THE IMPACT OF OIL EXPLORATION AND PRODUCTION ACTIVITIES ON THE ECONOMIC DEVELOPMENT OF OIL PRODUCING AREAS OF NIGERIA (A CASE STUDY OF RIVERS STATE).
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THE IMPACT OF OIL EXPLORATION AND PRODUCTION ACTIVITIES ON THE ECONOMIC DEVELOPMENT OF OIL PRODUCING AREAS OF NIGERIA
(A CASE STUDY OF RIVERS STATE).
The persistent communal crisis between the multi-national oil companies and the oil producing communities has become a concern to both the government and the oil companies. This research work therefore, critically examined the impact of oil exploration and production on the economic development of the oil producing areas. The work is specifically aimed at analysis, evaluation and quantifying the extent to which oil exploration and production has influenced the lives and development of the oil producing areas. For the purpose of achieving the specific and general objectives of this research work as stated in chapter one, the researcher made use of the chi-square statistical tool of analysis and simple percentages which are used to analyze the data collected through the administration of questionnaires. At the end of the analysis, the two null hypotheses were rejected; this meant that there is a significant relationship between the dependent and independent variables. Finally, based on the findings the researcher made recommendations on how a better and cordial relationship between the oil companies and the oil producing areas can be ensured.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the study 1
1.2 Statement of problem 4
1.3 Objective of the study 6
1.4 Research of questions 6
1.5 Research hypothesis 7
1.6 Significance of the study 7
1.7 Scope of the study 8
1.8 Organization of the study 9
1.9 Definition of terms 10
2.1 review of related literature 12
2.1.1 Oil exploration and development of host community 12
2.1.2 A review of the problem 15
2.1.3 ensuring peace between oil firms and host communities 17
2.2 conceptual framework 20
CHAPTER THREE: METHOD OF STUDY
3.1 Introduction 27
3.2 Population and sample size 34
3.3 Sources of data 35
3.4 Method of collection 35
3.5 Description of data gathering instrument used 36
3.6 Method of analysis 37
3.7 Decision rule 38
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction 40
4.2 Presentation of data 40
4.3 analysis of data 44
4.4 summary of findings 51
CHAPTER FIVE: DISCUSSION, RECOMMENDATION AND CONCLUSION
5.1 Introduction 53
5.2 Discussion 53
5.3 Recommendation 55
5.4 Conclusion 56
Map of area of study
1.1 BACKGROUND OF THE STUDY
Crude oil prospecting began in Nigerian as far back as 1908, when a German Company and Nigerian Bitumen corporation started in the Ararome area of the present Undo State. Their efforts however ended with the outbreak of the First World War in 1914.
In 1937, oil prospecting resumed in Nigeria by shell D’Arcy, who was awarded the sole right covering the whole Territory of Nigeria. This development was interrupted once again by the outbreak of the Second World War.
It was however in January 1956 that Shell Petroleum Development Company made their first successful oil well discovery in Oloribiri (Presented Bayelsa State) in the Niger Delta of Former Rivers State. Shell stated its successful oil production and shipment of crude oil in Nigeria on February 17th 1958 from Olorbiri field. The company changed to Shell B.P Petroleum Development Company in Nigeria Limited in April 1956.
By 1961, other companies like Mobil, Agip, Elf, Texaco etc., had begun exploration activities in Nigeria. The exploration right, which had formally been granted to Shell alone, was extended to the new comers in live with government policy of increasing of exploration in the country.
The search for more crude oil between 1958 and 1959 led to the discovery of oil at Ebubu oil field in Rivers State, Ughelli and Out Orugan oil field in former Bendel State.
The production and export form Oloibiri oil field by Shell in 1955 was at the rate of 5, 100 barrels of crude oil per day. The quantity doubled in the following year and the crude oil export from Nigeria raise to 2.0 million barrels per day in 1972 and reached a peak of 2.4 million barrel per day in 1972 (shell yearly report 2004p.6). Nigeria oil producer, ranking seventh in the world by 1972. We have then grown to become the sixth largest oil producing country in the world.
The role of government in the oil industries has gradually progressed from a regulatory one to direct involvement in oil exploration and exploitation.
Initially, government interest was only limited to the collection of royalties and other dues offered from oil companies and making of rudimentary laws to regulate the activities of the oil companies. This was partly due to the fact that oil was very insignificant to the economy before last sixties and relative lack of trained personnel and experts. Another reason of not is that Nigeria was an agro based country.
By 1971, a year after the Nigerian civil war, oil had become very important to the economy. To strengthen and establish government control at the oil industries, the Nigeria Oil Corporation (NOC) was established by decree in 1971 as an integrated oil company, which later changed to Nigerian National Petroleum Corporation (NNPC).
