Oil Blocs Allocations and Nigeria’s Socio-Economic Development (1999 – 2020)

Academic Paper, 2021

83 Pages, Grade: 4.5


Table of Contents

1.1 Background to the Study
1.2 Statement of the Problem
1.3 Research Aim and Objectives
1.4 Research Questions
1.5 Research Hypotheses
1.6 Significance of the Study
1.7 Scope of the Study

2.0 Literature Review
2.1. Conceptual Literature Review
2.2 Empirical Literature Review
2.3 Theoretical Framework

3.1 Research Design
3.2 Population of the Study
3.3 Sample Frame and Method
3.4 Method and Instrument of Data Collection
3.5 Instrument Validity and Reliability
3.6 Data Analysis and Interpretation
3.7 Ethical Consideration and Research Limitations
3.8 Summary of Research Methodology

4.1 Data Presentation
4.2 Data Analysis and Interpretation
4.3 Discussion of Finding/Implication of the Study

5.1 Summary
5.2 Conclusion
5.3 Recommendations


Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Appendix 6

Appendix 7

Appendix 8

Appendix 9

Appendix 10

Appendix 11

Appendix 12

Appendix 13



1.1 Background to the Study

From 1956 when the first crude oil was discovered in Oloibiri community in the present day Bayelsa State, Nigeria has moved steadily from an agro-based economy to a permanent oil-based economy in the early 1970s to date. Within this period, crude oil production has steadily moved from 5 million barrels (1960s), to over one trillion barrels (1990s). Government revenue also moved from just over N 66 million in 1970 to N 800 billion in 2018 (Romanova, 2007; Shell, 2019). As the major export earning product of the Nigerian government, the crude oil sector accounts for over 97% of total exports, 81% of total public revenue and 45% of Gross Domestic Product (GDP) (Temi, 2013). Nigeria produces over 2.4 million barrels of crude oil per day, more than 165 million cubic meters of gas per day. The energy reserves of Nigeria include more than 37 billion barrels of oil, 202 trillion cubic metres of gas and 639 million tons of coal and hydro resources, with an additional 600 trillion cubic feet of unproven gas reserves according to the Nigerian National Petroleum Corporation (NNPC) (Shell, 2019; Osu, 2019). Crude oil is produced in allocated oil fields in Nigeria.

Available records show that Nigeria has over 606 oil fields, 1,481 oil wells, 275 flow stations, 10 gas plants, 32 oil rigs and 4 refineries. These oil wells were allocated through procurement processes to about 13 major Multinational Oil Companies (Shell, Chevron, Mobil, Agip etc.), and indigenous oil companies (South Atlantic Company, Cavendish Petroleum, AMNI Oil Company, Old Work Field, North East Petroleum Limited, Express Petroleum, Seplat Petroleum etc.). Nigeria is the largest crude oil producing nation in Africa and the six largest in the world (Romanova, 2007). At present, there are about 92 Oil Prospecting Leases (OPLs) and 109 Oil Mining Leases (OMLs) (Temi, 2013; Shell, 2019). Most of these Oil Mining Leases (OMLs) are domiciled in the Niger Delta region. The establishment of the Niger Delta Development Commission (NDDC) during the Olusegun Obasanjo regime and the Ministry of the Niger Delta during the Umaru Musa Yar’Adua administration were in direct response to corruption and maladministration in the procurement, management and distribution of oil resources in Nigeria resulting in underdevelopment in the region amidst oil wealth. The alienation of the indigenes of the Niger Delta region in the oil blocs allocation, procurement and management in Nigeria shows that 88% of oil blocs in Nigeria were procured and owned by Multinational Oil Companies (MNCs) with indigenous companies having just about 11% production capacity (Temi, 2013). This is worrisome and stifles national development due to the disempowerment of the populace in the ownership and management of oil blocs in Nigeria.

Oil blocs allocation in Nigeria has not translated to economic development for the generality of Nigerians. Rather, few individuals in Nigeria with the opportunity of the ownership and management of oil blocs, especially in the procurement, management and logistics subsectors, and with the backings of government and international corporations are stupendously rich to the detriment of the people. Available statistics shows that while Nigeria may have earned well over one trillion dollars (US $1trillion) from 1960 to 2017 from the sales of crude oil, over six hundred billion dollars (US $600 billion) may have been stolen from the Nigerian treasury and stashed abroad by greedy politicians and their administrative, private and foreign collaborators (Ebenezer and Okejim, 2017). This is deeply disturbing in undermining national development, promote poverty of the masses and elitism of a very few in a country without any strong and inclusive social welfare system.

The Nigerian Bureau of Statistics (NBS) in its 2018 report indicated that both unemployment and underemployment in the country is at 40%. This is approximately 52 million of the estimated 130 million work force in the country. The NBS report also indicated that over 140 million (70%) of the estimated 200 million population are poor, living on less than one United States dollar (US $1) per day (Ikemba, 2019). The education sector in Nigeria is in a terrible state. Workers, especially lecturers in the university sub-sector are in constant confrontation with the federal government in the implementation of agreements, resulting in industrial disputes. Most of these disputes result in long industrial strikes that paralyzed academic activities and render both students and other academic and non-academic personnel unengaged academically for months. The health sector is moribund without any regard for its importance in the social wellbeing of the citizenry. With these statistics and the lackluster attitudes of political elite in addressing the challenges of national development, the synergy between oil blocs allocation and national development is negatively tailored.

The allocation of Oil Mining Leases (OMLs) which, by extension, empowers an individual or corporate body to explore and exploit oil in a particular location (oil fields or oil wells), is vested statutorily in the hands of the Federal Government of Nigeria. The 1999 constitution of Nigeria (as amended), Second Schedule, Part One (Legislative Power), under Exclusive Legislative List, Number 39, vested in the Federal Government the sole powers to legislate on “mines and minerals, including oil fields, oil mining, geological surveys and natural gas.” This means that the procurement, management and supply logistics of oil and gas in Nigeria is the exclusive preserve of the Federal Government of Nigeria (FGN). The President and Commander-in-Chief of the Armed Forces, through the Ministry of Petroleum Resources, allocate oil blocs to individuals and corporate organizations. The license for refining, distribution and management of oil and gas is statutorily vested in the Ministry of Petroleum Resources and implemented by the Department of Petroleum Resources (DPR). Challenges of corruption, lack of political will, poor governance foresight, nepotism and administrative inefficiency have made oil blocs allocation concentrated in the hands of a very few to the detriment of the poor masses. This is without recourse to its negative consequences on national development. Efforts have not been made to revisit and reverse this abnormality. Therefore, national development is being hampered by oil blocs allocation in Nigeria. Substantiating or disputing these claims are within the critical purvey of this research endeavour.

As Nigerians call for the stoppage of oil blocs allocation to few individuals and corporate organizations by the Federal government of Nigeria (Nwachukwu, 2019), there is the need to look at the historical origin of this phenomenon and why regional autonomy in the First Republic (1960-1966) did not allow this to happen. Military incursion into mainstream leadership of the country did. With the return of civilian administration in Nigeria from 1999 to date, the need to revisit this issue after 20 years of an unbroken democratic rule is of utmost priority. Femi Falana, a respected human rights activist and constitutional lawyer has looked at this issue from a legal prism. He noted that based on the combined provisions of Sections 16 and 44 of the 1999 Constitution of the Federal Republic of Nigeria (as amended), it will be “inequitable, illegal and unconstitutional to allocate the nation’s oil blocs to a few individuals and multinational corporations” to the detriment of the citizenry. This is because, while the constitution vested the ownership and control of all mineral deposits (oil and national gas) on the federal government, it insisted that “the economic system should not be operated in such a manner as to permit the concentration of wealth or means of production and exchange in the hands of few individuals or of a group”. When this is done, it will jeopardize the provisions of “suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wage, old age care and pensions, and unemployment and sick benefits, and the welfare of the disabled for the citizens” (the 1999 constitution of the Federal Republic of Nigeria (as amended), chapter 2, section 6, and subsection 2d). The non-provision of these existing issues amidst oil blocs allocation in the country, and the contentions arising therefrom are the premise from which the objectives of this work will emanate.

1.2 Statement of the Problem

From 1960 to date, Nigeria has earned over one trillion dollars (US $1 trillion) from the sales of crude oil through oil blocs allocation (Ebenezer and Okejim; 2017 p.322). Unfortunately, this has not translated to national development. Few individuals in Nigeria and major multinational corporations own and control the wealth arising from crude oil deposits in Nigeria. This is basically through the allocation (procurement) of over 606 oil fields and 1,481 oil wells within the Niger Delta region (Romanova, 2007). Regrettably, the wealth accruing to the nation from these oil wells, and in all the logistical chains of production, distribution, management and supply, are concentrated in the hands of a very few persons and other corporate bodies within and outside the country. If national development (the empowerment of the people through education, job creation, infrastructural and sustainable development of the citizenry) is going to be possible; the present arrangement is unrealistic. National development is not possible when oil blocs are concentrated in the hands of a very few persons. This has to change in Nigeria to ensure that the “control of the national economy is done in a manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity” (chapter 2, section 16, subsection 1b, of the 1999 Constitution of the Federal Republic of Nigeria, as amended). Most regrettably however, this is not the case presently.

Furthermore, oil bloc allocation is expected to impact positively on the lives of the citizens in Nigeria. Oil rich countries like Saudi-Arabia, Qatar, Oman, United Arab Emirate, United States of America etc. are using oil blocs allocation to develop their countries and empower their people. Unfortunately, there is increased poverty, illiteracy, criminality, militancy, unemployment and infrastructural decay in Nigeria in the midst of oil wealth. Social scientists have sought to interrogate the synergy between oil blocs allocation, the resources accruing from them, and poverty in Nigeria. Most conclusions have alluded to the allocation of oil blocs and the entire chain of management and distribution of oil resources to a very few persons who have cornered the collective wealth of the people for personal and family use (Ibaba, 2008; Effiong, 2010; Akinola, 2018; Arewa, 2019). With an estimated population of 200 million (NPC, 2019) and an increasing poverty and unemployment rate, revisiting this issue is of necessity in the quest for national development. Lack of capital investment especially on human capital development, poor leadership, corruption etc. have made progress made in this regard insignificant. There is therefore the need to take a critical look at the present nature of oil blocs allocation, its impact on the wellbeing of the citizenry and what needs to be done to engender national development.

The major challenge in doing this, is the visible lack of any political will by the government of the day in critically looking at the pains and hardship citizens are going through on daily basis even with stupendous wealth displaced by the very few who, through corruption, nepotism, bad governance and criminality have been allocated, or allocated to themselves oil blocs (procurement, production, management, distribution, supply etc. of crude oil and gas) of the Nigerian state. Again, structural imbalance, do or die politics, income inequality and lack of transparency have made governance processes in Nigeria unable to address the needs of the people. Therefore, if Nigerian leaders are able to see national development in the context of overcoming these societal imbalance and envisioned the possibility of a better society through the equitable allocation of oil blocs to the people, and by reappraising the present situation that elevates poverty and unemployment as national trademarks, then a critical appraisal of how these challenges should be addressed is a continuous prerequisite. National development is not possible in this present situation; hence the need to highlight the challenges of oil blocs allocation for national development.

With over 63 years of the allocation of oil blocs in Nigeria, most of the solutions on how oil wealth, through the allocation of oil fields and oil wells in Nigeria can aid national development are no longer feasible. If the suggestion during independence and post-independence era was the need to allocate the oil wells to few individuals and corporate bodies within and outside Nigeria, to manage on behalf of the people, create wealth, jobs and support the running of the affairs of government; increasing poverty and corruption have made this suggestion very impracticable. The increase in population, poverty, unemployment and illiteracy in Nigeria now questioned the very essence of oil blocs vis-à-vis the people’s well-being. Those in leadership, because of the benefits accruing to them through salaries, allowances, kick-backs and other fraudulent means, are readily not willing to confront the challenges of national development. The lack of positive synergy between oil blocs allocation and national development and what needs to be done to address it, is the intendment of this research.

Furthermore, the procurement process in the oil industry has been opaque over the years. The Federal Government of Nigeria (FGN) whose statutory responsibility it has been to allocate oil blocs in the country has not been very transparent about it. The refining of oil and gas in Nigeria is beyond the reach of ordinary citizens. The production, sales and distribution of crude oil products have been controlled by just a few either as individuals or multinational corporations. This unjust process goes contrary to the provision of the 1999 Constitution of the Federal Republic of Nigeria (as amended), chapter 2, section 16, sub-section 2a-b, to the effect that “the material resources of the nation are harnessed and distributed as best as possible to serve the common good; that the economic system is not operated in such a manner as to permit the concentration of wealth or means of production and exchange in the hands of few individuals or a group” to the detriment of the poor masses. This seemingly lack of adherence to constitutional provisions have entrenched an unjust economic situation in the country that daily begged to be addressed. The continued and visible lack of political will and the suppression of the masses due to increasing cases of unemployment and poverty propelled this research to see why the synergy between oil blocs allocation and national development is negatively tailored. This is the premise with which this research will be anchored.

1.3 Research Aim and Objectives

Oil blocs is the main source of wealth that sustains the Nigerian economy. Regrettably, few individuals benefit from it while the rest of the populace depends on them for sustenance and survival. Furthermore, the entire process of procurement and management of the oil blocs in the country is enmeshed in secrecy, corruption and lack of transparency. That is why this research is undertaken in order to once more look at the issues of oil blocs allocations and Nigerian national development especially in the Fourth Republic (1999-2019). The scope of this research will comprehensively cover the following objectives:

1. Critically examine the nature of oil blocs allocation in Nigeria (1999-2019).
2. Systematically evaluate the impacts of oil blocs allocation on national development (1999-2019).
3. Highlight critically the challenges of oil blocs allocation for national development (1999-2019).
4. Proffer solutions on how oil blocs allocation can be used for national development.

1.4 Research Questions

Nigeria is a complex (multi-ethnic and multi-religious) nation state with numerous vested interests based on geo political and personal interests. Therefore, to ensure coverage and inclusiveness, the “what” pronoun was used which connotes an interrogation expressing inquiry about the nature, impacts, challenges and solutions to a particular issue. In this context, that of oil blocs allocations and national development in Nigeria. The scope of this research also covered the following research questions as direct responses to each of the research objectives presented above:

1. What is the nature of oil blocs allocation in Nigeria (1999-2019)?
2. What are the impacts of oil blocs allocation on national development (1999-2019)?
3. What are the challenges of oil blocs allocation for national development (1999-2019)?
4. What are the solutions of using oil blocs allocation for national development?

1.5 Research Hypotheses

As a way of hypothetical speculations (assumptions), the research tentatively presented two untested conclusions which aided in both direction and quantitative appraisals. This was important for focused analysis and interpretation of findings and to adequately substantiate the claims or dispute them. The review of the body of literature in this work and the subsequent contribution to knowledge were therefore based on the following assumptions:

1. The increase in oil wealth in Nigeria from 1999 to 2019 has not translated to national development.
2. The allocation of oil blocs to a few individuals and corporate bodies in Nigeria is unconstitutional and unjust to the poor masses.

1.6 Significance of the Study

This research endeavour was very significant in the following ways:

1. The Nigeria Government: This research alluded to the need for government to change its policy of oil blocs allocations to few individuals and corporate bodies. If this advice is headed, the government will be obligated as the outcome of this research insisted, to revoke all existing oil blocs allocations domiciled in the hands of few individuals and corporate bodies to just the federal government and the state governments. That way, oil wealth from these oil fields and wells, will directly go into the coffers of the government and be used for national development through the provisions of quality education, health facilities, infrastructural development and transformative progress of the Nigeria state. This will also adhere to the provisions of the 1999 constitution of Nigeria, as amended.
2. The Nigeria Populace: This research intends to juxtapose by way of historical review, investigation and critical analysis, the relationship between oil blocs allocations and national development. This is to enable Nigerians understand why oil wealth has not (and will not), translated to improvement in their wellbeing so long as the existing policy of allocating oil blocs to few individuals and multinational organizations is maintained. This awareness is expected to create a policy interrogation; confrontation and citizens’ insistence of policy change to enable oil wealth and resources (production, refining, management, sales and distribution) to make direct impacts and its benefits directly accrue to the people, and have direct bearing in their lives for improvement in their standard of living and for societal sustainable development.
3. The Academic Community: The research makes a historical evaluation and analysis of oil blocs allocation in Nigeria in order to establish the synergy between oil wealth and national development. Though this is an academic research endeavour that is expected to benefit the academic community, policy makers in the education system in government will also find this research useful. Within the academic community, educators and students will utilize the recommendations of this research in expanding the frontiers of knowledge thereby contributing to solving socio-economic challenges in the country. Policy makes will utilize the benefits of this research to address societal problems and help persuade governments at all levels to make policy reversal in the allocation of oil blocs for the good of the generality of the citizens. Students and researchers will use the recommendations of this research as points of departure to further expand the scope of socio-economic discourse aimed at addressing contentious issues for national transformation and development.

1.7 Scope of the Study

This research was basically limited to the critical and system comprehension of the impacts of oil blocs allocations to Nigerian national development. In doing this, it covers the nature of oil block allocation in Nigeria from 1999 to 2019. However, this will be done in such a way as to compare the existing nature of oil blocs allocations with historical times (1960-1999). The challenges of oil blocs allocations in Nigeria and consequences of poverty, illiteracy, unemployment, social and infrastructural decay amidst oil wealth was looked into before solutions on how these challenges should be mitigated for national development were proffered.



2.0 Literature Review

Conceptual and theoretical review of relevant literature were carried out in this research in order to comprehensively understand the literary meanings and applications of concepts and empirical postulations in this research in addressing the relationship between oil wealth through oil blocs allocations or procurement and Nigerian national development.

2.1. Conceptual Literature Review

2.1.1 The Concepts of Development and National Development

The concept of development and by extension underdevelopment is replete with meaning. Conceptual uniformity is difficult when the issue of development is concerned. First, there is Western bias of what constitute development. Second, there is the peripheral resistance of racial inclusively in the definition and explanation of the concept of development. Ake (1981; p. 141) noted this concerned when he asserted that “the desire for development might be described with equal accuracy as a passion or an ideology” (Austen, 1983). To Ake, this passion or ideology, especially among Africa leaders is “perceived as the primary condition for their own welfare, the legitimation of their leadership and the well-being of their countries”. The bigger challenge of comprehension here is the fact that within African context, “African leaders tend to visualize progress towards a better society in terms of development, see their historical evolution in terms of the possibility of achieving development and base the possibility of the good life on the primary necessity of overcoming underdevelopment” (Ake; 1981, p. 141). Here lies the challenge of the universal acceptability conceptually, of the term development.

Prior to the 1970s, development has always been seen as economic growth measured by the Gross National Product (GDP). This was changed in the 1970s to mean “improvement of the quality of life of the individual” (Walter; 2007, p. 421). The indicators for development as the necessary conditions for the realization of potentials inherent in an individual were food, clothing, shelter, meaningful employment, quality education, sustainable living, equality of opportunities, justice, transparency, good governance etc. Nnaemeka (2009) defined development as “a process in which people create and recreate themselves and their life circumstances to realize higher levels of civilization in accordance with their own choice and values”. Kojo (2013) insisted that the concept of development is “politically charged and politically driven” because of the character of the state, the dynamics of the social forces in which it is embedded, and the kind of politics it engenders.

Meier (1976) defined development as “a process of cumulative change that results from positive forces that raise productivity”. Arokoyu (2004) observed that for development to be sustainable, “it involves the eradication of absolute poverty, reduction of inequality, and the creation of employment opportunities”. Nwibor and Kia (2015) gave a liberal scholar’s definition of development as “an all-encompassing multi-dimensional process, involving man in his political, economic, socio-cultural and psychological relation among others, in his effort to master and subjugate nations and natural living”. They also quoted Ofoeze (2000) to have defined development as “the attainment and qualitative realization of a state of affairs characterized by adequate distribution of social services, qualitative human happiness and welfare and mastery of his environment as well as free individual participation in the affairs of the state or, simply the satisfaction of basic needs in an economically, politically and structurally transformed society”.

Otto (2019; p. 282) sees development as “a physical reality or a mental frame of mind with respect to processes through which a nation achieves economic, social, political and institutional advancement leading to better lives and greater opportunities”. The administration of how to use development “to deal with the problems of poverty, low resources based, unstable political environment and inadequate technological base, both in terms of physical equipment and skills, in the face of increasing expectations on the government to bring about improved conditions of life” (Ibodje; 1998, p. 201); is what national development encompasses. This is because the improvement in the living standard of the people in all spheres of endeavours which is what development is all about should be strategically knitted with a national development agenda that is holistic, durable, sustainable and impactful. It is this provision of the human and materials needs of citizenry especially in the utilization, distribution and provision of resources for productivity and improvement in their well-being that a national development is visible.

National development is “the process through which the Nigerian people become self-reliant and confident, and can constantly generate and mobilize energy which is capable of running an independent and democratic government, and inducing a productive and distributive economy which is both self-generating and self-perpetuating” (Nwosu, 1998 in Nwibor and Kia, 2015; p.101). To Mezieobi (2013), National development is a “process of systematic transformation of the overall social, economic, political, scientific and technological life of a nation via effective, coherent, coordinated and management system and result oriented social mobilization strategy in the overall restructuring process for the improved human conditions of life” (Uranta; 2019; p. 401). The identified variables for national development are improved living conditions of a country’s citizenry, national awareness or consciousness rooted in national identity, democratic and responsible leadership with massive support and fellowship, economic stability and sustainable governance institutions for national growth and development, and economic, political, socio-cultural and moral discipline knitted in a united attitude for sustainable societal transformation for the good of all.

Therefore, the empirical expositions of this research is to look at available literature from a theoretical/empirical prism, analyze and interrogate, to see whether the allocation of oil blocs (oil been the main natural economic resources since independence in 1960) from 1999 to 2019, has helped to promote, sustain and engender the quest for Nigerian national development. This is because, the challenges of poverty, high incidences of diseases, unemployment, military weakness, ignorance, technological backwardness, social disorganization, short life expectancy and high incidence of political instability (Ake; 1981, p.141) are national development challenges.

2.2 Empirical Literature Review

Ebenezer and Okejim (2017) projected Nigerian earnings from oil wealth to more than One trillion dollars since 1956 when oil was discovered in Nigeria in Oloibiri Community in the present day Bayelsa State. Nigeria is also an Oil Producing Exporting Countries (OPEC) member since 1971. Within OPEC, Nigeria is the largest crude oil producing nation in sub-Saharan Africa and the sixth largest in the world (Romanova; 2007; Ajakorotu, 2010). Similarly, in the Niger Delta Development Commission (NDDC), the agency in charge of Oil Producing States of the Niger Delta and neighbouring states, comprising Rivers, Delta, Bayelsa, Akwa-Ibom, Cross River, Edo, Ondo, Imo and Abia States, with a population of Thirty Nine Million (39m) in 2015 and a projected population of Forty-Six million (46m) in 2020 (NPC, 2019), Nigeria produced over 2.5 million barrels of crude oil per day at its peak in 2012, and currently about 2.2 million barrels per day based on the 2020 appropriation act.

Furthermore, Nigeria has over 606 oil fields scattered within these states. 360 of the oil fields representing 60% are onshore, while 246 oil fields representing 40% are offshore. Nigeria also has 1,481 oil wells, 275 flow stations, 10 gas plants, 4 refineries and 13 major oil companies (Romanova, 2007; Ibaba, 2008; Ajakorotu, 2010; Ibrahim, 2008). The allocations of these oil wells with over 7,000 kilometers of pipelines and flow lines have been concentrated in the hands of few multinational companies and their indigenous counterparts (Arewa, 2019). The major oil companies are Shell, Chevron, Mobil, Elf, Agip and Texaco. The Royal Dutch/Shell Group is the largest Multinational Oil Company in Nigeria (MNOC). It produces over 50% of Nigeria’s oil and has over 100 oil fields. This is followed by Mobil (second) and Chevron (third). These three oil giants account for more than 65% of Nigeria’s oil, both upstream and downstream (Romanova, 2007; Ibaba, 2008). The indigenous oil companies like Sapetro (South Atlantic) Oil Company, Cavendish Petroleum, AMNI Oil Company, Old Wok Field, North East Petroleum Limited, Express Petroleum, Scaplat Petroleum Intel Oil Company, and Nigerian Petroleum Development Company (NPDC) (Akukwe; 2016; Effiong, 2010). These oil majors also control the production, refining, management, sales and distribution of oil and gas in Nigerian. The entire procurement and logistics chain of both the upstream and downstream petroleum sectors are majorly within their purview. It could also be argued that oil wealth in Nigeria is concentrated in their hands.

In 2012, Temi (2013) noted that the oil leases granted operators through the number of Oil Mining Leases (OMLS) in operation were 109. The Oil Prospecting Leases (OPLS) were 92 at December, 2012. With a production target of 2.48 million barrels per day set by the Federal Government in 2012, 1.5 million barrels of oil per day (mbpd) came from onshore and shallow water terrains. The deep-water concessions accounted for 900,800 bpd (Temi, 2013). The major Multinational Oil Companies (MNOcs) controlled these oil bases. The 2012 oil production capacity of 2, 48 mbpd had 276,000 bpd produced by indigenous oil companies. This was just 11% of Nigeria’s production. Among the International Oil Companies (IOCs), Shell Petroleum Department Company (SPDC) produced 605,539 bpd, Mobil Producing Nigeria Unlimited (Exxon Mobil) produced 528, 000 bpd, Chevron Nigeria produced 489,999 bpd, Total Elf produced 400,134 bpd, Nigerian Agip Oil Company (NAOC) produced 98,284 bpd and Addax Oil Company produced 90,489 bpd (Shell, 2019; Arewa, 2019).

The Local Oil Companies (LOCs) with higher capacity were Nigerian Petroleum Development Company (NDPC), a subsidiary of Nigerian National Petroleum Corporation (NNPC) in charge of exploration and production, produced 125,828 bpd, Seplat Petroleum produced 40,033 bpd, Pan Ocean produced 7,387, and while all other LOCs combined (Independent Marginal) produced 102,797 bpd (Temi, 2013). The higher stake of NPDC was because of the current legislation that allocated all oil reserves as Federal Government owned. Because ownership of oil resources in Nigeria is exclusive to the Federal Governments, Multinational Oil Companies are mandated since the indigenization policy of 1970s, to form a joint venture with the Nigerian National Petroleum Corporation (NNPC) in oil exploration, exploitation and production (Effiong, 2010; Arewa, 2019). The revenue arising from it is also pooled into the Federation Account for distribution among the sub national governments. The agreed revenue allocation currently in operation gives the federal government 43%, states 30%, local government 20%, special funds 7% and derivation 13%. (Romanova, 2007; Ibaba, 2008). This showed alienation of the people from the wealth they produced.

The impact of this alienation to Nigerian national development is negatively unprecedented. Nigeria has the highest number of poor people in the world, overtaking China and India (Nwachukwu, 2019). Over 140 million (70%) of an estimated 200 million Nigerians are poor, living on less than one United States dollar (US$1) per day. The per capital income is about US$350 (Romanova, 2007; Usman, 2017). The Nigerian Bureau of Statistics (NBS) report in 2018 indicated that unemployment in Nigeria is 23% of the work force which is 130 million (65%) of the population. This is about 30 million of the population. The NBS report also indicated that unemployment was put at 16.6% of the workforce. This is about 21.6 million people (Ikemba, 2019). These statistics are worrisome and blink for Nigeria. Ikemba (2019) also reported that the incumbent Minister of Labour and Employment Generation, Senator Chris Ngige projected that unemployment will rise to 33.5% (43.5 million) in 2020 if nothing is done about it. This is why Forbes has tagged Nigeria as one of the poorest countries in the world.

The concentration of oil wealth in the hands of a very few in Nigeria also have socio-economic and political implications in the country. The production of crude oil in Nigeria would have been a blessing with attractive opportunities to generate income and improve the living standards of citizens. Unfortunately, the huge revenue accruing to the country through royalties, petroleum taxes, oil exports, refining and sales have not translated to economic wealth to the people. The neglect of the agricultural sector has created rural impoverishment and poverty. Lack of economic diversification has resulted in infrastructural decay and reduction in quality of education due to total neglect and abandonment. The emphasis in crude oil sales and production means total neglect of domestically produced goods and services in the agriculture, technology, manufacturing sectors etc. which would have been used to sure-up quality education in the country (Romanova, 2007; Ibaba, 2008; Usman, 2017; Arewa, 2019). The impact is very visible in the rate of poverty, poor health care, high rate of child and maternal mortality, reduced expenditures on societal services, poor quality education, income inequality, social unrest, corruption, environmental degradation, pollution of land and rivers, migration, unemployment etc.

Ironically, the reasons why these were the implications of concentrating the collective wealth of the people in the hands of a few in the allocation of oil blocs were due to lack of political will to ensure good governance and prudent management of available resources, lack of transparency and poor leadership (Arewa, 2019; Ibrahim, 2008; Romanova, 2007; Ajakorotu, 2010, Ibaba, 2008; Effiong, 2010). The enthronement of democratic government in 1999 in Nigeria did little to diversify the resources and ownership parameter of oil wealth for citizens’ wellbeing. This was due to inept political leadership and ineffective governance process in the country. With lack of political/public accountability, increased rate of corruption among the levels and organs of government, the need to invest in human capital development for national development was totally neglected. In 2008, President Umaru, Musa Yar’adua (2007-2010) stated that “Nigeria needs capital investment of between US$ 8 billion and US$ 10 billion to be among the top 20 developed economics by 2020” (Nwaibor and Kia; 2015, p.98). Similarly, President Goodluck Ebele Jonathan (2010-2015) echoed this sentiment at the 10th meeting of the Honorary International Investors Council. In his opening address, he said, “Nigeria needs $31 billion (US dollars) capital investment to be among the top 20 developed economics in the world by the year 2020” (Nwibor and Kia; 2015, p.98). The administration of President Olusegun Obasanjo (1999-2003) did nothing to address these challenges. This is also applicable to the present administration of President Muhammadu Buhari (2015 – date). Crude oil revenues have not translated to Nigerian national development the way it is visible in countries like Saudi-Arabia, United Arab Emirate (UAE), and Qatar etc. Regrettably, corruption, opaque governance system, lack of political will and nepotism in the allocation of oil blocs in Nigeria have made this difficult to accomplish. These challenges scholars noted, have greatly undermined national development and retrogressed socio-economic and political empowerment of the populace.

Barrister Femi Falana, a legal luminary and human rights activist in Nigeria has advised the Federal Government of Nigeria to stop allocating the nation’s oil blocs to few individuals in the country. In a letter to the Federal Government under President Muhammadu Buhari, Falana insisted that it was illegal and unconstitutional to allocate oil blocs to a few persons in Nigeria to the detriment of the general populace (Nwachukwu, 2019). The reaction of Barrister Falana was based on the decision of the Federal Government to revoke a number of oil blocs and marginal fields hitherto allocated to a few individuals as well as local and foreign corporate bodies especially multinational corporations by former military and civilian administrations in Nigeria.

The 1999 constitution of the Federal Republic of Nigeria (as amended) vested the ownership and control of all mineral deposition, mineral oil and natural gas in, under and upon any land in Nigeria or in, under or upon the territorial waters etc. to the Federal Government of Nigeria (FGN; 1999; S.44 :3)


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Oil Blocs Allocations and Nigeria’s Socio-Economic Development (1999 – 2020)
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blocs, allocations, nigeria’s, socio-economic, development
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Leo the Great Ebenezer (Author)Chris Piate (Author), 2021, Oil Blocs Allocations and Nigeria’s Socio-Economic Development (1999 – 2020), Munich, GRIN Verlag, https://www.grin.com/document/1143439


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