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Oil Production in Nigeria

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Nigeria is Africa’s largest oil producer and is ranked sixth oil producing country worldwide. Its maximum crude oil production capacity is of 2.5 million barrels a day. Oil was discovered in the Niger Delta in the late 1950s by the British. Almost all the oil reserves are located within the vicinity of the Niger River. They also have eminent offshore rigs in the coastal region (Ikein, 1990. p. 43). Nigeria being the most populated country in Africa boasts its economic boost from the petroleum industry which is the main generator of its GDP, at more than 40%.  Oil is the major export commodity and also delivers the highest foreign exchange earnings and approximately 40 percent budgetary revenues of the government according to the International Monetary Fund’s report.  The largest importer of Nigeria’s crude oil is the U.S at 10%.

Due to the oil reserves Nigeria is the most prosperous country in Africa. Nigeria is placed among the few chief oil producing nations that show a steady escalation in oil production (Ikein, 1990. p. 97). Nigeria embarked on bulk additions and decreased national oil consumption and focussed in meeting the world oil demand thus maintaining its stability in exports. It produces high value oil that is basically free from sulphur thus referred to as “light” and “sweet”. This type of crude oil is known as “Bonny light” other crudes include Antan Blend, Forcados, Qua Ibo, Pennington Anfan, Brass River, Odudu Blend, IMA and Escravos blend which derive their names from their export terminals.

Their oil production mainly operates under the concession system where one company acts as the concessionaire to other subsidiary companies. The Nigerian national Petroleum Corporation, NNPC, is the concessionaire and is in partnerships with companies operating on-shore the Delta, offshore and in the deep waters. NNPC manages all the exploration request rounds (Ikein, 1990. p. 145). They have operating agreements and also have contracts that bind their production sharing. There are other local companies that are in partnership with international companies independently (Frynas, 1999. p. 114). They have an earth science facility which is among the major and revolutionary in Africa known as Integrated Data Services Ltd, IDSL). This is where they analyse their data; the data is processed and interpreted in 3-Dimensinal configurations from the hydrocarbon reserves. This is a key boost to their success since it improves their reservoir management strategies. This subsidiary has a rigorous exploration programme which has found the major oil discoveries in the country and is still searching for more.

Nigeria has benefited from the oil revenues massively and it is exhibited in the infrastructural and social developments. This is a major boost to the economy although the benefits don’t overshadow the harmful effects that oil production has caused both intentionally and unintentionally. Research has pointed out that that the oil operators have had a drawback in their social-responsibility to the locals. This has also being brought out by a series of demonstrations and strikes (Frynas, 1999. p. 68).

Much of the effect is environmental and trickles back to having a major impact on the society. Locating the oil rigs neat to water bodies affect marine life since there can be smothering or physical contamination through wastes and spills. Accumulation of the oil chemical components can cause intoxication. Oil retraction and production can have a direct effect on humans (Manby, 1999. p. 123). When the water resources are polluted or the soil around is contaminated humans are at health risks. In addition the vegetation and livestock are threatened by the pollution thus human’s source of food is damaged forcing alternative emergency options. This can largely influence human’s productivity at work and a portion of the oil production manpower is derived from humanity.

It goes without saying that oil production promotes a country’s stability and with a proper channel of distribution and the right policies implemented drawbacks brought about by harmful effects of their operations can be eliminated.

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