A Review of the Nigerian Energy Industry

Oil and gas in Africa: Boom or doom?

Uche Nwadialor

23 August 2012, Sweetcrude, LAGOS – WHEN oil was first discovered in Oloibiri, Bayelsa State of Nigeria in 1956, there was jubilation not only in the then Eastern Region of Nigeria but all over the country.

That euphoria was predicated on the assumption that oil was wealth and that Nigeria’s economy was launched on a prospective future and that both social and political development would in the next few years be ushered in. Meanwhile, agriculture had effectively and confidently driven the economy before the advent of oil economy.

Consequently, member countries of the Organisation of Petroleum Exporting Countries, OPEC, are today rated as some of those with high gross domestic products as a result of the multiplier effect of their enhanced national income, balance of trade, balance of payment and external reserve.

Between 1956 and the end of the 30 months Nigeria Civil War in 1970, more oil wells had been discovered in various parts of Southern Nigeria with particular reference to Niger Delta. Many African countries also belong to the league of oil producers, including Sudan, Egypt, Libya, Algeria, Gabon, Equatorial Guinea, Cameroon, Chad, among others.

What baffles international observers, including socio-political analysts in Africa is that it does not appear that the oil wealth in Africa has maximally or at least considerably promoted development on the continent.

For example, despite the quantum of oil and gas produced in Nigeria since the past three decades, Nigeria is far more distant to the Millennium Development Goals than Ghana where oil has just been discovered. The standard of living in the oil-rich giant of Africa is a far cry from that of Ghana whose economy is non-oil.

Looking through the African continent, it is safe to claim that the oil-producing countries on the continent are the most prone to conflict. One can further say without any fear of contradiction that the current wave of conflicts involving political violence, terrorism, corruption, youth militancy, etc, can be traced largely to the problem posed by the authoritative allocation of their oil resources.

One of the factors which were enumerated as the causes of the Nigerian Civil War is the discovery of oil and gas in the then Eastern Nigeria made up of the present day Akwa Ibom State, Bayelsa State, Rivers State, Cross River State, Imo State, Enugu State, Abia State, Anambra State and Ebonyi State. I don’t know how true this is but it was also speculated that the defunct Biafran Army declared a Republic of Benin in the then Bendel State in order to colonise the oil wealth of the Niger Delta.

However, Nigerians who were adults before and during the Nigerian Civil War can testify to the authenticity of the assertion. There is also this belief in some Nigerian quarters that the task of keeping Nigeria one had become so inevitable not only for the corporate sustenance of the giant of Africa but also that the country might not lose the oil in Niger Delta which is the mainstay of our economy today to break away Biafra.

It is gratifying to state that a greater majority of the federating components of the Nigerian states are gradually benefiting, no matter how minimal, from the fallout of Nigeria’s oil wealth. But the truth of the matter is that the authoritative allocation of Nigeria’s oil wealth which has diverted Nigeria’s attention from agriculture remains a pivotal source of Nigeria’s challenges put together.

In Nigeria, the negative effect of oil exploration and exploitation had devastated many local oil-producing communities, including Odi in Bayelsa State where so many lives and property were destroyed, Ogoni land where oil pollution has been described by the United Nations as unprecedented. The armed conflict between Ibabu Onicha-Ukwuani in Ndokwa West L.G.A and Iselegu-Afor in Ndokwa East, both in Delta State, to mention but a few, are all leaving examples.

The wind of changes in Sudan, Libya, Egypt, Ivory Coast, Mali, among other African countries, cannot be tackled in isolation of the materialistic concept of history. Even the youngest African nation state, namely South Sudan which was granted independence recently is in conflict with her mother country over the sovereign ownership of the oil resources between the two countries and this has attracted the intervention of both the
African Union, AU and the United Nation. This economic imbroglio has stultified the economies of both oil nations. The activities of the late Libyan dictator, while in power, also come to mind.

More African nations are joining the international committee of oil-bearing states. They include Ghana, Uganda, Kenya, Sierra Leone, Mozambique and Liberia. There is no doubt that these countries will learn from the experience of the old members of the committee by making adequate arrangements for the proper utilization, judicious and equitable allocation of their incipient oil wealth.

Indeed, one would recommend the Botswana model where that country had provided a stability fund right from the on set from where diversification policies and projects are implemented; Nigeria should borrow a leaf from Botswana.

The numerous challenges posed by the oil and gas industry, which include interstate armed conflict, political violence corruption, environmental degradation, industrial dispute, political instability, gas flaring among others, result in colossal loss of human lives and property.

*Mr. Uche Nwadialor, a public affairs commentator, contributed this piece from Asaba, Delta State, It was published in the View Point section of Vanguard Newspaper.

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