Economic History of Nigeria – Oil Economy (Part I) Basic 6 History Lesson Note

Learning Objectives

By the end of the lesson, pupils should be able to:

• Explain the meaning of Economic History
• List the relevance of Economic History to Nigeria’s Development
• Define Crude oil and name the place and when it was first discovered in Nigeria
• Define Refinery
• List the crude oil refineries in Nigeria
• Name the government agency responsible for control, distribution and sale of petroleum products

Content

WEEK 5: FOUNDATIONS OF NIGERIA’S OIL ECONOMY

What is Economic History?

Economic History is the study of how people, communities, and nations have produced, distributed, and consumed goods and services over time. It examines how economic activities have changed and developed throughout history.

Key Elements of Economic History:

• Production: How goods and services are made
• Distribution: How products reach consumers
• Consumption: How people use goods and services
• Trade: Exchange of goods between people and nations
• Technology: How tools and methods change over time
• Resources: Natural resources and how they are used

Relevance of Economic History to Nigeria’s Development:

1. Understanding Economic Transformation

• Pre-Colonial Economy: Traditional farming, trading, crafts
• Colonial Economy: Cash crops, mining, export-oriented
• Post-Independence: Industrialization attempts, oil discovery
• Modern Economy: Oil-dependent, diversification efforts

2. Learning from Past Experiences

• Success Stories: What worked well in the past
• Failed Policies: Understanding why some policies failed
• Economic Patterns: Recognizing recurring economic trends
• Policy Lessons: Applying historical lessons to current challenges

3. Resource Management Lessons

• Agricultural Era: How Nigeria managed agricultural resources
• Mining Period: Tin, coal, and other mineral exploitation
• Oil Era: Management of petroleum resources
• Sustainable Development: Learning sustainable resource use

4. Trade and Commerce Development

• Traditional Trade: Ancient trade routes and markets
• Colonial Trade: European trade relationships
• Modern Trade: International economic partnerships
• Regional Integration: West African economic cooperation

5. Understanding Economic Challenges

• Poverty Patterns: Historical roots of poverty in Nigeria
• Inequality: How economic inequality developed
• Infrastructure: Evolution of transportation and communication
• Employment: How job patterns have changed over time

What is Crude Oil?

Crude oil (also called petroleum) is a thick, dark liquid found underground. It is formed from the remains of tiny sea plants and animals that lived millions of years ago. Over millions of years, heat and pressure changed these remains into oil.

Characteristics of Crude Oil:

• Appearance: Thick, dark, sticky liquid
• Composition: Made of hydrocarbons (hydrogen and carbon)
• Formation Time: Takes millions of years to form
• Location: Found in underground reservoirs
• Varieties: Different types with varying quality and thickness

First Discovery of Oil in Nigeria:

Location: Oloibiri, Ogbia Local Government Area, Bayelsa State (then Rivers State) Date: 1956 Company: Shell-BP (Shell British Petroleum) Significance: First commercial oil discovery in Nigeria

Details of the Discovery:

• Exploration Started: 1937 by Shell-BP
• World War II Interruption: 1940-1947 exploration stopped
• Resumed Exploration: 1947
• First Well: Oloibiri-1 well drilled in 1956
• Commercial Production: Started in 1958
• Daily Production: Initially about 5,000 barrels per day

Other Early Oil Discoveries:

• Afam Field: 1958
• Bomu Field: 1958
• Ughelli Field: 1958
• Forcados Field: 1963

What is a Refinery?

A refinery is a large industrial plant where crude oil is processed and converted into useful products like gasoline (petrol), diesel, kerosene, and other petroleum products.

Refinery Process:

1. Crude Oil Input: Raw oil brought to refinery
2. Heating: Oil heated to high temperatures
3. Separation: Different products separated by boiling points
4. Treatment: Products cleaned and improved
5. Storage: Finished products stored in tanks
6. Distribution: Products sent to markets

Major Crude Oil Refineries in Nigeria:

1. Port Harcourt Refining Company (PHRC)

• Location: Port Harcourt, Rivers State
• Established: 1965
• Capacity: 210,000 barrels per day (two refineries)
• Products: Petrol, diesel, kerosene, fuel oil, LPG

2. Warri Refining and Petrochemicals Company (WRPC)

• Location: Warri, Delta State
• Established: 1978
• Capacity: 125,000 barrels per day
• Products: Petrol, diesel, kerosene, aviation fuel

3. Kaduna Refining and Petrochemicals Company (KRPC)

• Location: Kaduna, Kaduna State
• Established: 1980
• Capacity: 110,000 barrels per day
• Products: Petrol, diesel, kerosene, lubricants

Private Refineries (Planned/Under Construction):

• Dangote Refinery: Lagos State (650,000 barrels per day capacity)
• BUA Refinery: Akwa Ibom State
• Waltersmith Refinery: Imo State

Government Agency for Petroleum Control:

Nigerian National Petroleum Corporation (NNPC)

• Full Name: Nigerian National Petroleum Corporation
• Established: 1977
• Headquarters: Abuja, Federal Capital Territory
• Status: National oil company of Nigeria

NNPC Functions:

1. Exploration: Search for oil and gas in Nigeria
2. Production: Oversee oil and gas production
3. Refining: Operate oil refineries
4. Distribution: Ensure petroleum products reach all parts of Nigeria
5. Marketing: Sell petroleum products locally and internationally
6. Joint Ventures: Partner with international oil companies

NNPC Subsidiaries:

• NNPC Exploration & Production: Oil exploration and production
• NNPC Refining & Petrochemicals: Refinery operations
• NNPC Retail: Petrol stations and retail operations
• NNPC Gas & Power: Natural gas and power generation

Other Related Agencies:

Department of Petroleum Resources (DPR) – Now NUPRC:

• Function: Regulate oil and gas industry
• Activities: Issue licenses, monitor operations, enforce regulations
• Environmental Oversight: Ensure environmental protection

Petroleum Products Marketing Company (PPMC):

• Function: Market and distribute petroleum products
• Activities: Wholesale distribution, import coordination
• Storage: Manage petroleum storage depots

WEEK 6: ECONOMIC IMPACT AND DEVELOPMENT

Nigeria’s Oil Production Growth:

1958-1960s: Early production years

• Production: 5,000-50,000 barrels per day
• Revenue: Minimal contribution to national income
• Focus: Agriculture still dominated economy

1970s: Oil boom period

• Production: Over 2 million barrels per day
• Revenue: Oil became major source of government income
• Impact: Massive increase in government spending

1980s-Present: Mature oil economy

• Production: 1.5-2.5 million barrels per day (varies)
• Revenue: 80-90% of government revenue from oil
• Challenges: Over-dependence on oil revenues

Oil Production Regions:

Niger Delta States:

• Rivers State: Highest oil production
• Bayelsa State: Major oil and gas reserves
• Delta State: Significant oil production
• Akwa Ibom State: Large oil and gas production
• Cross River State: Oil and gas production
• Ondo State: Offshore oil production
• Edo State: Some oil production

Major Oil Fields:

• Bonny Field: Rivers State
• Forcados Field: Delta State
• Brass Field: Bayelsa State
• Qua Iboe Field: Akwa Ibom State

Activities

• Create a map showing Nigeria’s major oil fields and refineries
• Timeline of oil discovery and development in Nigeria
• Research project on NNPC and its functions
• Discussion on Nigeria’s economic transformation from agriculture to oil

Multiple Choice Questions

1. Crude oil was first discovered in Nigeria in: a) 1956 b) 1958 c) 1960 d) 1955 
2. The first oil discovery was made at: a) Warri b) Port Harcourt c) Oloibiri d) Kaduna 
3. How many major government refineries does Nigeria have? a) Two b) Three c) Four d) Five 
4. NNPC was established in: a) 1975 b) 1976 c) 1977 d) 1978 
5. The company that first discovered oil in Nigeria was: a) Mobil b) Chevron c) Shell-BP d) Agip 

Homework

Research and write about one of Nigeria’s oil refineries. Include: (1) When it was built, (2) Where it is located, (3) How much oil it can process per day, (4) What products it makes, (5) Any problems it faces. Use diagrams or pictures if possible.