2.3: PERFORMANCE OF THE OIL SECTOR: The Nigerian oil sector has faced major problems in one of its subsectors. The subsectors include the upstream, downstream and the gas sector with the down sector being the problematic of them all. The downstream includes the distribution arm and connection with the final consumer of the product in the domestic economy. The deregulation of this subsector has been due to relentless crises in the supply of products, which has been controversial because the deregulation ignores the economic realities in Nigeria. It has a Joint oil venture with shell that accounts for 95% of the country’s crude oil production, producing 50% of the oil and 55% being government interest through the NNPC. The place of oil in the …show more content…
Some of which include contribution to government revenue and contribution to GDP. Creation of employment opportunities, supply of energy and local expenditure on goods and services and, attraction of Foreign Direct Investment (FDI). But even with these contributions and the increase in oil wealth, oil has not made any significant economic impact to the economy of the country. The World Bank report on Nigeria stated that “At present, petroleum remains a typical enclave industry whose contribution to the
[Nigerian] economy is limited largely to its contribution to government revenue and foreign exchange earnings” (World Bank 1974).
• Contribution to government revenue and GDP: the gross output of the oil sector consists of the profits from local sales of oil and gas and, export of oil. Due to massive involvement of foreign investors into the sector it is better to consider the contribution of the sector to Gross National Product (GNP) due to the fact that not all the value added is retained in the country, most of it is paid abroad in the form of factor payments, interest, wages and salaries. In Nigeria, the high increase in government receipts has been seen as a reflection of increase in crude oil production, increase in oil prices and more favourable fiscal arrangements obtained by the government over the years due
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They also exercise secondary effects through the multiplier process on employment and output level of other related sectors of the country’s economy.
• Attraction of FDI: Nigeria has made it into the top 20 FDI destinations in Africa and it has received the largest amount of FDI over the period of 2010-2013. Involvement of the FDI in the Nigerian oil economy has created the opportunity for the country to participate in the upstream sector of their oil industry (Kukoyi 2015).
The oil sector has faced more problems than benefits, which has limited its development over the years. Some of which include; poor funding of investments, smuggling and diversion of petroleum products, corruption amongst government officials, fraudulent domestic marketing practices, environmental hazards and product adulteration.
• Poor funding of investments: most joint venture operators have reported a delay in the payment of cash calls which has discouraged them to increase the level of their investment in the oil industry. There is no adequate maintenance of equipment due to lack of
First the story of the Standard Oil Company briefly describes the limits of power. When Rockefeller was trying to take over the market he formed the “South Improvement Plan. When this occurred the public grew very angry with the price of trains, so nobody went on the railroads and Rockefeller eventually got the bill, until prices changed. This is an example of how the consumers, make the company run and when nobody wants to buy your product the individual must adjust. Another example would be when the Standard Oil Company was primarily the only oil company and was forced to split into thirty nine different independent companies. This shows that one business cannot control the entire market and interventions will need to be done accordingly so that a company does not have all the power.
In conclusion, Oil impacted social change over time, which helped us grow as a society. If you took my proposal into consideration I would really appreciate it. My proposal is going to have all of the factors of Oil and how oil has change our state. After reading the documents that you have given me I was able to answer question “What story should be told”. As H.L hunt always said “money is just as way of keeping score”. - H.L
"Oil Imports and Exports - Energy Explained, Your Guide To Understanding Energy." Web. 26 May 2011. .
oil in Nigeria. Nigeria’s large supply of high quality crude oil helped Shell climb to the top,
Wright, R. T., & Boorse, D. F. (2011). The U.S. dependency on foreign oil presents many negative impacts on the nation’s economy. The cost of crude oil represents about 36% of the U.S. balance of payments deficit. Wright, R. T., & Boorse, D. F. (2011). This does not directly affect the price of gas being paid by consumers, but the money paid circulates in the country’s economy and affects areas such as the job market and production facilities.
Oil-Led Development: Social, Political, and Economic Consequences. CDDRL Working Paper 80. Robinson, J. A., Torvik, R. & Verdier, T. (2006). Political Foundations of the Resource Curse. Journal of Development Economics, 79, 447-468.