Therefore, the importance of Petroleum in Nigeria can only be fully appreciated when are realizes the dominant role it plays in the economy. For instance, its contribution to the nation’s earning started to gain ground since 1958, and by 1987 petroleum accounted for about 92.12 percent of Nigerian major exports.
The importance of oil exploration, exploitation, production, transportation and marketing in Nigeria has continued to be prominent. But there had been an increase in the incalculable damages to the eco system in the areas of corporation.
1.2 STATEMENT OF PROBLEM
Over six million people live in the 70,000 square kilometer in the Nigeria Delta region where the most of Nigeria’s oil is produced. The operation of oil companies affect the lives of the people in some 12 major ethnic groups divided into over 800 communities. The oil communities fell strongly that they have not had a reasonable share of oil revenue from the Nigerian Government and following some thirty years of oil production from their land, they consider their standard of living poor.
Many of these oil communities still lack basic amenities such as electricity, running water, good roads and health care and have limited opportunities for education and employed. Discontent among oil communities has led to agitation, disturbance and at times violence. Communities are increasingly looking to ail companies to provide help in improving their situation.
The oil companies claim to have done enough for their last communities with regards to transformations stated above. Doubts have been expressed about the veracity of these claims. Critics argue that oil companies in Nigerian have not contributed much to the rural transformation of this area of operation, rather, have only contributed to environmental degradation and exploitation.
They hold this as the raison d’etere of a non-cordial relationship and psychological warfare in existence between these companies and their lost communities.
Unfortunately, all accusations have been based on assumptions and speculation. No concrete fact have been produced on which to base judgment, such fact can only be produced by specific and carefully conducted studies. It is thus the devise to contribute towards providing such needed facts that has indeed helped in this research.
1.3 OBJECTIVES OF THE STUDY
Based on the statement of problem, the general objective of this study is to determine the general impact of oil exploration and production on the economic development of oil producing areas in Nigeria.
The specified objectives are:
i) To investigate the extent of contribution of oil companies to rural transformation of the oil producing areas.
ii) To ascertain the causes of incessant conflict between oil companies and their communities.
1.4 RESEARCH QUESTIONS
The following research questions have been formulated to guide the researcher in the course of this research work.
(a) What impact does oil exploration and exploitation have on the lives of the people in the oil producing areas?
(b) Has the activities of oil companies produced a negative are positive impact on the oil producing communities.
(c) To what extent has oil companies helped to improve the basic and infrastructural amenities of the oil producing communities?
(d) Has the oil exploration and production activities affected the quantities of land available for agricultural activities.
1.5 RESEARCH HYPOTHESES
For the purpose of this study the following hypotheses were formulated to be tested for verification.
(a) There is no significant relationship between the activities of oil companies and a reduction in agricultural production in oil producing areas.
(b) There is no significant relationship between oil exploration production activities of oil companies and infrastructural development of oil producing communities.
1.6 SIGNIFICANCE OF THE STUDY
It is expected that at the end of this research work, that the findings will be useful to government personnel at both federal, state and local levels of government in taking artificial policy decisions bothering on oil companies and lost communities. Also, the result of this research will be useful to students in economics and administrative studies in organizing other research works in this area of interest.
Finally, it is expected that the result of this research work will aid to the stock of knowledge in the social sciences.
1.7 SCOPE OF THE STUDY
The study focused on the direct involvement of oil companies in their immediate areas of operation attention was specifically focused on the exploration and production activities of these oil companies and its impacts on the rural lost communities in terms of the social economic lives of the people and the provision of infrastructural facilities to the local people.
1.8 ORGANIZATION OF THE STUDY
This research work is organized into five major chapters.
Chapter one consists of the introduction, statement of the problem, objective of the study, research question, research hypotheses, significance of the study, scope of the study and definition of terms. Chapter two is the review of related literature; this sets the foundation for the definition of the conceptual framework. Chapter three is the method of study and it consists of population and sample size, sources of data, methods of collecting data, description of data gathering instruments used and methods of analysis.
Chapter four is the presentation and analysis of data collected. Findings, summary, conclusions, limitation of study and recommendations.
1.9 DEFINITIONS OF TERMS
This study employed the use of conceptual and operational definitions which will be addressed for the purpose of clarity.
(a) Oil Companies: Theses are industries involved in the exploration, exploitation, production, transportation and marketing of petroleum products.
(b) Oil Communities: These are communities (or local areas) on whose land, the free gift of nature, crude oil is found.
(c) Development: This is a process of improvement in the various aspects of the lives of the communities.
(d) Physical Infrastructure: This refers to essential facilities such as water, electricity, good access road etc.
(e) Environment: Within the context of this study, it is the place where oil companies work.
(f) Degradation: This is environmental pollution as result of the operations of the oil companies.
(g) Exploration: This involves the processing and treatment of crude oil into gas, fuel, kerosene, diesel etc.