Oil and Gas have played a major role in the country’s earnings, revenues, and GDP, and in this post, You will get to know all about oil and gas history in Nigeria.
History of Oil and Gas in Nigeria
Nigeria is a beautiful African nation and the largest oil and gas producer in Africa. The oil exploration in Nigeria started in 1903 when Nigerian Bitumen Corporation conducted exploration work but stopped operating when the First World War began.
As at that time, there were no financial and technological resources by small oil companies in Nigeria to continue with the oil exploration this made large oil companies take over the oil exploration in the country.
The license to explore for oil was given to D’Arcy Exploration Company and Whitehall Petroleum but none of the companies found commercial oil causing them to return their licenses in 1923.
Thereafter a new license covering 920,000 sq. kilometers was given to Shell D’Arcy Petroleum Development Company of Nigeria a consortium of Shell and British Petroleum (then known as Anglo-Iranian) and they began exploratory work in 1937. This company was granted a license to explore oil all over the territory of Nigeria but in 1951, 1955, and 1957, the acreage given to the company in the original license was reduced.
Drilling activities began in 1951 and the first test well was drilled in Owerri area. Oil was also discovered in non-commercial quantities at Akata, near Eket in 1953.
Shell-BP in the pursuit of commercial available petroleum found oil in Oloibiri, Nigeria in 1956. Other important oil wells discovered during this time were Afam and Bomu in Ogoni territory.
In the late fifties and early sixties, the exploration rights in onshore and offshore areas adjoining the Niger Delta were extended to non-British companies like Mobil, Tenneco, Gulf Oil, Agip Chevron, and Elf, and in 1965, the EA field was discovered by Shell in shallow water southeast of Warri.
In 1971, Nigeria joined the Organization of Petroleum Exporting Countries (OPEC) and founded the Nigeria National Petroleum Company in 1977.
By the late 1960s and early 1970s, Nigeria had attained a production level of more than 2 million barrels of crude oil per day. Although the production figures dropped in the 1980s due to an economic slump, 2004 saw a total rejuvenation of oil production to a record level of2.5 million barrels a day.
Before the discovery of Oil in Nigeria, Nigeria like many other African nations strongly relied on agricultural exports to other countries to supply their economy.
Most Nigerians thought the developers were searching for palm oil. But after about 50 years of searching for oil in Nigeria, Shell-BP discovered the oil at Oloibiri in the Niger Delta and the first oil field began production in 1958.
To date, petroleum production and export play a dominant role in the country’s economy and account for nearly 90% of Nigerian’s gross earnings.
Important Events in the History of the Nigerian Oil and Gas
1908 – Nigerian Bitumen Co. and British Colonial Petroleum started operations around Okitipupa
1938 – Shell D’Arcy granted an Exploration license to explore for oil throughout Nigeria.
1955 – Mobile Oil Corporation began operations in Nigeria
1956 – First successful well was drilled at Oloibiri by Shell D’Arcy
1956 – Shell D’Arcy changed its name to Shell-BP Development Company of Nigeria Limited
1958 – First Oil production in Nigeria
1958 – First oil shipment from Nigeria
1961 – Shell’s Bonny Terminal was commissioned
1961 – Texaco Overseas started operations in Nigeria
1962 – Elf and Agip Oil Company started operations in Nigeria
1963 – Elf Oil Company discovered Obagi field and Ubata gas field
1963 – Gulf first oil production
1965 – Agip discovered its first oil at Ebocha
1965 – Philips Oil Company started operations in Bendel State
1966 – Elf began production in River State with 12, 000 b/d
1967 – Philips Oil Company drilled its first well (Dry) at Osari and discovered its first oil at Gilli –Gilli.
1968 – Mobile Production Nigeria Limited was established
1968 – Gulf terminal at Escravos was commissioned
1970 – Mobile started production from 4 wells at Idoho Field
1970 – Agip started production
1970 – Department of Petroleum Resources Inspectorate started
1971 – Shell’s Forcados Terminal was commissioned
1971 – Mobile’s Terminal at Qua Iboe commissioned
1973 – First Participation Agreement, Federal Government obtains 35 percent in the Oil Companies
1973 – Ashland began PSC with then NNOC (NNPC)
1973 – Pan Ocean Corporation drilled its first well at Ogharefe-1
1974 – 2nd Participation Agreement, Federal Government increases equity to 55 percent
1974 – Elf Oil Company formerly change its name from “Safrap”
1974 – Ashland’s first oil discovery at Ossu-1
1975 – Agip first oil lifting Brass Terminal
1975 – DPR upgraded to Ministry of Petroleum Resources
1976 – MPE renamed Ministry of petroleum Resources (MPR)
1976 – Pan Ocean began production through Shell-BP’s pipeline at a rate of 10, 800 b/d
1977 – Government set up Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC and MPR extinguished)
1979 – 3rd Participation Agreement (throughout NNPC) increases equity to 60 percent
1979 – 4th Participation Agreement, Shell—BP’s shareholding nationalized leaving NNPC with 80 percent equity and Shell 20 percent in the Joint Venture.
1979 – Changed name to Shell Petroleum Development Company of Nigeria (SPDC)
1984 – Agreement consolidation NNPC/Shell joint venture
1986 – The Signing of Memorandum of Understanding (MOU)
1989 – 5th Participation Agreement (NNPC with 60%, Shell 30%, Elf 5%, and Agip 5%)
1991 – The signing of Memorandum of Understanding and Joint Venture Operating Agreement (JOA)
1993 – The Production Sharing Contracts signed – SNEPCO
1993 – 6th Participation Agreement (NNPC 55%, Shell 30%, Elf 10%, and Agip 5%)
1993 – The coming on-stream of Elf’s Odudu blend offshore OML 100
1995 – SNEPCO commenced drilling its first exploration well
1999 – NLNG’s first shipment of Gas out of Bonny Terminal
2000 – NPDC/NAOC Service Contract signed
2001 – The production of Okono offshore field
2002 – New PSCs agreement signed
2002 – Liberalisation of the downstream oil sector
2002 – NNPC started retail outlet scheme
There you have it, all you need to know about oil and gas history in Nigeria. Nigeria to date is still the largest oil and gas producer in Africa.
As of 2000, oil and gas exports accounted for over 98% of the country’s export earnings and nearly 83% of federal Government revenue. It also generated over 14% of the nation’s GDP and provided 95% of foreign exchange earnings and over 65% of government budgetary revenues.