It’s no secret that the oil industry is the backbone of Nigeria’s economy. The history of crude oil in Nigeria is one of wealth, spills, fires, and tragedy. In order to understand how the country ended up in its current state, it’s important to learn how the industry was created. Alas, not that many people know when it all began. If you would like to find out when oil was discovered in Nigeria, continue reading below!
Oil discovery in Nigeria
The history of the Petroleum industry in Nigeria goes back to 1908 when the NBC began their explorations in search of crude oil. But right before the start of World War I, they left Nigeria. Their successors, D’Arcy EC and Whitehall Petroleum, spent a couple of years continuing their efforts. And yet they were unsuccessful as well and did not prolong their licenses, disappointed in the results.
The next stage is marked by the appearance of the Shell D’Arcy BP of Nigeria in 1923. This company was the product of a union between Shell and British Petroleum. They launched their first serious oil exploration campaign in 1937 while having a license that allowed them to set up their operations all over the country. In 1955, the area that was allocated to Shell was decreased in size. You’d think that a lesser territory would have reduced their chances of finding oil, but you’d be wrong.
The year of 1956 manifested the emergence of the oil industry in Nigeria. Shell-BP found the first commercially available oil in the country in Oloibiri. The Oilfield of Oloibiri is situated in Bayelsa State about 72 kilometers away from Port Harcourt in the Niger Delta. The oilfield was named after a tiny community with the same name, as this later became a tradition in Nigerian oil-well naming.
What sounded like great news at the time became a story of wealth for the minority, while the majority of the local communities continued their struggle against poverty. The discovery of oil in 1956 has proven to be both a blessing and a curse for the people of Oloibiri.
The first well in the area, Oloibiri 1, was created in August 1955 and reached a total depth of 3660 meters. In the first year, the daily average oil produced stood at about five thousand barrels. As more wells were built, the production increased in a geometrical progression and reached its maximum in 1964. During that time, a total of 11 wells were pumping the oil from Oloibiri. The crude oil extracted from the field was of a sour and heavy nature and had an API of twenty.
Nigeria conducted its premier crude oil export at the beginning of 1958, pumping the black gold through the first pipeline built by Shell. In 1960, a grand total of 847,000 tons of oil was exported. Later, the production rate grew even further, as the government sold licenses to multiple other foreign businesses. Over the course of its existence, Oloibiri gave Nigeria over twenty million barrels of oil, before being closed in 1978.
After the initial drilling in Oloiribi, Shell-BP began to explore the Niger Delta even further, as they found 12 new areas by the end of 1958, with Afam and Bomu joining the first oilfield as the richest ones.
We answered the question of when was oil discovered in Nigeria, but what happened next? Let’s talk about what became of the country’s Petroleum industry in the following decades.
History of crude oil in Nigeria
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The story of the Oloibiri Oilfield is only the beginning of Nigeria’s rise as one of the leading oil exporters in the world. In 1965, the EA field was found by Shell near Warri. By the time the seventies came around, the country was producing around two million barrels of oil per day. Those were also the years when the Nigerian Government regulated the taxation of the industry. Thus, they introduced a 50-50 split between the country and the oil companies. Another step that helped to establish Nigeria as a big player in the world market was the end of the Biafran war that skyrocketed the prices for oil and led to the creation of the NNPC in 1981.
The ever-increasing oil industry has been involved in controversial scandals from the very beginning. The Nigerian population does not understand why most of the money made from the export is disappearing, instead of helping the population of the Niger Delta that has to survive on $1 per day. Another common criticism is the lack of environmental control in the production of crude oil. There were dozens of major spills that left an incurable scar on the face of Nigeria’s climate.
Oil production and its export continue to have a dominant role in the economy of our country and they are responsible for nearly 90% of Nigeria’s gross earnings. Such an over-reliance on crude oil has forced agriculture and other industries to the sidelines.
Now you know that oil in Nigeria was discovered in 1956 and you are also aware of all the circumstances that surrounded that discovery. Feel free to share this information with your friends, when you find yourself in another debate about the oil industry in Nigeria.
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