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Geopolitics and strategy of petroleum: The Nigeran experience

THIS  article traces the history of petroleum development in Nigeria. It is without prejudice to the findings and recommendations of the National Assembly’s public hearing on the industry.

The assumption in this article is that the term petroleum or oil and gas will be used interchangeably for the same resource. Petroleum comes from the Latin (medieval) petroleum, meaning rock oil. It is unimaginable to live a life without oil by humankind, as long as movement of people and goods is carried out by vehicles, ships or aircraft, powered by the inventions of engineers such as Otto, Diesel and Whittle. Oil is also used to lubricate machines and other contrivances with moving parts.

A multitude of cosmetics, paints, inks, drugs, fertilizers and plastics as well as myriad of other items contain petroleum products. Daily life, for many, would be drastically different without oil. Little wonder that according to some scholars, petroleum and its derivatives have a greater variety of uses than, perhaps, any other substance in the world.To illustrate the strategic importance of oil, Clemenceau observed that “petrol is as necessary to the battle field of the future as blood is to the body”. Clemenceau was right in his assertion because of the impact of petroleum on the outcome of battle space in World War 1, when he was the French Prime Minister.

Furthermore, the strategic importance of petroleum compelled Adolf Hitler to occupy Poland and Romania very early in World War II, because of the oil refineries in these countries.

During the Arab­-Israeli War of 1973, the Arab members of OPEC used the oil embargo against the USA and some European countries, they believed were supporting Israel. Although, that action did not succeed, it proved that oil power would become part of the instruments of international relations.

Thus, three pertinent questions then arise. How does humankind get oil? Where does it come from? How long has humankind used it? The Holy Bible asserts that more than two millennia before Christ, Noah, following Divine instructions, constructed a gigantic wooden ship and used tar, possibly a petroleum substance, to make it watertight.

Petroleum substances were used by the Babylonians for their kiln-dried bricks, by the Egyptians in their mummification process, and by other ancient peoples for medicinal purposes.

Who, would have imagined that this product would come to be of such importance in today’s world. No one can deny the fact that modern industrial civilization depends on petroleum.The use of oil from petroleum for artificial lighting was oil’s springboard to fame.

As early as the 15th century, oil from surface wells was used in lamps in Baku, present day capital of Azerbaijan. In 1650, shallow oil reserves were dug in Romania, where oil in the form of kerosene was used for lighting. The French produced oil first at Perchenbrauer (Alsace region) in the 17th century.

In the Unites States, it was mainly the search for a high quality illuminant in the 1800s that made a group of men direct their efforts toward oil.

Thus, in 1859, Titusville Pennsylvania, Col Drake drilled a rig 23 metres deep using a steam engine. That marked the beginning of the oil era. In Nigeria, petroleum was first struck at Ogbia (not Oloibiri) in 1956, although oil prospecting had begun as early as 1908, with the establishment of the German firm, the Nigerian Bitumen Manufacturing Corporation.

THE question now is, how did petroleum form? The opinion that has prevailed amongst most scientists since the 1870s is called the biogenic theory. This holds that biological debris buried in sediments decays into oil and natural gas in the long course of time and that this petroleum, then becomes concentrated in the pore space of sedimentary rocks in the uppermost layers of the Earth’s crust.

This process then,; produces petroleum whose main constituents are hydrocarbons, that is hydrogen and carbon. However, since the 1970s, this theory has at times been challenged by some scientists. In August 2002, some scientists argued that the origin of natural petroleum must occur at depths that are well into the mantle of the Earth and not at the shallower depths, generally accepted.

On his own, Thomas Gold has suggested some controversial theories and explains his reasons in his book: The Deep Hot Biosphere – The Myth of Fossil Fuels. He writes: The theory of the biological origins of hydrocarbons was so favoured in the United States and in much of Europe that it effectively shut out work on the opposing view point. However, this was not the case in the countries of the former Soviet Union. That was probably because the Russian Chemist Mendeleyev had supported the biogenic (not biological) view.

The arguments he presented are even stronger today, given the greatly expanded information available. Then, what is the abiogenic view? Gold states: “The abiogenic theory holds that hydrocarbons were a component of the materials that formed the Earth through accretion of solids, some 4.5 billion years ago”.

According to this theory, the elements of petroleum have been deep in the Earth since its formation. The conclusion from this is that, the Earth has a finite amount of petroleum unlike the biological theory, which proposes that fossil fuel can still be produced by decaying debris. However, the rate of consumption will outstrip the rate of decay as the World’s population increases.

This author is of the opinion that both processes might have taken place at different times since the Big Bang. As stated earlier, petroleum was first struck in Nigeria in 1956 in Ogbia, in the present day Bayelsa State by the Shell Petroleum Development Company (Shell Well 1). Production from the Ogbia field started in 1958 at the rate of 4,000 barrels per day, an event that reshaped the- socio-economic landscape of the country.

The success of Shell attracted other companies, notably Mobil, Texaco, Gulf, Agip, Unocal, Esso and Safrap (now Elf Total) to the Niger Delta, which became the new focus of exploration activities. In 1963, the first offshore discoveries were made by Gulf (Okan 1), Mobil (Ata 1) and Texaco (Kaulama 1). The industry expanded rapidly and by the end of the civil war in 1970, the country’s daily production, undertaken exclusively by multi-nationals, had exceeded one million barrel mark, while its agro-based economy which had, heretofore, been the engine of growth of the economy, quickly gave way to a monoculture that is with the country up till date.

In 1971, Nigeria joined the organisation of Petroleum Exporting Countries, OPEC and thereafter, established the Nigerian National Oil Corporation, NNOC, as a vehicle for exercising control over the operations of the multi-nationals in line with the policy of the OPEC cartel.

The same year, the Federal Government through NNOC, acquired 33 and half per cent participating interest in AGIP Oil Company and by 1974; the acquisition had included all the operating companies in the country with the percentage of Government interest increasing to 60 percent.

That gave birth to the joint venture agreements, which subsist till today. In 1977, NNOC was merged with the Department of Petroleum Resources to form the Nigerian National Petroleum Corporation, NNPC, through which operational interest was expanded to include refining, petrochemicals and products transportation as well as marketing, in addition to its sole exploration and production activities. Between 1978 and 1989, NNPC constructed three refineries in Warri, Kaduna and Port Harcourt and took over the 35,000 barrel Shell Refinery constructed in 1966, also located in Port Harcourt .

Furthermore, the corporation established a product distribution network comprising thousands of kilometres of pipeline as well as pump stations and depots, while also, pioneering exploration activities in the Chad Basin without success.

In 1990, Nigeria initiated an aggressive exploration programme in some frontier basins covering the deep offshore Niger Delta and the Inland basins, including Benin Republic basin, Anambra and Benue basins. This exercise, which was based on the production sharing contract, PSC, arrangement, was aimed at improving the nation’s oil and gas reserve base.

The same year, the indigenous operator-ship programme was introduced by way of discretionary allocation of blocks to some indigenous companies, which operate on sole risk basis. After 50 years of oil production, more than 30 billion barrels of oil and 25 trillion standard cubic feet of natural gas have been produced in Nigeria.

Mr .OSITA OBIERIKA,  a rtd  AVM, wrote from Abuja.


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