Petroleum And The Nigeria Economy SS3 Economics Lesson Note

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. Narrate a brief history of the development of the Petroleum industry in Nigeria
2. State and explain the positive and negative contributions of Petroleum to the Nigerian economy

INSTRUCTIONAL TECHNIQUES: 

• Identification, 
• explanation, 
• questions and answers, 
• demonstration, 
• videos from source

INSTRUCTIONAL MATERIALS: 

• Videos, 
• loudspeaker, 
• textbook, 
• pictures

NOTE

The Development of the Petroleum Industry

Oil exploration in Nigeria dates back to 1908 with the appearance of oil in the present Ondo state.  Another exploratory activity took off in 1937 with an Anglo Dutch consortium that served as a forerunner of the present-day Shell Petroleum Development Company of Nigeria Limited, Shell D’Arcy.  Oil was first discovered at Oloibiri in Rivers State in 1956.

The most important landmarks in the history of oil development in Nigeria were the  Hydro-Carbon Oil Refinery Act of 1965 and the Petroleum Decree of 1967.  The Hydrocarbon Act of 1965 approved the license for the first the refinery at Elese Eleme near Port-Harcourt, while the Petroleum Decree (1967) gave the right to fix petroleum prices to the government.

Nigeria has since returned to this status quo since December 1998. The Shell BP undertook the preliminary geological reconnaissance and intensified its geophysical surveys in the 1946 -1951 period.  To increase the pace of oil exploration and to ensure that the country was not dependent on one oil company or nation, Shell’s sole concession right over the country was reviewed and exploration rights were granted to companies of other nationalities.  Examples of oil companies are Mobil, Gulf, Agip, Tenneco, and Texaco/Chevron.  They were allowed to join the explorers for oil in the onshore and offshore areas of Nigeria.

The period 1975 – 1980 was considered as the golden era of the oil industry in Nigeria. In 1977, the Nigerian National Petroleum Corporation (NNPC) was established by the NNPC Act No 33 through the merger of the Nigerian National Oil Company (NNOC) and the then Ministry of Petroleum Resources.  This new body, NNPC started to perform both operational as well as regulatory functions.  In 1979, Nigeria nationalized the Nigerian subsidiary of British Petroleum because it was supplying crude oil to South Africa.

 Positive Contributions of Petroleum to the Nigerian Economy:

1. It increases Nigeria’s National Income greatly.
2. There is an increase in the income per capita of Nigerians.
3. When the first commercial shipment of oil was made in 1958, petroleum became a major foreign exchange earner.
4. As a result of provision of more employment opportunities, increase in per capita income, development of basic infrastructures, etc the standard of living of the people of Nigeria has improved.
5. Oil has played a significant role in shaping Nigeria’s foreign policy since she gained independence in 1960.

 Negative Effects of Petroleum on the Nigerian Economy

Although there were positive contributions of petroleum to the Nigerian economy, there are also negative effects which include the following among others.

1. One of the political woes of the discovery of oil in Nigeria is political instability. All the frequent coups, changes of government that occurred in Nigeria had an oil undertone.
2. As a result of oil exploration, together with the fear in many quarters of possible earthquakes occurring in those areas, many oil producing areas in Nigeria have been eroded.
3. There is shortage of raw materials as another negative effect of the neglect of agriculture as a result of the discovery and exportation of petroleum in Nigeria.
4. Oil exploration in Nigeria has caused soil, water, and air pollution in many parts of the country.
5. One of the immediate consequences of the neglect of agriculture in Nigeria as a result of the discovery and exportation of oil is the decline in food production.

 EVALUATION:   

1. Narrate briefly the history of the development of the petroleum industry in Nigeria
2. State three positive and negative contributions of petroleum to the Nigerian economy

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively