The study examined the Impact of Oil and Gas Technology on Nigeria: A Study of Niger

Delta from 1970-2010)

By
AKUJURU, CHUKWUNONYE ABOVU. (Doctoral Student, M.Sc., B.Sc., LLB, BL)
(08037450542)
Head of the Department, Public Administration,
Rivers State College of Arts and Science, Rumuola Port Harcourt.
Email: cakujuru@yahoo.com
&
ENYIOKO NEWMAN CHINTUWA (MNIM, MBA, M.Sc., B.Sc.)(0803-6703647)
Medonice Consulting and Research Institute, Port Harcourt.
Email: newmanenyioko@yahoo.com
ABSTRACT
The study examined the Impact of Oil and Gas Technology on Nigeria: A Study of Niger
Delta from 1970-2010). The population of the study is defined by Nigerian population of about
167 million people, while the sample size was restricted to the 9 Niger Delta states where oil and
gas production is consummated on daily basis. The analyses of the studys data were restricted to
forty one (41) years (1970 to 2010). The method of ordinary least square (OLS) regression was
used to estimate the data generated from NNPC Statistical Bulletins (1970-2010), CBN,
Statistical Bulletins (1970-2010) and National Bureau of Statistics on Economy and oil / gas
production in Nigeria (1970-2010). Statistical Package for Social Sciences (SPSS) was used to
analyse the data statistically. The empirical investigations into the relationship between the
indices of oil and gas production technology and the economy of Nigeria as well as Niger Delta
variables used oil and gas production as the predictive variable and Real Gross Domestic
Products, total oil export, Niger Delta share of oil /gas revenue, oil pollution in Niger Delta and
poverty level in Niger Delta as explanatory variables from 1970 2010. The study revealed that
the inhabitants of the Niger-Delta Region of Nigeria have suffered untold hardship as a result of
the criminal neglect, abandonment, exploration and exploitation of oil and gas by the federal
government of Nigeria in collaboration with the Oil Companies operating in the region. Oil and
gas, with which the Almighty God has endowed the region, has become a curse to the people of
the region, instead of being a blessing. From this study it has become conclusive and revealing as
well as evident that: there is significant relationship between oil / gas production and real Gross
Domestic products and total oil exports in Nigeria (1970-2010). However, oil /gas production has
negative impact on Niger Delta region because of inequitable Niger Delta share of oil / gas
revenue, oil pollution and poverty level in Niger Delta in the midst of oil and gas endowment /
revenue. The study recommends an integrated approach which involves building of human and
institutional capacity to improve agricultural and water reservoir management; testing and
recommending suitable environmental management measures; reduction of oil pollution
incidences, increment of Niger Delta share of oil revenue to at least 25%; initiation of
community and commercial as well as youth re-orientation and access to quality education establishment and access to technical and vocational studies.
Key words: Oil and Gas, Technology, Poverty, Niger Delta, Oil Pollution, Oil Revenue
1

Introduction
Oil and gas products have been an increasingly important aspect of international
diplomacy and a scarce but vital resource. The strategic calculations of minor and major
countries alike place more prominent emphasis on the production, exporting, pumping, refining,
transportation and use of petroleum products (Brown, 2008). It is imperative to note that since
the discovery of oil in the oil producing countries, their economic fortunes have changed. The
mainstay of the economies of these oil producing countries have always revolved around oil
products. However, the politics of oil, corruption and mismanagement have not allowed the oil
bearing communities to enjoy the maximum benefits derivable from oil resources.
Nigeria, with an estimated population of 167 million, ranks among the top 10 nations in
production of oil and natural gas reserves. Of Nigerias current 36 constituent states, only nine
are classified as oil and gas producers. The nine states are located in the three southern
geopolitical zonesSouthwest, South-South (Niger Delta), and the Southeast. The six producing
states in the South-South geopolitical zoneDelta, Bayelsa, Rivers, Akwa Ibom, Cross River,
and Edoaccounted for 91.5 percent of the gross oil production in 2008. In the late 1990s, the
majority of oil and gas production was from onshore and shallow water fields. But, as militant
disturbances and insecurity of employees increased, suspension and outright abandonment of oil
and gas operations in the western part of the Niger Delta region became inevitable.
As at January 1, 2009, the estimated crude oil and natural gas reserves were, respectively,
36.2 billion barrels and 182.4 trillion cubic feet (tcf). Crude oil production has expanded,
growing from its initial daily output of about 5,100 barrels in 1956 to as high as 2.5 million
barrels per day in the late 1970s and in 2004 to 2010 (OPEC Bulletin, 2010). Continual
investments and economic policy incentives have been instituted by the federal government in an
attempt to increase Nigerias proved oil reserves to 40.0 billion barrels and expand production
capacity from 2.5 to 3.0 million barrels per day by 2013 from its current 2.5 million barrels per
day. At current extraction levels, Nigeria has a production equivalence of about 30 years in
comparison to the global aggregate average of 45 years.
Oil /gas production has always played a very significant role in economic development.
It is so because oil is and will for a long time to come be the most useful commodity to all
countries of the world. Despite the oil wealth, Nigeria is not rich compared to the developed
countries of the world. This contradiction has been making some scholars to query the economic
impact of petroleum products in Nigeria. The gross domestic products of Nigeria hardly
epitomise the economic wellbeing of the citizenry. Also the oil revenues do not seem to equate
the quantum of oil / gas production in the oil bearing communities. Nigeria has been unable to
refine the oil / gas she produces to meet the demand for local petroleum product needs, instead
Nigeria imports over 60% of her required refined petroleum products, while her refineries
operate below capacity utilization.
Owing to both external and internal factors, the growth performance of the Nigeria
economy has been less than satisfactorily during the past three decades. Since the first oil price
shock of 1974, oil has annually produced over 90% of Nigerias export income from 1970 to
1999, oil generated almost $231 billion in rents for the Nigeria economy and these rents have
constituted between 21% and 48% of Gross Domestic Product, but yet these rents have failed to
raise Nigeria incomes and done little to reduced poverty. Since 1970, Nigerias per capita income
has fallen by about 4% in constant dollars.
Also, since early 1970, the government has annually received over half of its revenues
from oil sectors which are about 85%. These oil revenues are not only large but highly volatile
2

and causing the size of government programs to fluctuate accordingly. From 1972 to 1975,
government spending rose from 8.4% to 22.6% of GDP, by 1978, it dropped back to 14.2% of
the economy. This fluctuation has made the government unable to adhere to wise fiscal policies
during the 1970s and 1980s, when oil prices fluctuated sharply, the ability of these governments
to spend their funds wisely, and limit corruption has been low.
Although large proceeds are obtained from the domestic sales and export of petroleum
products, its effect on the growth of the Nigeria economy as regards returns and productivity and
positive impact on Niger Delta is still questionable, hence there is a need to evaluate empirically
the relative impact of oil and gas production on broad economic variables (such as Real GDP,
total oil exports in Nigeria on one hand ) and regional antecedent variables such as oil pollution,
Niger Delta share of oil / gas and poverty level in Niger Delta on the other hand.
Given the above background; this study seeks to examine the Impact of Oil and Gas
Technology on Nigeria: The Niger Delta Experience. This shall be achieved through the pursuit
of the following specific objectives; they are to:
(a) Determine the impact of oil /gas production on Real Gross Domestic
Products in Nigeria.
(b) Determine the impact of oil /gas production on total oil exports in Nigeria.
(c) Ascertain the extent to which oil /gas production reflects equitably to the share of oil
/gas resources allocated to Niger Delta States.
(d) Determine the extent to which oil /gas production causes oil pollution in Niger Delta.
(e) Evaluate the extent to which oil /gas production increases the poverty level / incidence of
the people of Niger Delta.
Equally, this study is designed to investigate the relationship between the indices of oil
and gas production (technology) and the Nigeria economy vis--vis Niger Delta Region
experience. The hypothesis tested in this study is as follows:
The study has earlier hypothesized that: There is no significant relationship between oil / gas
production (technology) and Real Gross Domestic products, total oil export, Niger Delta share of
oil /gas revenue, oil pollution in Niger Delta and poverty level in Niger Delta, (1970-2010).
Literature Review
Theoretical Frameworks on Oil and Gas Production Technology and
Real GDP, Oil Exports, Niger Delta Share, Oil Pollution and Poverty Level in
Niger Delta
The growth theory has evolved over the years as a major feature of development
economics. One of the earliest attempts to model economic growth is popularly referred to as the
Harrod-Domar Model associated with the English economist, Sir Roy Harrod and American
Economist, Evsey Domar. The model is an early attempt to show that growth is directly related
to savings and indirectly related to the capital/output ratio. According to the model, growth (G)
can be written symbolically as: G= s k (2.1)
Where; G = growth
k = incremental capital-output ratio and;
s = the average propensity to save.

The model indicated that saving affect growth directly, while the incremental
capital/output ratio affects growth indirectly or inversely. But Solows model of economic
growth is based on the premise that output in an economy is produced by a combination of
labour (L) and capital (K), under constant returns, so that doubling input results in doubling
output. Contemporary versions distinguish between physical and human capital. Thus, the
quantity of output (Y) is also determined by the efficiency (A) with which capital and labour is
used. Or mathematically: Y = A f (L, K).. (2.2)
Solow assumed that this production function exhibits constant returns to scale, that is, if
all inputs are increased by a certain multiple, output will increase by exactly the same multiple.
The Solow neoclassical growth model uses a standard aggregate production function in which
Yt = At Kt aLt 1-a , 0 < a < 1. . (2.3)
In this case, Y is gross domestic product, K is stock of capital, L is labour and A represents the
productivity of labour, assumed to grow at exogenous rates n and g. Lt = L0 ent....... (2.4)
At = A0 egt .. .(2.5).
The number of effective units of labor, At Lt grows at rate n+g. For developed countries,
these rates have been estimated at about 2 % per year. For developing countries, it may be
smaller or larger depending on whether they are stagnating or catching up with the developed
countries. In the equation (2.3) above, a represents the elasticity of output with respect to capital
(the percentage increases in GDP as a result of a 1 % increase in human and physical capital). It
is usually measured statistically as the share of capital in a countrys national income accounts.
The model assumes that a constant fraction of output, s, is invested. Defining k as the
stock of capital per effective unit of labour, k = K/AL and y as the level of output per effective
unit of labour, y = Y/AL, the evolution of k is governed by:
Kt = syt (n + g + d) kt. (2.6) = sktn (n + g + d) kt .
Where; d is the rate of depreciation, equation (2.6) above implies that k converges to a
steady-state value k* defined by sk * = (n + g +d) k*, or
k* = [s/(n + g +d)]1/(1-) (2.7).
The steady-state capital-labor ratio is related positively to the rate of saving and negatively to the
rate of population growth. The central predictions of the Solow model concern the impact of
saving and population growth on real income.
History of Oil Development in Nigeria
The history of oil in Nigeria dates back to January 1906 when the colonial government
issued a number of prospecting licenses to the British Colonial Petroleum Corporation covering
an area of 100 square miles on the Rofutoro and Lafagbo Rivers in the Benin district (present
day Edo State in the Niger Delta region). Concessions were also granted in 1907 to the betterknown Nigerian Bitumen Corporation which drilled thirteen wells in the area near Lekki Lagoon
(present day Lagos State in the South West region) between 1907 and 1914, (Steyn, 2004).
The prospects for lucrative oil business in Nigeria were already recognized in 1907 as the
following colonial record shows: The admiralty is said to be arranging for the adoption of fuel oil
for the Navy, and has secured control of the Nigerian oil fields, which it is anticipated will prove
very rich. This fact is significant enough in itself, for it shows beyond a doubt that the Colonial
authorities in England have begun to realize the great and vital importance of Nigeria.
Indeed...this discovery of oil in large quantities is bound to raise Nigeria
to the rank of a first- class imperial asset, (Eson, 2009).
4

With the passing of the Mineral Oil Ordinance number 17 of 1914, further oil
exploitation and exploration in Nigeria were limited to British and British colonial companies.
After the First World War two British companies- namely the DArcy Exploration Company and
the Whitehall Petroleum Corporation - briefly explored for oil between 1919 and 1922. Neither
company was successful in finding any oil in commercially viable quantities. This
disappointment led to a suspension of all serious investigations into the petroleum potential of
Nigeria during the 1920s, (Steyn, 2004).
Despite the negative reports of the 1920s, interest in the petroleum prospects of the
country was revived in the 1930s with the joint application of Royal Dutch/Shell and British
Petroleum (BP) to explore for oil in the colony. A concession covering the whole of Nigeria was
granted to Shell-BP in 1937. Their first real break-through came only in 1951, but the source was
limited; commercially exploitable oil was discovered only in 1956 at Oloibiri (in former Rivers
State now in present day Bayelsa State in the Niger Delta), and at Ebubu and Bomu in the Ogoni
(in Rivers State) section of the Delta in 1958. Production at Oloibiri started in 1958 with 6,000
barrels per Day, (Steyn, 2004). The first commercial export of Nigerian crude also took place
that year, that is, in 1958, (Eson. 2009). Since then, oil extraction has come to play a very central
role in both the politics and economy of the nation. Between 1958 and 1961 the oil industry in
Nigeria was completely dominated by Shell-BP. Independence came to Nigeria on 1st October
1960. The Nigerian Federal Government opened up the oil industry to more role players from
1961 onwards and important newcomers including Mobil (American Company), Gulf (now
Chevron, American Company) and Safrap (French, now Total Exploration and Production
Nigeria Limited).
Oil in Nigeria was discovered in commercial quantity in Oloibiri, Eastern Nigeria (now in
Bayelsa State) in 1956 by an Anglo-Dutch Consortium, Shell DArcy (later Shell-BP), (Amu,
2003). Two years later, the first export took place. Ownership of the oil was vested in the Crown
by the Minerals Act of 1958. Other oil multinationals like Mobil, Safrap (later Elf), Agip, Gulf,
Texaco, etc. got various concessions at various times and since then, have been major actors in
the Nigerian oil industry. Under the concession agreements, the companies got right to explore
and prospect for oil within given acreages at their own expense and risk subject to payment of
fixed annual rents plus royalties assessed by the tonnage of oil extracted (Daniel, 2006).
At independence in 1960, Nigeria succeeded as a promising oil industry under the firm
grip of multinational companies. However, her lack of technological knowhow and managerial
skills necessitated maintenance of the status quo. Arrangement was made for the continuous flow
of petroleum profit tax into the government coffers. But ownership of the oil and similar natural
resources remained vested in the state. It was vested in the central Government (substituting the
Crown). It was the German Bitumen Company which started Exploration in 1908 but it later
abandoned it. Shell BP got the second concession to exclusively explore and prospect for oil in
the whole of Nigeria in 1937, (Daniel, 2006). It got the concession under the Colonial Mineral
Oil Ordinance of 1914 which restricted granting of concessions to only British subjects or
companies (Beth, Simmons, and Hopkins, 2005). It began exploration and gradually limited its
areas of operations until it finally settled for the Niger Delta area relinquishing the remaining
acreage to the government. Shell alone accounts for over 50% of oil production in Nigeria. There
are four regimes of oil development contracts: concession agreement, participation or joint
venture agreement, production sharing agreement, and risk-service agreement (Daniel, 2006).
Ownership of oil and similar natural resources was vested in the central Government
(substituting the Crown in whom the ownership was vested before independence) by the
5

Minerals Act of 1958 (S. 3, paragraph 1) Laws of the Federation of Nigeria (Revised Edition)
1958 Cap. 120, Ss. 3 and 10, Cap. 121, S. 3 (1). The 1963 Constitution (S. 69 and Part 1, item 25
of its Schedule) merely vested in the Federal Government the exclusive power to legislate on
mines and minerals, including oil fields, oil mining, geological surveys and natural gas. S. 40 (1)
1979 Constitution vested ownership in the state.
Important developments in the initial phase of the Nigerian oil industry included the
passing of the Petroleum Profits Ordinance in 1959, under the terms of which the Nigerian
government obtained 50 per cent of the profits of the oil companies; and the opening of the first
oil refinery at Alese Eleme (in Ogoniland) close to Port Harcourt in 1966.
The Nigerian oil industry remained small until 1970, after which its rapid development
coupled with a corresponding increase in the daily production as well as the importance of oil
world-wide, contributed to the emergence of the oil industry as the dominant sector within the
Nigerian economy. The income the federal government derived from oil sales and taxes
consequently become the main source of income and since the 1970s oil revenue has accounted
for more than 90 per cent of Nigerias total foreign export earnings. Oil sales account for more
than 40 percent of GDP, 80 percent of the governments budgetary revenue, and more than 95
percent of exports. With an average production of approximately two (2) million barrels per day,
but as is the case with many oil-rich developing countries, oil reserves have proved a mixed
blessing for Nigeria.
All petroleum production and exploration is undertaken under the auspices of joint
ventures between foreign multi-national corporations and the Nigerian federal government. The
Nigerian partner in this joint venture system manifests itself as the Nigerian National Petroleum
Corporation (NNPC), a nationalized state corporation. All companies operating in Nigeria obey
government operational rules and naming conventions (companies operating in Nigeria must
legally be sub-entities of the main corporation, often incorporating "Nigeria" into its name). Joint
ventures account for approximately 95 percent of all crude oil output, while local independent
companies operating in marginal fields account for the remaining five (5) percent. Additionally,
the Nigerian constitution states that all minerals, oil, and gas legally belong to the federal
government, (The 1969 Petroleum Act).
While the oil industry invariably received much attention from successive Nigerian
governments, and foreign oil companies received the necessary incentives to ensure their
continued presence, the story of oil in Nigeria is one of missed opportunities, administrative
disorganization, and resource mis-management. It must, however, be pointed out that the
particular nature of political instability in Nigeria sets it apart from other oil-producing countries,
specifically those in the Middle-East.
Despite the frequency of political change, foreign oil investors continue to stay in
Nigeria. This according to Khan, (1994) could be that upheavals have not been as dramatic as
they were in Iraq and Iran. This can be said to be true as, apart from the Biafran crisis, no change
in government has been severe enough to interrupt oil production. Until now: the current Rivers
State crisis may change the permutation, if the underlying factors responsible for the crisis are
not addressed. This may, however, lead to a very serious conflict.
Conceptual Issues and Theoretical Framework of Rural Poverty in Niger Delta

Generally, there is no widely acceptable definition of poverty. This is as a result of

different opinions held by different scholars. For instance, in economics, poverty has been
defined by developing a poverty line using the minimum wage/income concept like that
developed by Morgan Commission in Nigeria. Any group of people within the income brackets
below the wage/income ratio is living below the poverty line. Townsend, (1991) defined poverty
as the lack of material resources of certain duration and to such an extent that participation in
normal activities and possession of amenities and living conditions become impossible or very
limited.
A more comprehensive definition of poverty is that given by Prado and Tobi (1994). To
them poverty is a multi-dimensional phenomenon with few commonly agreed definitions across
the characteristics of the poor, particularly the urban poor such as excessive labor flow,
undifferentiated/unskilled persons who cannot readily be integrated into the production system,
sub-culture of personalized ethical code in contrast to the norm of kindred or community
behavior, scarcity of essential commodities (food, housing, clothing), growth of slums,
unemployment and under-employment and crimes or deviant behaviors. Onibokun, (2005)
perceived poverty as living in sub-standard and sub-human environments plague by slums,
squalor and grossly inadequate social amenities like health facilities, schools, recreational
opportunities etc.
Gaibrath, (1968) also diagnosed poverty as having limited people living in crowded and
insufficient food and clothing, peoples living in crowded, cold and dirty shelters and people
living painful and comparatively brief lives. Aluko, (1975) presented a pragmatic and
materialistic concept of poverty by giving it as an inadequate level of consumption giving rise to
insufficient food, clothing and or shelter. Similarly, Olowu and Akinola, (1995) pointed out that
poverty is characterized by the lack of or inadequate access to infrastructures among others,
while the rural/urban can easily be identified from the types of food they eat and the environment
in which they live. According to World Bank, (1994) as cited in Anyanwu, (1997), infrastructure
is an umbrella term for many activities referred to as social overhead capital and characterized
by peculiar technical features (such as economies of scale) and economic features (such as spillover from users to non-users). These include services from power, pipe water supply,
telecommunications, sanitation and solid waste collection and disposal, roads, urban transports,
port and waterways. World Bank, (2005) believes that the adequacy of the measure of one
countrys success is anothers failure, especially in diversifying production, expanding trade,
coping with population growth, reducing poverty, or improving environmental conditions. An
adequate infrastructural provision in an environment is one key factor of attraction to investors.
This is because it boosts productivity and enhances drastic production costs. This will have a
multiplier effect of producing employment, increase income thus, welfare of the people and
making them to be much more constructive rather than destructive as in the case in some part of
the oil producing area of the country especially the Niger Delta. More so, it will improve welfare
and standard of living and enhances environmental sustainability.
High Level of Poverty: People are hungry not because there are no foods but they cannot afford
to buy it (Eregha, 2001). The statement above shows the link between unemployment and
poverty as it affects the region that account for the main source of foreign exchange earnings for
the country. It is no doubt to state that if oil sector sneezes the country will catch cold. This
emphasized what the Niger-Delta region means to the country. The issue of poverty cannot be
overemphasized in the region. The contextual meaning of poverty is really emphasized and
defined to a lay man by the environment and the ways of life of the people. The incidence of
7

poverty is at increase in the region as revealed in the table in appendix 1. Poverty has become a
way of life due to economic stagnation, unemployment, malnutrition, poor quality of life as well
as unhealthy environment in the region.
Oil / Gas Production and Export
The level of production is determined largely by demand and of course the technological
capacity for more exploration and development. Above all however is the availability of the
explorable resource. The growth of Nigerias oil production is quite impressive. Average
production rate was 5000 barrels per day in 1958. Production of about 1.8 million barrels in 1958
rose to about 16.8 million barrels in 1961; about 43.9 million barrels in 1964; and about 116.5
million barrels in 1967 (Olokesasi, 1996). Quantity exported followed a similar growth pattern.
As at 1965, there were 3 billion barrels of proven oil reserves. It was in the 1970s that Nigeria
launched herself as one of the important oil producers of the world having regard to her scale of
production. It was from 1970 that daily average production exceeded one million barrels. Yearly
production rate increased to about 558.8 million barrel in 1971; hitting 823.3 million barrels in
1974; with a slight reduction to 766 million barrels in 1977; and then it picked up to 841.2
million barrels in 1979. As a result of more exploration spurred by high global demand, Nigeria
recorded 20.2 billion barrels of proven oil / gas reserves in 1975. The bulk of quantity produced
was exported throughout the period. Oil exports rose to over 90% of total exports in 1979
(Brown 1998).
Production decreased in the 1980s with an average 2.3% share of the total world daily
production as opposed to the 3.8% share in the mid 1970s. Between 1981 and 1988, yearly
production was in the region of 450 to 540 million barrels. This was due to the economic slump
of the decade. Large-scale production resumed towards the end of the decade and it has largely
been seeing a steady increase since then with a level of 828 million barrels 918 million barrels
between 2000 and 2005. Table 2.1 gives details of the levels of production and export from 1970
to 2007, (NNPC Annual Statistical Bulletins 2005, 2006 & 2007).

Table 1: Nigerias Oil / gas Production and Export (1970-2007, million barrels)

Year
Daily average production Total production Daily average exports
Total exports
1970
1,083.1
395,835,825
1,050.8
383,446,359
1971
1,531.2
558,878,882
1,486.4
542,545,131
1972
1,815.7
665,283,111
1,756.1
650,640,779
1973
2,054.3
750,452,286
1,978.1
725,017,584
1974
2,255.0
823,320,724
2,179.4
795,710,044
1975
1,783.2
651,509,039
1,713.3
627,638,981
1976
2,066.8
758,058,376
2,013.2
736,822,998
1977
2,085.1
766,053,944
2,030.2
744,413,355
1978
1,897.0
692,269,111
1,827.1
667,357,065
1979
2,302.0
841,226,770
2,210.1
818,726,943
1980
2,058.0
752,223,285
1,960.2
700,138,614
1981
1,439.6
525,500,562
1,228.4
447,814,027
1982
1,287.0
470,687,221
1,002.8
366,410,179
1983
1,235.5
450,974,545
935.2
341,360,910
1984
1,388.0
507,998,997
1,094.1
400,428,085
1985
1,498.9
547,089,595
1,333.3
453,758,591
1986
1,466.6
535,296,671
1,221.2
445,673,729
1987
1,323.0
482,886,071
1,065.2
388,815,449
1988
1,341.3
490,440,000
1,110.5
406,443,000
1989
1,716.3
626,449,500
1,525.9
556,953,500
1990
1,726.7
630,245,500
1,550.0
565,750,000
1991
1,893.1
690,981,500
1,610.0
587,650,000
1992
1,957.0
716,262,000
1,585.0
580,110,000
1993
1,905.2
695,398,000
1,557.0
568,305,000
1994
1,820.9
664,628,500
1,590.0
580,350,000
1995
1,842.6
672,549,000
1,665.0
607,725,000
1996
1,863.1
681,894,600
1,812.9
620,135,000
1997
1,876.7
855,736,287
1,855.5
767,949,757
1998
1,939.0
806,443,999
1,832.8
706,265,498
1999
1,781.5
774,703,222
1,705.1
678,111,479
2000
2,053.6
828,198,163
1,986.4
714,356,161
2001
2,017.6
859,627,242
2,009.4
780,093,703
2002
1,801.7
725,859,986
1,798.2
663,326,494
2003
2,166.3
844,100,267
2,163.5
791,016,260
2004
2,356.8
911,044,764
2,356.0
871,286,594
2005
2,365.9
918,972,465
2,326.0
843,533,331
2006
2,233.9
869,196,506
2,248.4
817,388,227
2007
2,059.3
803,000,708
2,144.1
791,826,522
Sources: NNPC Annual Statistical Bulletins 2005, 2006 & 2007; OPEC Annual Statistical Bulletins 2004, 2005,
2006 & 2007.

There are a total of 606 oilfields in the Niger Delta out of which 355 are onshore while
251 offshore. Average daily production as at the time of this study is 2.8 million barrels per day.
It is planned that production level will hit 4 million barrels per day by 2013. Nigeria is now the
largest oil producer in Africa. It is second only to Venezuela in OPEC outside the Middle East
and they virtually compete in exports.
Oil Exploration and Environmental Degradation
The exploration and exploitation of crude oil in the Niger-Delta has resulted to a number of
environmental problems for the region. These environmental problems related to oil operations
in the region are examined in this section. Since 1956 when the first oil well was drilled at
Oloibiri in the present Bayelsa State over 1,481 oil wells have sprang up, producing from about
9

159 oil fields. There are more than 7,000 kilometers of pipelines and flow lines and 275 flow
stations operated by more than 13 oil companies (UNDP Report, 2006). The productive and
environmental impacts of the number of operators are at increase everyday in the region. The
percentage of the land of the region occupied by the oil industry is less than five percent but the
adverse effects associated with its operations are innumerable and region-wide. This oil related
environmental problems are discussed below.
Oil Pollution
The Niger-Delta region is located in the coastal part of Nigeria and this is a waterlogged area as
more than eighty percent of the oil producing communities is on water. Before the discovery of
oil in the region, it was characterized by natural clean long stretch fresh water and healthy water
lettuce that add beauty and flavor to the environment. According to Bisina, (2006) the oil
activities in the area has resulted to situations whereby complete polluted water is bequeathed to
the children. The communities shorelines have been washed away or eroded due to the high
volume of deep-sea exploration and exploitation activities. One of the major oil induced water
pollution is oil spillage. With the expansion of oil production, the incidence of oil spills has
greatly increased. Available records show that a total of 6,817 oil spills occurred between 1976
and 2001 with loss of approximately three million barrels of oil in the region. Approximately
twenty-five percent spilled in swamps and sixty-nine in off-shore (UNDP Report, 2006). Besides
oil spills as source of water pollution, canalization and wastes discharged into freshwater
swamps and into the sea are other sources (Akpofure, 2008). In an attempt to shorten travel time
and improve access to oil fields and production facilities, oil companies have constructed canals
that in some cases have caused salt water to flow into fresh water zones destroying freshwater
ecological systems. The table in appendix 1 shows the number of oil spills in the region on
yearly basis.

Impact of Oil and Production on Oil Bearing Communities in Niger Delta

The petroleum industry operates on the petroleum market. Petroleum is vital to nearly all
other industries, if not industrialized civilization itself, and thus is critical concern to many
nations (Amu, 2003). Oil accounts for a large percentage of the worlds energy consumption,
ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other
geographic regions consumption patterns are as follows: South and Central America (44%),
Africa (41%), and North America (40%). The world at large consumes 30 billion barrels of oil
per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil
consumed in 2004 went to the United States alone (Yergin, 1993). For more than three decades
worlds dependence on oil has been near total. For long it has been the heart of the nations. It
is worlds most important mineral resource.
The advent of oil in the world economy has had both positive and negative effects (Petroleum
Economist, 2003).
(A) Positive Effects
The positive contributions of petroleum became more pronounced with the oil boom of the
1970s. Within the period, oil changed the producing countries fortune from aid-seeking
10

countries to countries that give aid to less fortunate neighbours. It raised the status of these
countries in the world community. Its positive effects are:
(i)
A Source of Government Revenues: Petroleum is the most important revenue
earner for the government. Between 1970 and 1984 oil contributed more than 70% of
member government revenue.
Oil therefore greatly enriches the purse of
governments. Revenue is derived from oil-producing companies in the form of
royalties and profits tax. It has, therefore acted as a major source of capital for
development.
(ii)
A Source of Foreign Exchange Earnings: Agriculture as the major foreign
exchange earner, since 1970, oil has on the average accounted for over 80% of
foreign exchange. In 1970, the sector accounted for 58.1% of foreign exchange; in
1972 87.2% and by 1984 95.1%. The high contribution of oil to total export
earnings was a result of the high price of oil in the late 1970s. The price of oil
reached a peak of $40, in January 1981, after which the oil glut set in.
(iii)
A Source of Employment: It contributes to employment generation in member
countries, both directly and indirectly. Gainful employment has been provided for
very many people at the prospecting, mining, refining, and distribution stages. Very
many people therefore, depend on oil for their livelihood. This led to a high standard
of living especially during the oil boom years.
(iv)
The Transfer of Technology: It has an avenue for the introduction of foreign
technology through the participation of foreign firms. Foreign skilled manpower and
entrepreneurship are highly involved in the oil industry in the member countries.
This has, therefore, aided the transfer of technology to these countries.
(v)
The Provision of Technology Energy Requirements: The products of the
petroleum industry such as gasoline, fuel oil, kerosene, and cooking gas are used as
fuel for industrial and domestic purposes. The establishment of a petrochemical
industry would further enhance the contribution of the sector (Uche, 2001)
(vi)
The Development of the Economy: The increased revenue from oil has led to
tremendous improvements in many sectors of the economy of the member countries.
a. Development of Infrastructure: There have been rapid developments in
infrastructural facilities such as electricity, water supply, telecommunications,
dams, stadia, modern airports, new harbours, flyovers, gigantic buildings, and
super-highways. It has led to a boom in the construction industry and resulted in
the transformation of the structure of the landscape.
b. Improved Health Facilities: Very many health centres, clinics, maternities and
hospitals- have been built and more personnel provided. It is said that life
expectancy has increased from 40 years in 1970 to 50 years in 1983.
c. Improved Educational Facilities: There has been a significant increase in both
the provision of educational facilities and school enrolment. In general, the
number of primary and post-primary institutions (with better amenities) more than
tripled. The number of tertiary institutions increased more than four-fold.
d. Industry: Significant improvements have also been made in the industrial sector.
Major industrial projects such as the Iron and Steel complex, oil refineries,
vehicle assembly plants, cement industries, and breweries, were embarked upon.

11

e. Tertiary Production: Activities like banking, insurance, and commerce also

witnessed a boom. All the above have helped to diversify the economy to some
extent and laid a sound foundation for an industrial take-off.
B)
Negative Effects
The advent of oil, which has helped in shaping member countries, has had some bad
effects on the economy.
1.
Neglect on the Agricultural Sector and Increased Food Import Bills:
Before oil came to dominate the economy, some of these oil-producing
countries were agricultural economy. Agriculture employed more than 80%
of the economically active population and agricultural exports accounted for
more than 85% of foreign exchange of these countries. Much of the local
demand for food was met by home production. However, the increasing
wealth realized from oil in the 1970s led to the neglect of agriculture and the
need for food has had to be met by increased importation, contributing to the
balance of payments deficits for some oil producing countries.
2.
Urban Congestion: Increased wealth from oil made people abandon the rural
areas in search of an easier life in towns. There was therefore, an increase in
rural-urban drift of population, leading to a population explosion in urban
centres, with its attendant social problems.
3.
High Rate of Inflation: The increased spending both by governments and
private individuals during the period of the oil boom is the origin of the
galloping inflation in member nations. There has been squandermania in both
public and private life with a consequent increase in the price level.
4.
Oil Spillage: The extraction of oil / gas has led to environmental pollution
with its attendant hazards. Oil spillage has constituted a hazard to both plant
and animal life in the areas where drilling activities are being carried out.
Research Methodology
The Study Area
The study area is specifically Nigeria which occupies a geographical area of 923.8
thousand square kilometers and with a population of about 167 million people based on the 2006
population census. Nigeria is made up of over 250 ethnic groups and is richly endowed with oil
deposits thereby placing her as the 6th largest producer of oil in the world. The study is narrowed
down to the nine (9) Niger Delta states (Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo,
Imo, Ondo and Rivers) where oil and gas are produced in Nigeria; (See figure 1 below).

12

Figure 1:

Map of Nigeria showing Niger Delta Region

Research Design
In this study, a cross sectional survey design involving the survey of existing data
(secondary sources) was adopted.
Methods of Data Collection and Technique of Analysis
Time Series Annual data was employed ranging from 1970 - 2010 with a sample size of
41years. The research instruments used in collection of data for this study were mainly secondary
data from the NNPC Website, CBN & OPEC Annual Statistical Bulletins respectively.
Descriptive and inferential statistics were used to analyze the data for this study. Also
ratios, frequency distribution, multiple regression, t-test statistical tools were used to test the
hypothesis formulated in this study.

13

Model Specification: This study used the econometric technique of Ordinary Least Square
(OLS) in form of Multiple Linear Regressions to the relative regression coefficients. The
regression model was estimated through the use of Statistical Package for Social Sciences
(SPSS).
The mathematical model for the study is as follows:
TOGPT = f (RGDP, TOGEXR, NDSOGR, NOPND, LPND)
Where;
TOGPT = Total Oil and Gas Production Technology
RGDP = Real Gross Domestic Products in Nigeria
TOGEXR =Total Oil and Gas Exports / Revenue
NDSOGR = Niger Delta Share of Oil and Gas / Revenue
NOGPND = Number of Oil and Gas Pollution in Niger Delta
LPND = Level of Poverty in Niger Delta
The Econometric Model used for estimate in a Linear Form is:
TOGPT = o + 1 RGDP + 2 TOGEXR + 3 NDSOGR + 4 NOGPND + 5 LPND + t
Where; o
= The parameter which represents the intercept
1 - 5 = Coefficient or the regression parameters used in determining the
significance of the effect of each of the independent variables 1 - 5
on the dependent variable TOGPT,
TOGPT = Impact (Oil/Gas Production Technology in Nigeria)
1
= Real Gross Domestic Products in Nigeria
2
= Total Oil and Gas Exports / Revenue
3
= Niger Delta Share of Oil and Gas / Revenue
4
= Number of Oil and Gas Pollution in Niger Delta
5
= Level of Poverty in Niger Delta
t
= Error or Random disturbance term.
Priori Expectation of the Model: The expected signs of the coefficients of the explanatory
variables
are:
1>0,
2>0,
3>0,
4>0,
5>0.
TOGPT is used as a measure of predictive variable. The model above was used to estimate the
OLS Regression.

Results and Discussions

Regression Results
The summary of the Impact of Oil and Gas Technology on Nigeria: The Niger Delta
Experience (1970-2010) regression results from the Two - Stage Least Squares Analysis are as
shown in the model summary below. The summary presents the results of the empirical
regression estimates for the specified equation in the model.
Summary of the Results_
R
=
0. 989
2
R
=
0. 978
Adj. R
=
0. 975
R2 Change
=
0..978
14
Std Error of estimate
=
2.23903
Durbin Watson
=
1.205
F Value
=
310.703
DF
=
40-5 = 35 i.e. F-tab = 2.021

PV (Significant)

0.000

Appendix 1 shows the comprehensive data on Nigerias oil and gas production
(technology), real GDP, oil exports, Niger Delta oil share, oil pollution in Niger Delta and
poverty level in Niger Delta covering 1970-2010. All the computations of the regression analysis
in this study were based on the secondary data generated from NNPC Annual Statistical
Bulletins, National Bureau of Statistics and CBN Statistical Bulletins.
With a p-value of zero to three decimal places (revealed from the regression analysis)
and f-statistics value of 310.703 compared to the statistical table value of 2.021, the model is
statistically significant. The R2 is 0.978, meaning that approximately 98% of the variability of
Total Oil and Gas Production (Technology) affect the behaviour of the explanatory variables (i.e
real Gross domestic products, total oil exports/ revenue, Niger Delta Share of the Oil / Gas
revenue, Oil Pollution in Niger Delta and Poverty Level in Niger Delta) in the model. In this
case, the adjusted R2 indicates that about 98% of the variability of Total Oil and Gas Production
is accounted for by the model, even after taking into account the number of explanatory variables
in the model.
Table 2: Regression Analysis Results Showing the Coefficient Value
for the Variables in Oil Production
Unstandardized
Standardized
Coefficients
Coefficients
t
Model 1 B
Std. Error
Beta
(Constant)
71065058.823 16892416.691
Real GDP
-6.731
2.650
Total oil export
1.020
.033
Niger Delta Share
-1482867.797 374221.940
Oil Pollution in Niger Delta -8287.737
31718.787
Poverty level in Niger Delta 85940.198
247523.365
Constant = Total oil and gas production technology

Sig.
-.081
1.038
-.166
-.010
-.017

4.207
-2.540
30.950
-3.963
-.261
-.347

.000
.016
.000
.000
.795
.731

The coefficients for each of the variables indicates the amount of change one could
expect in total oil and gas production technology given a one-unit change in the value of that
variable under consideration, given that all other variables in the model are held constant. For
example, the variable - total oil and gas export revealed an increase of 1.020 (based on B
coefficient) or 103.80% (beta coefficient) in the total oil and gas production score for every one
unit increase in revenue amount, assuming that all other variables in the model are held constant.
The -8287.737 (negative value) changes in oil pollution really means that one might compare the
strength of that coefficient to the coefficient for another variable, say total oil exports. To address
this problem, the results are revealed in Beta coefficients column, also known as standardized
regression coefficients. The beta coefficients have been used here to compare the relative
strength of the various explanatory variables within the model, the detail results reveal as
follows: real GDP -0.081 i.e. 8.1% negative impact on the real sustainable development in
Nigeria; total oil export 1.038 i.e 103.80% contribution or impact on revenue generation to
Nigerian Government; oil pollution -0.010 i.e 1% negative impact on the Niger Delta
environment for every increase in oil/gas production technology elicited by Nigerian
Government or oil companies; poverty level in Niger Delta 0.017 i.e 1.7% harsh bite of poverty
15

on the people of Niger Delta for every single line of oil and gas production technology operated
in the environment and Niger Delta share of oil / gas revenue -0.166 i.e. 16.60% negative impact.
Because the beta coefficients are all measured in standard deviations, instead of the units of the
variables, they can be compared to one another. In other words, the beta coefficients are the
coefficients that one obtains if the outcome and predictor variables were all transformed to
standard scores, also called z-scores, before running the regression. In this study, total oil exports
have the largest Beta coefficient, 1.038, and Niger Delta share of revenue has the smallest Beta,
-0.166 which is an indication of negative impact on the people because they do not get the
equitable share from the oil and gas revenue. Thus, a one standard deviation increase in total oil
exports leads to 1.038 standard deviation decreases in predicted Total Oil and Gas Production,
with the other variables held constant. Equally, a one standard deviation increase in real GDP, in
turn, leads to a 0.081 standard deviation decrease in total Oil and gas production with the other
variables in the model held constant. In interpreting this output, it is important to note that the
difference between the regular coefficients and the standardized coefficients is the unit of
measurement. For example, to describe the coefficient for oil pollution, the results revealed that
"A one-unit decrease in oil pollution would result to
-8287.737 unit decrease in the total Oil Production / revenue since the production technology in
the oil sector in Nigeria is yet to adapt to the best practice model used in other developed
nations." However, for the standardized coefficient (Beta) the study revealed that, "A one
standard deviation decrease in Niger Delta share of oil revenue would yield a 1482867.797
standard deviation increase in the Total Oil and Gas Production / revenue to the Federal
Government / oil companies."
The Extent to which Total oil and gas production impacts on Real Gross
Domestic Products in Nigeria
Table 3: Shows the analysis of the data and the extent to which total oil and production
impacts on real GDP
Total Oil
Production
Real
Technology
GDP
Pearson
Total oil production technology
1.000
0.270
Correlation
Total oil export
0.974
0.321
Oil pollution in Niger Delta
0.274
-0.211
Real GDP
0.270
1.000
Poverty level in Niger Delta
0.358
0.247
Niger Delta Share
0.088
-0.065
Sig. (1-tailed) Total oil production technology
-0.044
Total oil export
0.000
0.020
Oil Pollution In Niger Delta
0.041
0.093
Real GDP
0.044
-Poverty Level In Niger Delta
0.011
0.060
Niger Delta Share
0.292
0.343
Source: SPSS Computations based on the Data in Appendix 1
16

The study revealed that total oil production plays significant role in determining the gross
domestic products. Based on the Regression Analysis with respect the correlation aspect, 27% of
the real GDP are accounted from the contribution of the total oil production. Accordingly, with pvalue of 0.044 i.e 4.4% < 5% it means the correlation is significant. To a large extent oil/gas
productions contribution to real GDP has not revealed high percentage outcome because Real
GDP indicates sustainable development unlike current or nominal GDP which connotes growth
without corresponding development.
The Extent to which Oil and Gas production Impacts on Total Oil Exports in Nigeria
Table 4: Shows the analysis of the data and the extent to which oil production affects oil
exports.
Table 4: Oil / Gas Production and Oil Export (Correlation Analysis)
Total Oil
Production Technology
Pearson
Total Oil Production Technology
1.000
Correlation
Total oil export
0.974
Oil pollution In Niger Delta
0.274
Real GDP
0.270
Poverty level in Niger Delta
0.358
Niger Delta share
0.088
Sig.(1-tailed) Total Oil Production Technology
-Total oil export
0.000
Oil Pollution In Niger Delta
0.041
Real GDP
0.044
Poverty Level In Niger Delta
0.011
Niger Delta Share
0.292
Source: SPSS Computations based on the Data in Appendix 1

Total
Oil
Export
0.974
1.000
0.169
0.321
0.247
0.246
0.000
-0.145
0.020
0.060
0.061

The study revealed that total oil and gas exports by Nigeria are very high. From the
correlation analysis, it is revealed that oil production accounts for 97% of the oil exports in
Nigeria. It is therefore conclusive from the study that to a large extent oil and gas production
technology impacts highly positive on total oil exports 97% of the time. With the significant
level figure p-value of 0.000 the correlation impact of oil and gas production on oil export is very
significant.

17

The Extent to which Oil /Gas production causes Oil Pollution in Niger

Delta

Table 5: Shows the analysis of the data and the extent to which oil and gas production
causes oil pollution in Niger Delta.
Table 5: Oil and Gas Production and Oil Pollution in Niger
Delta (Correlation Analysis)
Total Oil
Production
Technology
Pearson
Total oil Production Technology
1.000
Correlation
Total oil export
0.974
Oil Pollution In Niger Delta
0.274
Real GDP
0.270
Poverty Level In Niger Delta
0.358
Niger Delta Share
0.088
Sig.(1-tailed) Total Oil Production Technology
-Total Oil Export
0.000
Oil Pollution In Niger Delta
0.041
Real GDP
0.044
Poverty Level In Niger Delta
0.011
Niger Delta Share
0.292
Source: SPSS Computations based on the Data in Appendix 1

Oil
Pollution
In Niger
Delta
0.274
0.169
1.000
-0.211
0.650
-0.487
0.041
0.145
--.
0.093
0.000
0.001

The study has revealed that oil and gas production impacts the environment negatively
with oil pollution up to the level of 24.40%. This is because the study has revealed that with a (pvalue) significant level figure of 0.041 @ 5% critical value the impact of oil pollution in Niger
Delta is significant.
The Extent to which oil and gas production Technology Causes poverty
in Niger Delta
Table 6: Shows the analysis of the data and the extent to oil and gas production
increases poverty in Niger Delta.

18

Table 6: Oil / Gas Production Technology and Poverty Level in Niger Delta (Correlation
Analysis)
Total Oil
Poverty
Production
Level
Technology
in Niger Delta
Pearson Total oil production technology
1.000
0.358
Correlatio Total oil export
0.974
0.247
n
Oil pollution in Niger Delta
0.274
0.650
Real GDP
0.270
0.247
Poverty level in Niger Delta
0.358
1.000
Niger Delta share
0.088
-0.674
Sig.(1Total oil production technology
--.
0.011
tailed)
Total oil export
0.000
0.060
Oil Pollution In Niger Delta
0.041
0.000
Real GDP
0.044
0.060
Poverty Level In Niger Delta
0.011
--.
Niger Delta Share
0.292
0.000
Source: SPSS Computations based on the Data in Appendix 1
The study has revealed that the poverty level caused by oil / gas production in Niger
Delta is 35.8%. Equally evident from the study is the fact that poverty incidence in Niger Delta
is very significant because the p-value of poverty caused by oil / gas production in Niger Delta is
0.011 i.e 1.1%.
The Extent to which oil and gas production causes impacts on the Niger
of Oil Revenue

Delta

Share

Table 7: Shows the analysis of the data and the extent to which oil and gas production
impacts on the Niger Delta share of oil revenue.

19

Table 7: Oil and Gas Production and in Niger Delta Share of Oil
Revenue (Correlation Analysis)
Total Oil
Production
Technology
Pearson
Total Oil Production Technology
1.000
Correlation
Total oil export
0.974
Oil pollution In Niger Delta
0.274
Real GDP
0.270
Poverty Level In Niger Delta
0.358
Niger Delta share
0.088
Sig. (1-tailed) Total oil production Technology
-Total oil export
0.000
Oil Pollution In Niger Delta
0.041
Real GDP
0.044
Poverty Level In Niger Delta
0.011
Niger Delta Share
0.292
Source: SPSS Computations based on the Data in Appendix 1

Niger
Delta
Share
0.088
0.246
-0.487
-0.065
-0.674
1.000
0.292
0.061
0.001
0.343
0.000
--

The study has revealed that oil and gas production impacts negatively to the Niger Delta
share of oil revenue as only 8.80% correlated as the only dividend arising from oil endowment.
At p-value 0.292 oil and gas production did not show any significant correlation to the Niger
Delta share of oil / gas revenue in spite of huge oil exploration in the region.
Test of Hypothesis
The study has earlier hypothesized that: There is no significant relationship between oil /
gas production (technology) and Real Gross Domestic products, total oil export, Niger Delta
share of oil /gas revenue, oil pollution in Niger Delta and poverty level in Niger Delta, (19702010). Therefore using the results of the regression analysis the study looked at the coefficient
for the explanatory variables to determine if they are statistically significant, the study also tested
sets of variables, using t- test, to see if the set of variables are significant; the results are as
follows: Real Gross Domestic Products = 2.540 > 2.021 (Significant); total oil exports = 30.98 >
2.021 (Significant); Niger Delta oil share = -3.963 < 2.021(Not significant), oil pollution in
Niger Delta = -0.261 < 2.021 (Not significant) and poverty level in Niger Delta = 0.347 < 2.021
((Not significant).
As revealed in the SPSS Output reports (appendix 2) the significance of the overall model with
all the 5 explanatory variables based on the F value is 310.703 and that indicates statistical
significance.
Based on the Decision Rule the study has rejected the null hypothesis in two (2) variables
(namely; Real Gross Domestic products and total oil exports) and accepted the null hypothesis in
three (3) variables ( namely; Niger Delta oil share, oil pollution in Niger Delta and poverty level
in Niger Delta). Accordingly: There is significant relationship between oil/gas production and
real Gross Domestic products and total oil exports in Nigeria (1970-2010). However, there is no
20

significant relationship between oil /gas production and Niger Delta oil share, oil pollution in
Niger Delta and poverty level in Niger Delta (1970-2010).
Conclusion
The inhabitants of the Niger-Delta Region of Nigeria have suffered untold hardship as a
result of the criminal neglect, abandonment, exploration and exploitation of oil and gas by the
federal government of Nigeria in collaboration with the Transnational Oil Companies (TOC)
operating in the region. Oil and gas, with which the Almighty God has endowed the region, has
become a curse to the people of the region, instead of being a blessing. What an irony of fate for
the people. From this study it has become conclusive and revealing that: there is significant
relationship between oil / gas production and real Gross Domestic products and total oil exports
in Nigeria (1970-2010). However, oil /gas production has negative impact in Niger Delta because
of inequitable Niger Delta share of oil / gas revenue, oil pollution and poverty level in Niger
Delta in the midst of oil and gas endowment / revenue, (1970-2010).
Recommendations
In the light of the findings and based on the conclusions, the following recommendations are
hereby adduced:
1)
In view of the fact that the oil sector is so strategic to the economy of Nigeria and
coupled with the fact that huge sums of money are being sunk into oil production
technology and exportation on daily basis, it is recommended that the Federal
Government (which is in control of the oil sector) should exert enough political will
to ensure that the long awaited Local Content Bill' for the Oil and Gas industry
recently presented to the National Assembly by President Goodluck Jonathan is
passed and religiously followed to give Niger Delta people the much expected
benefits from oil and gas production technology.
2)
It is also recommended that the Federal Government should make sure that funds
generated from oil exportations should be effectively and efficiently used for the
purpose of enhancing development in order to improve the standard of living of the
masses who have been constantly pauperized by government retrogressive and
unyielding policies on oil production. Such funds could equally be used for the
development of infrastructure especially, good road networks and electricity.
3)
The Federal Government should deregulate oil production through impartial methods
that would give the stakeholders / citizenry equal chances to participate and acquire
shares in the oil sector, and forestall the concentration of shares in particular income
class or sets.
4)
It is equally recommended that the Federal Government should not see the
recommendation to deregulate oil production as an attempt to discriminate and do
funny dealings leading to total hands-off from governmental responsibility. There are
still some strategic responsibilities which the government must as a matter of
necessity reserve to itself in the interest of the citizenry/ the economy, for instance
providing enabling environment, water, healthcare and education etc.
5)
An integrated approach which is a combination of several development strategies.
This calls for the establishment of community based integrated approach that needs
joint committed efforts from the government and the multinational companies as well
as other stakeholders. This integrated approach should focus on: building of human
21

and institutional capacity to improve agricultural production and management; testing

and recommending suitable environmental management measures; reduction of oil
pollution incidences, increment of Niger Delta share of oil revenue to at least 25%;
initiation of community and commercial as well as central agricultural programmes;
youth re-orientation and access to quality education; establishment and access to
technical and vocational studies.

22

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31

Appendix 1
Table 1B:

Years
1970
1971
1972
1973
1974
1975

Oil and Gas Technology /Production in Nigeria and Economic Indicators,

Niger Delta Share of Oil, Oil Pollutions and Poverty Level in Niger Delta

Total Oil/Gas
Production
(Oil Production
Technology)
(Barrels)
395,689,000
558,689,000
665,295,000
719,379,000
823,320,000
660,148,000

Real GDP
(Outputs)
4,219.00
4,715.00
4,892.60
5,310.00
15,919.70
27,172.00

Total oil
Export (Barrel)
383,455,000
542,542,000
650,640,000
695,629,000
795,710,000
627,638,000

Niger Delta
Share
(Derivation)
(%)
45
45
45
45
45
45

No. of Oil
Spills (Oil
Pollution)
0
0
0
0
0
0

Poverty
Level
(Incidence)
in Niger Delta
(%)
0
0
0
0
0
0

32

736,822,000
715,240,000
674,125,000
807,685,000
656,260,000
496,095,000
401,658,000
392,031,000
450,580,000
486,580,000

45
25
25
25
0
0
1.5
1.5
1.5
1.5

128
104
154
157
241
238
257
173
151
187

535,296,671

29,146.50
31,520.30
29,212.40
29,948.00
31,546.80
205,222.10
199,685.30
185,598.10
183,563.00
201,036.30
205971.4

445,673,729

1.5

155

0
0
23.4
25.3
15.3
32
35.5
39.0
43.0
43.82
46.0

1987

482,886,071

204806.5

388815449

1.5

129

45.5

1988

490440000

219875.6

406443000

1.5

208

45.0

1989

626449500

236729.6

556953500

1.5

228

44.5

1990

630245500

267550

565750000

1.5

166

44.0

1991

690981500

265379.1

587650000

1.5

258

43.5

1992

716262000

271365.5

580110000

378

43.86

1993

695398000

274833.3

568305000

453

49.0

1994

664628500

275450.6

580350000

495

54.7

1995

672549000

281407.4

607725000

417

60.0

1996

681894600

293745.4

620135000

158

59.02

1997

855736287

302022.5

767949757

162

65.5

1998

806443999

310890.1

706265498

187

69.5

1999

774703222

312183.5

678111479

7.5

205

72.0

2000

828198163

329178.7

714356161

7.5

311

74.0

2001

859627242

356994.3

780093703

7.5

378

83.1

2002

725859986

433203.5

663326494

13

432

88.0

2003

844100267

477533

791016260

13

412

46.9

2004

911044764

527576

871286594

13

387

43.05

2005

918972465

561931.4

843533331

13

410

68.9

2006

869196506

595821.6

817388227

13

251

78.5

2007

843937714

634251.1

791826522

13

597

82.3

2008

768745932

674889

724479796

13

727

84.4

2009

780,347,940

7954925

769,195,205

13

54.4

2010

896,043,406

8014739.6

864,702,101

13

69.0

Sources:

Historical Inflation Rates: 1914-2012, CBN Statistical Bulletin., 2010.

1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986

758,058,000
766,055,000
696,324,000
845,463,000
760,117,000
525,291,000
470,638,000
450,580,000
507,487,000
547,088,000

Appendix 2
Table 2: Derivation: Niger Delta State and Federal Shares of Petroleum Proceeds 1953Present
To Producing
Earmarks via
Federation Account

33

19531958
19581969
19701971

States (%,
Allocated by
Proportion of
Production)
100
50
45

Regional
and Remaining
Development
Distributable Pool (%)
Agencies or Special
Projects (%)

Niger Delta Development Board (19601966): nil

19701977

45 minus offshore
proceeds

Niger Delta river Basin Development authority (1972):

nil

19771979

25 minus offshore
proceeds

19791981

19821984

1984
19921998

19992001

2002 Date

13 (constitutional
minimum) minus
offshore proceeds,
gross equivalent to 7.5
13 (constitutional
minimum) including
offshore proceeds

1.5% commission: 1.5 and .5 of Special projects

managed by the FG are considered derivation funds

50
55
55 plus
offshore
proceeds
75 plus
offshore
proceeds
100
98.5

1.5% commission: 1.5

OMPADEC: 3
NDDC: nil
Funds: (a) 15% state statutory allocations due to the oilproducing states; (b) 3% oic operating budgets; (c) 50%
State ecological Fund; (d) aid or other contributions.

98.5
97

NDDC: nil Funds: see above

87

92.5 approx.

Source: Adapted from UNDP 2006, HRW 1999 and other sources

Appendix 3
Regression Results: The Impact of Oil /Gas Production Technology on Nigeria: The Niger
Delta Experience (Statistical Computations with Statistical Packages for
Social Sciences SPSS)

34

Correlations
OIL
TOTAL OIL
POLLUTIO
POVERTY
PRODUCTION TOTAL
N
LEVEL
TECHNOLOG
OIL
IN NIGER REAL IN NIGER
Y
EXPORT
DELTA
GDP
DELTA
Pearson TOTAL OIL PRODUCTION
Correlatio TECHNOLOGY
n
TOTAL OIL EXPORT

Sig. (1tailed)

NIGER
DELTA
SHARE

1.000

.974

.274

.270

.358

.088

.974

1.000

.169

.321

.247

.246

OIL POLLUTION IN NIGER

DELTA

.274

.169

1.000

-.211

.650

-.487

REALGDP

.270

.321

-.211

1.000

.247

-.065

POVERTY LEVEL IN
NIGERDELTA

.358

.247

.650

.247

1.000

-.674

NIGERDELTASHARE

.088

.246

-.487

-.065

-.674

1.000

.000

.041

.044

.011

.292

TOTALOILEXPORT

.000

.145

.020

.060

.061

OIL POLLUTION IN NIGER

DELTA

.041

.145

.093

.000

.001

REALGDP

.044

.020

.093

.060

.343

POVERTY LEVEL IN
NIGER DELTA

.011

.060

.000

.060

.000

NIGER DELTA SHARE

.292

.061

.001

.343

.000

TOTALOILPRODUCTIONT
ECHNOLOGY

41

41

41

41

41

41

TOTALOILEXPORT

41

41

41

41

41

41

OILPOLLUTIONINNIGERD
ELTA

41

41

41

41

41

41

REALGDP

41

41

41

41

41

41

POVERTYLEVELINNIGER
DELTA

41

41

41

41

41

41

NIGERDELTASHARE

41

41

41

41

41

41

TOTALOILPRODUCTIONT
ECHNOLOGY

35

Descriptive Statistics
Mean
TOTAL OIL PRODUCTION TECHNOLOGY
REAL GDP
TOTAL OIL EXPORT
NIGER DELTA SHARE OF OIL MONEY
OIL POLLUTION IN NIGER DELTA
POVERTY LEVEL IN NIGER DELTA

Std. Deviation

700478298.4146
621267.3366
639125166.0000
13.7927
226.6829
43.2183

141099650.12091
1698184.21191
143583255.13819
15.83153
174.94791
27.31525

41
41
41
41
41
41

Model Summaryb

Model
1

Change Statistics
Std. Error
R
Adjusted
of the
R Square
Square R Square Estimate Change F Change df1 df2 Sig. F Change

.989a

.978

.975 2.23903E7

.978

310.703

35

Durbin-Watson

.000

1.205

a. Predictors: (Constant), NIGERDELTASHARE, REALGDP, TOTALOILEXPORT,

OILPOLLUTIONINNIGERDELTA, POVERTYLEVELINNIGERDELTA
b. Dependent Variable: TOTALOILPRODUCTIONTECHNOLOGY

ANOVAb
Model
1

Sum of Squares

Df

Mean Square

Regression

7.788E17

1.558E17

Residual

1.755E16

35

5.013E14

Total

7.964E17

40

F
310.703

Sig.
.000a

a. Predictors: (Constant), NIGERDELTASHARE, REALGDP, TOTALOILEXPORT,

OILPOLLUTIONINNIGERDELTA, POVERTYLEVELINNIGERDELTA
b. Dependent Variable: TOTALOILPRODUCTIONTECHNOLOGY

36

Coefficientsa
Unstandardized Coefficients
Model
1

B
(Constant)
REALGDP

Std. Error

Standardized
Coefficients
Beta

71065058.823 16892416.691

Sig.

4.207 .000

-6.731

2.650

-.081 -2.540 .016

1.020

.033

1.038 30.950 .000

-1482867.797

374221.940

-.166 -3.963 .000

-8287.737

31718.787

-.010

-.261 .795

POVERTY LEVEL IN NIGER

85940.198
247523.365
DELTA
a. Dependent Variable: TOTAL OIL PRODUCTION TECHNOLOGY

-.017

-.347 .731

TOTALOILEXPORT
NIGER DELTA SHARE OFOIL
OILPOLLUTION IN NIGER
DELTA

37

38