The early history (1908 – 1960) – The history of oil exploration in Nigeria dates back to 1908 when Nigerian Bitumen Corporation conducted exploratory work in the country; however, the firm left the country at the onset of World War I. Thereafter, license was given to D’Arcy Exploration Company and Whitehall Petroleum. However, both companies did not find oil of commercial value and returned their licenses. In 1923 new license covering 357,000 sq. miles was given to a new firm called Shell D’arcy Petroleum Development Company of Nigeria. The new firm was a consortium of Shell and British Petroleum (then known as Anglo-Iranian). The company began exploratory work in 1937. The consortium was granted license to explore oil all over the territory of Nigeria but in 1951 and then between 1955 and 1957, the acreage allotted to the company in the original license was reduced. Drilling activities started in 1951 and the first test well was drilled in Owerri area. Shell-BP in the pursuit of commercially available petroleum found oil in Oloibiri, Nigeria in 1956 and came on stream producing 5,100 bpd. Production of crude oil began in 1957 and in 1960, a total of 847,000 tonnes of crude oil was exported.
Major Dates in Early History of Nigerian Oil and Gas Industry
1908: Nigerian Bitumen Co. & British Colonial Petroleum commenced operations around Okitipupa.
1938: Shell D’ Arcy granted Exploration license to prospect for oil throughout Nigeria.
1955: Mobil Oil Corporation started operations in Nigeria.
1956: First successful well drilled at Oloibiri by Shell D’Arcy
1956: Changed name to Shell-BP Petroleum Development Company of Nigeria Limited.
1958: First shipment of oil from Nigeria.
1960: Other non-British firms were granted license to explore for oil like Tenneco
The Mid History (1961 – 1990) – at this period, Nigeria was just understanding its latest grounds as an oil exporter and developing its export market. It was during this time that commercial exploitation of the country’s reserves began with the Nigerian Government introducing its first regulations governing the taxation of oil industry profits in which the profits were to be shared 50-50 between the government and the oil companies. By the later part of the 1960s, the Nigerian Government considered ways to utilize the resource being exploited by the western countries to develop the country and with this thought formulated its first agreement for taking equity in one of the producing companies, the Nigerian Agip Oil Company, jointly owned by Agip of Italy and Phillips of the United States. The option to take up an equity stake-in effect the first step toward the creation of the NNPC-was not, however, exercised until April 1971. In 1970, the end of the Biafran war coincided with the rise in the world oil price, and Nigeria was able to reap instant riches from its oil production.
Major Dates in Mid History of Nigerian Oil and Gas Industry
1961: Shell’s Bonny Terminal was commissioned; Texaco Overseas started operations in Nigeria.
1962: Elf started operations in Nigeria. (As Safrap), Nigeria Agip Oil Company started operations in Nigeria
1963: Elf discovered Obagi field and Ubata gas field, Gulf’s first production
1965: Agip found its first oil at Ebocha, Phillips Oil Company started operations in then Bendel State
1966: Elf started production in Rivers State with 12,000 b/d
1967: Phillips drilled its first well (Dry) at Osari -I, Phillips first oil discovery at Gilli-Gilli -I
1968: Mobil Producing Nigeria Limited) was formed, Gulf’s Terminal at Escravos was commissioned
1970: Mobil started production from 4 wells at Idoho Field, Agip started production, Department of Petroleum Resources Inspectorate started.
1971: Shell’s Forcados Terminal Commissioned, Mobil’s terminal at Qua Iboe commissioned
1973: First Participation Agreement; Federal Government acquires 35% shares in the Oil Companies, Ashland started PSC with then NNOC (NNPC), Pan Ocean Corporation drilled its first discovery well at Ogharefe -I
1974: Second Participation Agreement, Federal Government increases equity to 55%, Elf formally changed its name from “Safrap”, Ashland’s first oil discovery at Ossu -I
1975: First Oil lifting from Brass Terminal by Agip, DPR upgraded to Ministry of Petroleum Resources
1976: MPE renamed Ministry of Petroleum Resources (MPR), Pan Ocean commenced production via Shell-BP’s pipeline at a rate of 10,800 b/d
1977: Government established Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC & MPR extinguished).
1979: Third Participation Agreement (throughout NNPC) increases equity to 60%, Fourth Participation Agreement; BP’s shareholding nationalized, leaving NNPC with 80% equity and Shell 20% in the joint Venture, Changed name to Shell Petroleum Development Company of Nigeria (SPDC)
1984: Agreement consolidating NNPC/Shel1 joint Venture.
1986: Signing of Memorandum of Understanding (MOU)
1988: Formation of 12 strategic business units, covering the entire spectrum of oil industry operations: Nigerian Petroleum Development Company (NPDC), Nigerian Gas Company (NGC), Products and Pipelines Marketing Company (PPMC), Integrated Data Services Limited (IDSL), National Engineering and Technical Company Limited (NETCO),Hydrocarbon Services Nigeria Limited (HYSON), Warri Refinery and Petrochemical Co. Limited (WRPC), Kaduna Refinery and Petrochemical Co. Limited (KRPC), Port Harcourt Refining Co. Limited (PHRC), NNPC Retail, Duke Oil
1989: Fifth Participation Agreement; (NNPC=60%, Shell = 30%, Elf=5%, Agip=5%).
Recent History (1991 – date) –
1991: Signing of Memorandum of Understanding & joint Venture Operating Agreement (JOA)
1993: Production Sharing Contracts signed -SNEPCO, Sixth Participation Agreement; (NNPC=55%, Shell=30%, Elf= 10%, Agip=5%), the coming on-stream of Elf’s Odudu blend, offshore OML 100.
1995: SNEPCO starts drilling first Exploration well, NLNG’s Final Investment Decision taken
1999: NLNG’s First shipment of Gas out of Bonny Terminal.
2000: NPDC/NAOC Service Contract signed
2001: Production of Okono offshore field.
2002: New PSCs agreement signed, Liberalization of the downstream oil sector, NNPC commences retail outlet scheme.
Written By Nosa Tunde-Oni