the petroleum industry

DEVELOPMENT OF PETROLEUM INDUSTRY IN NIGERIA. The development of the petroleum industry in Nigeria started several years ago.

The first attempt made towards oil exploration was in 1908 by a German company called Butman Corporation. This was closely followed in 1937 by Shell D ‘Aery, an Anglo-Dutch company.

The development of the petroleum industry has been a crucial aspect of the modern industrial era. Here is a general overview of the key stages in the development of the petroleum industry:

Exploration and Early Discoveries:

The petroleum industry traces its roots back to the mid-19th century when the first oil well was drilled in Pennsylvania, United States, in 1859.

Following this discovery, exploration efforts intensified globally, leading to significant oil discoveries in different parts of the world, including the Middle East, Russia, and other regions.

Standardization and Infrastructure:

As the industry grew, efforts were made to standardize extraction and refining processes to increase efficiency and maximize production.

Infrastructure development played a crucial role, including the construction of pipelines, storage facilities, and transportation networks to facilitate the movement of oil from production sites to refineries and markets.

Industrialization and Technological Advancements:

The early 20th century witnessed the industrialization of the petroleum industry, with the emergence of large-scale refineries and the introduction of advanced technologies to enhance oil extraction and processing.

Techniques such as seismic exploration, offshore drilling, and enhanced oil recovery methods were developed, enabling the extraction of oil from more challenging reservoirs.

Nationalization and OPEC:

In the mid-20th century, several oil-producing countries started to nationalize their petroleum resources, gaining greater control over their oil reserves and operations.

In 1960, the Organization of the Petroleum Exporting Countries (OPEC) was founded, comprising major oil-producing nations. OPEC aimed to coordinate oil production policies and stabilize oil prices.

Globalization and Market Dynamics:

The petroleum industry became increasingly globalized, with the rise of multinational oil companies and the expansion of oil trade across borders.

Market dynamics, geopolitical factors, and global demand and supply fluctuations started to play a significant role in shaping the industry.

Environmental Concerns and Diversification:

Over time, concerns about the environmental impact of fossil fuels, including air pollution and greenhouse gas emissions, led to increased emphasis on environmental regulations and the development of cleaner energy alternatives.

The industry has been exploring diversification into renewable energy sources and investing in research and development of technologies like carbon capture and storage (CCS) to mitigate its environmental footprint.

Technological Innovation and Efficiency:

Recent decades have seen significant advancements in technology within the petroleum industry, such as advanced drilling techniques (horizontal drilling, hydraulic fracturing), digitalization, and data analytics.

These advancements have contributed to increased production efficiency, cost reduction, and improved safety measures.

the first company to start large-scale production and exploration of oil in Nigeria\’s petroleum industry

By 1956, Shell B.P. embarked on a more economic production of petroleum in the Niger Delta region of Nigeria which incidentally is my state of origin where the historical development of the petroleum industry in Nigeria started

 It was in this year 1956 that Shell B.P. discovered its first commercial crude oil in the country at Oloibiri in the present Rivers State. In 1958, full-scale production took off.


factors affecting the expansion of industries

mineral resources and the mining industries

demand and supply

types of demand curve and used


how companies raise funds for expansion


list of companies that started the petroleum industry of Nigeria

Later, many other companies such as Agip Oil and Gulf (now Chevron), joined in the exploration of crude oil.

By 1960, when Nigeria became independent, the volume of output of crude oil was just about six million barrels. By 1965, crude petroleum production had reached about 100 million barrels.

The civil war between 1967 and 1970 slowed down production. At the end of the civil war, crude oil production was about 197 million barrels.

Since 1976 till date, petroleum has remained the major source of government revenue.



The petroleum industry and exploration in Nigeria have contributed a lot to the Nigerian economy.

in all Sources of government revenue: Petroleum has contributed greatly to the major source of revenue available to the government and the historical development of the petroleum industry in Nigeria

Generation of employment: The petroleum industry has also aided in the generation of employment opportunities for various categories of people, e x petroleum engineers, geologists chemical engineers.

Of the gains, we can also say that the discovery of oil in Nigeria has brought Nigeria back in so many aspects of development.

Infrastructural development: Generated from the petroleum industry to help develop infrastructures in the country, e.g. roads, airports, se electricity and telecommunications

 Source of foreign exchange Petroleum plays a major role: in foreign exchange for the nation.

 Establishment of oil-related industries: Other oil-related industries have been established with crude oil, e.g. petrochemical ii

 Improvement of balance payment: The exportation of payment to foreign countries has contributed greatly to the improvement of the balance of payment.

Improvement of the standard of living: Petroleum industry, through the provision of employment, increase in per capita income and development of basic infrastructure, has helped to improve the
standard of living of the people

Positive foreign policy: Petroleum has played a vital role in shaping Nigeria’s foreign policy since its independence.

A major source of energy: Petroleum remains the major source of energy in
the country, e.g. petrol, tiles and kerosene.

Provision of a wide range of products: Petroleum has contributed to the provision of a

wide range of products such as fuel, paints, insecticides, tiles and fertilizers

Arising from these developments, many programmes embarked upon during the oil boom period have remained uncompleted while those completed could not be adequately maintained.

This paper is an attempt to present an accurate account of the situation in the Nigerian petroleum industry.

It also aims to highlight the constraints on the effective performance of the sub-sector and outline relevant policy options. The rest of the paper is structured into four parts.

Section II presents a detailed discussion of the structure of the industry.

An analysis of the sub-sectors performance is reviewed in Section lll while Section IV undertakes the identification of major constraints to the optimal development of the petroleum

Section V summarizes and concludes the paper.

It is supervised by the Ministry of Petroleum Resources under a Minister who is assisted by a Minister of State.

The Ministry re-created in 1985, and to which the Petroleum Inspectorate was transferred by Presidential fiat in March 1988, has full responsibility 1 for, among others,

(i) the overall supervision of the Nigerian oil industry including activities of the NNPC and its subsidiaries;

(ii) all policy matters relating to the disposition of crude oil and petroleum products;
(iii) development of the hydrocarbon industry, including natural gas, processing, refineries and petrochemicals



(1)     Environmental pollution: Oil exploration has led to serious environmental pollution of the land, air and water, especially in the Niger Delta region of the country.

 Increased social vices: The discovery of oil in the country has led to increased social vices like corruption, and armed and pen robbery.

Development of mono-economy: As a result of the discovery of oil, Nigeria is now a mono-economic country, i.e., it now relies solely on crude oil as its major source of revenue.

Neglect of agriculture and other sectors: Agriculture, which used to be a major source of revenue to the nation, has been neglected, and other sectors no longer have relevance in the economy of Nigeria.

Rural-urban migration: it has also led to the movement of able-bodied men and women from the rural to urban centres in search of non-existent jobs. as the development of the petroleum industry in Nigeria

High-rated inflation: The money derived from petroleum is so much that there is excess money pursuing few goods and services.

Political instability: The discovery of crude oil has led to political instability in the country as people in the Niger Delta are always at war with other groups, causing social insecurity.

Economic instability: The oil glut, which had once spelt doom for this nation, always reminds us not to over-rely on crude oil as the high prices of the crude being experienced now can collapse any time.

Deprivation of means of livelihood: As a result of the exploration of crude oil, many people, like fishermen and farmers have been deprived of their means of livelihood due to heavy pollution.

Optimized by Optimole
Scroll to Top