" Oil is the life blood of our modern industrial society. It fuels the machines and lubricates the wheels of the world’s production. But when that vital resource is out of control, it can destroy marine life and devastate the environment and economy of an entire region…. The plain facts are that the technology of oil-- its extraction, its transport, its refinery and use-- has outpaced laws to control that technology and prevent oil from polluting the environment…" (Max, 1969). Oil in its many forms has become one of the necessities of modern industrial life. Under control, and serving its intended purpose, oil is efficient, versatile, and productive. On the other hand, when oil becomes out of control, it can be one of the most devastating substances in the environment. When spilled in water, it spreads for miles around leaving a black memory behind (Stanley, 1969).
total value of the imports of the country. It benefits Nigeria’s oil, natural gas, coal,
Oil is an essential resource in the whole world. People use oil in a variety of ways. The world has used oil for many years and it will still use it as a basic commodity. Oil use can be traced back to 1850s. However, when Edwin Drake produced commercially usable quantities of crude oil from a 69-foot well in Pennsylvania in 1859, he marked a new period that considered oil as a valuable commodity. Oil prices have been inconsistent since 1859. The discoveries of more wells considerably lowered oil prices and made some oil barons abandon the industry. However, oil prices have increased over time because of several factors.
The measure of petroleum abundance and production in Nigeria is measured by the United States. According to the statistical data and the U.S. measures, Nigeria reserves make the country the tenth petroleum-richest nation, and by far, one of the most affluent countries in Africa. In the middle of 2001 its crude oil production was averaging around 2.2 million barrels per day. Though, there is a very prominent market for offshore rigs, nearly all of Nigeria’s primary reserves are in and around the delta of the Niger river. Ever since Nigeria became independent, it is one of the few oil producing countries that can increase its oil output drastically. The g...
According to Samuels in Case Studies in Comparative Politics, Nigeria began as a group of states and empires, which were conquered by the British Empire who ruled Nigeria through indirect rule with varying degrees of rule in North and South Nigeria (Samuels, 323-326). Since they were granted independence in 1960, three republics have been created and each has ended by military rule, which led to the creation of the fourth, and current republic in Nigeria. In the current regime Nigeria’s GDP is ranked 108 of 156 and has been decreasing, lower than some of the non oil-producing nations in Africa (“Nigeria”).
Since its discovery back in the year 1858 crude oil has been become one of the most sought after resources on the face of the planet. It is due to this fact that the oil industry has fallen into a rather odd category in the case of globalization and seeking out new markets, new labor and new customers. The reason being that the need for crude oil and fuel is always present therefore the product of oil in its basic sense sells itself and the companies do not have to go out and publicly advertise it in the sense that clothing lines and other commodities do. Oil companies must focus more on the matter of why an individual should buy their oil and along with other alternative fuels over their competitors even though in the end the companies products are the same thing. The company ExxonMobil has been the superior company in the oil industry for quite sometime now, and had plenty of success as individual companies before their merger in 1999. The reason for there success is partially due to the power they wield as the most successful company, leading to many new refineries around the world, making deals with smaller companies to gain access to new markets and are leading the world in alternative fuel research. However these things all come naturally to the biggest oil company in the industry, the real question is how they became the powerhouse they are now. That question can be answered by the way in which the company has not focused in globalizing their product of fuel and oil, but globalizing the image of the company company. This is achieved by focusing on charity in which they donate hundreds of millions of dollars, Foreign Direct Investment in areas in which they wish to expand by attempting to provide these impoverished areas wit...
The industry is divided into three distinct sectors including the upstream, midstream and downstream sectors. The upstream sector includes the exploration and production of crude oil as well as the exploration and production of natural gas. This sector has experienced the largest amount of deals in terms of mergers and acquisitions, which will be further discuss in section III. The midstream sector involves the transportation of extracted petroleum from the upstream sector through pipelines, rail, barge, truck as well as storage. Finally, the downstream sector connects the end consumers through derived products such as gasoline, liquefied natural gas (LPG), liquefied natural gas (LNG), kerosene (aircrafts), and diesel…
Shell Nigeria’s activities included “exploring and producing oil and gas onshore as as offshore and gas sales and distribution. Shell also has an interest in Nigeria’s largest liquefied natural gas plan (NLNG)”. Shell Nigeria was founded in 1938 and obtained a licence to search for oil throughout Nigeria. In 1956 Shell found commercial oil and then the first export of this oil occurred in 1958. The Niger Delta area is a poor area where the majorities of Shell’s operations were, and still are being carried out. Niger Delta is rich in natural resources with 85% of Nigeria’s Gross Domestic Product coming from the area. Before 1995 when Shell’s CSR strategy hadn’t became scrutinized, Shell’s strategy focused on reputation management and risk. In 1995 this changed as members of the MOSOP activist group were protesting for a fairer share of the wealth from oil and also for compensation for environmental damage were brutally executed by the National army who were funded and aided by Shell.
According to the study, the price of crude oil, which is the primary fuel of the industrial activity, plays an important role in shaping the political and economic development, not only to continue to have an impact on aggregate indicators, but also to influence countries operating costs, and the income (Istemi and Berna, 2009). When the stock market is efficient, positive crude oil price shocks would negatively affect the cash flows and market values of companies, causing an immediate decline in the overall stock market returns.