CHAPTER ONE
INTRODUCTION
1.1
Background
of the Study
All
over the world, oil industry plays a vital role in world industrialization.
This is because; petroleum is used for power generation, fuel, medicine,
petrochemicals and heating (Reis, 2003). The discoveries of oil in commercial
quantities have facilitated the flow of the much – needed foreign exchange for
the under-developed producing countries; oil has also its negative side though.
Apart
from the high revenue oil yields, it has caused environmental pollution, wars
within countries, towns and villages; it has led to all forms of youth
restiveness and militancy as exemplified in the Nigeria’s Niger Delta, where
oil is predominantly found. The politics surrounding oil has made some
producing countries to form cartels in an effort to maximize benefit while
minimizing costs. The Organization of Petroleum Exporting Countries (OPEC), is
one of such cartels formed to regulate the production and marketing of crude
oil in an effort to stabilize production and price. Nigeria is the 11th
member of (OPEC).
In
1908, a German company named the Nigeria Bitumen Corporation began the search
for oil in Nigeria. The company drilled
fourteen wells in the Aaromi Area of the present Ondo State but later abandoned
it dry, shallow wells with the outbreak of the World War I in 1914. Interest in
the possibility was revived in 1937 with the establishment of Shell D’Arcy
Exploration Parties, a consortium owned equally by Royal Dutch Shell and
British Petroleum that later became the Shell –BP Petroleum Development
Company, Nigeria Limited.
In
1938, this company recorded an Oil Exploration License (OEL). Shell’s
activities were interrupted by World War II. In 1947, after the World War II,
Shell teamed up with British Petroleum to form Shell – BP. In 1956, oil was
discovered in commercial quantity at Oloibiri, in the present day Rivers State.
Before then, in 1946, oil was also seen at Ihuo in Imo State; but not in
commercial quantity. How6ever, in 1958, the first export of 5,100 barrel per
day commenced (Obiukwu, 2000). This, according to him touched off a period of
extensive exploration activities in the territory.
By
1961, other companies began to show interest in Nigeria such as: Mobil, Agip,
Sultrap (now Elf), Amoseas (now Texaco/Chevron) Gulf Oil (now Chevron). Gulf
Oil company made the first Nigerian oil strike in 1963 at Okan Field in the
Present Delta State.
In
1971, as oil became more important to the Nigerian economy, the federal
government established the Nigerian National Oil Corporation (NNPC), and joined
(OPEC) as the 11th member. It acquired 33.4% in Nigeria Agip, and
35% in Elf. (NNPC) an upstream and downstream resources had a regulatory
function.
The
exploration of oil has brought its effect, both negative and positive, to the
Nigeria economy and the producing communities. Increased revenue, economic
mono-culturalism, all forms of pollution and even militancy are all direct
consequences of oil exploration. It is therefore against this background that
this research has decided to investigate the effects of oil exploration on the
oil communities.
1.2
Statement
of the Problem
Before
the advent of oil, agriculture w as Nigeria’s major source of foreign exchange.
But over the years, as oil witnessed periods of acute stagnation as a result of
the hazards that go along with the export of mono product. Excessive dependence
on the export of a single crop or mineral resources without a thoroughly
diversified economic structure has always exposed us to total disruption and
disarticulation of our economy, especially, when the price for such commodities
falls.
Again,
inept leadership prevalent in Nigeria since independence has been unable to
utilize the much revenue gotten from oil. Instead of making meticulous
investments that would facilitate economic growth and development, these
revenue are aggrandized for selfish interests. This situation is accentuated by
the plethora of military administrations that bewitched the Nigeria’s federal
state, which is dysfunction in every respect. Particularly, is the revenue
allocation formula, which brought about agitations and feelings of
marginalization by the minorities, majority who ironically are the oil communities,
These minorities have expressed the discontent with the fiscal federalism
through youth’s restiveness, militancy, seccessionists agenda, kidnapping and
pipeline vandalization.
The
pollution of their lands, sea and air by the oil multinational companies add
salt to their injuries. The Nigerian state has not used regulations to
ameliorate their problems; instead they connive with the oil communities. Most
of their leaders had died in the process, whilst majority especially at Udi and
Etche where rendered homeless by the federal troops.
This
research work would therefore look into role of the oil multinationals in oil
exploration, the various problems suffered by the oil communities, and the
negative and positive impact of oil exploration.
1.3
Purpose
of the Study
The
purpose of this research is to carry out a systematic study of oil exploration
and its effects on oil communities with a view to discover:
1. To
enumerate the associated problems of petroleum activities to the oil
communities with particular emphases on Afam;
2. To
examine the role of oil multinational companies in oil exploration;
3. To
have a general overview6 of the positive impact of petroleum industry in
Nigeria economy; and
4. To
suggest the appropriate solutions to the problems.
1.4
Significance
of the Study
The imperative need of this study arises
from the sour relationship that contemporarily exist within the oil
multinational companies, oil producing communities and Nigerian government, which
has resulted to looses, both economically and otherwi6se. Also, the dominance
of the oil sector as the source of government revenue from the oil sector makes
government finances to undergo severe pressure.
This research work will therefore be
useful to government, security agencies, community leaders in oil communities
and multinational companies. It will also be of benefit to students and
researchers in Nigeria’s oil industry.
1.5
Theoretical
Framework
This research work sees the increasing
alienation of oil communities from the natural endowment by the oil companies,
in connivance with connivance with government is capitalist. The Marxist theory
will be adopted.
Karl Marx (1818 - 1883), propounded
that those w6ho control the economic structure control the political structure.
This is exactly the situation in Afam. The Nigeria economy is based on oil.
This oil is explored by the oil multinationals w6ho invariably hold the key to
the Nigeria’s economy. Because they control this important economic sector,
there is ample evidence that they immensely manipulate government policies. This
is why government connive w6ith them against the wishes of the producing
communities.
The under – development predominant in
the Niger Delta is a product of economic exploitation. The Nigerian government
and the multinational companies have continuously represented the interest of the
ruling class (haves), and have neglected the (have-not) which comprise the
citizens of the oil communities like Marx himself advocated a bloody revolution
against the ruling class by the oppressed masses, so also are the people of oil
communities engage in agitations and violence as the only remedy to change the
tides of clime.
Evidently, the state under –
development and pauperization of oil communities by the ruling class has
resulted to youth restiveneess, abuctionof expatriates, vandalization and
extensive militancy. The surplus value, which is supposed to be ploughed back
into the region to attain sustained economic growth, is unfortunately
misappriopriated to the detriment of the oil communities, including Afam.
1.6 Research
Hypothesis
The hypothesis for this study is as
follows:
1) Oil
has brought so much wealth to Nigeria.
2) Inept
leadership has led to the mismanagement of Nigeria’s oil revenue.
3) The
activities of oil multinationals have brought pains to oil communities.
4) Governement
has connived with the oil companies to alienate the oil communities from their
natural endowments.
1.7 Method
of Data Collection
For the purpose of this research, data
was collected from two sources: Secondary and primary data. The ssecondary data
mainly came from books, newspapers journals, magazines and internet. The
primary data came from questionnaires distributed and collected on the spot.
Descriptive account would be used tables and simplepercentage will be used to
analyse data.
These two sources facilitated the
study.
1.8 Definition
of Basic Concepts
Oil
Communities; areas which oil is predomintaed.
Multinational
Companies: They are big gigntic companies who have the headquarters in their
countries but operate in most part of the world in many areas of business.
GDP:
it means Gross Domestic Product – it is a measure of the total, final domestic
output of goods and services produced by residents, regardless of the
allocation to domestic and foreign claims.
1.9 Scope
and Limitation of the Study
This study coversthe effects of ooil
exploration on oil communities with emphasis on Afam.
This study was not conducted without
some constraints. These constraints are likely to make the findings inaccurate
to a large extent:
1) Unavilability
of adequate data required for this work.
2) The
stipulated time for this research was considered too short for a topic as wide
as this to adequately and effectively handle.
3) The
constraint imposed by inadequate finance to enable the researcher reach some
important respondents or colectrt some vital data.
4) Unwillingness
of some people to devulge information.
Apart
from all this liimitations, all other errors or ommissions are precisely those
of the researcher.