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).
ABSTRACT
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
PAGE
Certification i
Dedication ii
Acknowledgement iii
Abstract iv
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
CHAPTER
TWO
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
Biography
Map of area of study
Appendixes
CHAPTER ONE
INTRODUCTION
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.
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