nigeria.
Geological investigations by Bernard A. Collins and A.H. Harrison confirmed the existence
of vast bitumen deposits as well as the possibility of petroleum.
Real exploration of the
hydrocarbon potentials of the country commenced, however, in 1908 under the Nigerian Bitumen Corporation (NBC),
a German concern (some Industry
historians argue that John
Simon Bergheim was a British Businessman and that the NBC was a British-registered company and its shares were traded on the West African Market of the stock
exchange in London)
The efforts were stalled both by
Bergheim’s death in an automobile
accident in September 1912 and the
outbreak of the First World War, but
the ground had been paved for Shell
(then known as Shell D'Arcy) a
state-sponsored company of the Colonial government. In 1938, the colonial government granted Shell monopoly over exploration of all minerals and petroleum
throughout the entire colony.
The Royal/Dutch Company
initially got the whole of Nigeria as one huge concession, which it then
narrowed to the Niger Delta where in
1956, after having drilled some 15 dry holes, beginning with the lhuo-1 NW in Owerri, the first successful well was spudded at Oloibiri (in modern Bayelsa State).
Before commercially viable Oil was
discovered at all, an ordinance had been made in 1914 making any oil and mineral under Nigerian soil legal property
of the Crown.
Initially a 50–50 profit sharing system was implemented between the company and
the government, concessions on production and exploration was the exclusive
domain of the then Shell-British
Petroleum. Other firms became interested based on the success of Shell. In 1959, the sole concession right over
the whole country, earlier granted to Shell,
was reviewed and exploration rights were extended to other foreign companies.
By the early 1960s Mobil, Texaco, and Gulf (Gulf later became Chevron and a couple of decades later, Texaco was merged into Chevron)
had purchased concessions.
Mobil was awarded the Sokoto Basin, the Benue Trough and fringes of the Niger Delta to explore in 1956.
Seismic and field geological surveys in the Sokoto Basin yielded no success, and Mobil withdrew from Sokoto
and obtained license to explore in the Dahomey
Basin. Between 1959 and 1961, Mobil had drilled four dry wells in Dahomey Basin and pulled out of the area.
It was against this backdrop that
the Nigerian Civil War broke out and resulted in a significant drop in output.
Oil companies were uncertain as to the future of their investments depending on
who prevailed in the war. Britain’s staunch support of the Nigerian Government
made Shell, a major holder of concessions in the southeast a little more
inclined to the Federal Government side. Safrap (Elf, now absorbed into Total)
a French interest, was accused of favoring Biafra
and enlisting the aid of France for
the Biafran cause.
The Nigerian government was
determined the Civil War scenario would never repeat itself. The 1969 Petroleum Decree dismantled the
existing revenue allocation system that had divided revenue from oil taxes
equally between federal and state government, and came up with an allocation
formula in which the federal government controlled the dispensation of revenues
to the States. The Eastern Region that was to constitute Biafra had been, according to General
Yakubu Gowon split into:
§
The East-Central State comprising the present
Eastern Region excluding Calabar, Ogoja and Rivers Provinces.
§
The South-Eastern State comprising Calabar
and Ogoja Provinces.
§
Rivers State comprising Ahoada, Brass,
Degema, Ogoni and Port-Harcourt Divisions.
By May 1971 the Nigerian Oil Industry was nationalized with the
creation of the Nigerian
National Oil Corporation (NNOC), the predecessor of the Nigerian National Petroleum Corporation
(NNPC), and the admission of Nigeria into OPEC,
the Organization of Petroleum
Exporting Countries, in July 1971.
The Year 1978 would turn out to be a watershed
with the creation by the Obasanjo
Military Regime, of the Land Use
Act which vested control over state lands in control of military governors
appointed by the federal military regime. This would eventually culminate in
the Section 40(3) of the 1979 constitution which declared all
minerals, oil, natural gas, and natural resources found within the bounds of
Nigeria to be legal property of the Nigerian federal government (ref. Section
315 (5) (d) of the 1999
Constitution) .
........TO BE CONTINUED
