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October 08, 2015
History of the Nigerian Petroleum Industry
Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of exploration. The discovery was made by Shell-BP, at the time the sole concessionaire. Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream producing 5,100 bpd. After 1960, exploration rights in onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies. In 1965 the EA field was discovered by Shell in shallow water southeast of Warri.

In 1970, the end of the Biafran war coincided with the rise in the world oil price, and Nigeria was able to reap instant riches from its oil production. Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971 and established the Nigerian National Petroleum Company (NNPC) in 1977, a state owned and controlled company which is a major player in both the upstream and downstream sectors.

Following the discovery of crude oil by Shell D’Arcy Petroleum, pioneer production began in 1958 from the company’s oil field in Oloibiri in the Eastern Niger Delta. By the late sixties and early seventies, Nigeria had attained a production level of over 2 million barrels of crude oil a day. Although production figures dropped in the eighties due to economic slump, 2004 saw a total rejuvenation of oil production to a record level of 2.5 million barrels per day. Current development strategies are aimed at increasing production to 4million barrels per day by the year 2010.

Petroleum production and export play a dominant role in Nigeria's economy and account for about 90% of her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the economy, from the early fifties and sixties, to the background.

Major Events in the history of the Nigerian Oil and Gas
Nigerian Bitumen Co. & British Colonial Petroleum commenced operations around Okitipupa.

Shell D' Arcy granted Exploration license to prospect for oil throughout Nigeria.

Mobil Oil Corporation started operations in Nigeria.

First successful well drilled at Oloibiri by Shell D'Arcy

Changed name to Shell-BP Petroleum Development Company of Nigeria Limited.

First shipment of oil from Nigeria.

Shell's Bonny Terminal was commissioned.
Texaco Overseas started operations in Nigeria.

Elf started operations in Nigeria. (As Safrap)
Nigeria Agip Oil Company started operations in Nigeria

Elf discovered Obagi field and Ubata gas field
Gulf's first production

Agip found its first oil at Ebocha
Phillips Oil Company started operations in Bendel State

Elf started production in Rivers State with 12,000 b/d

Phillips drilled its first well (Dry) at Osari –I
Phillips first oil discovery at Gilli-Gilli -I

Mobil Producing Nigeria Limited) was formed.
Gulf's Terminal at Escravos was commissioned

Mobil started production from 4 wells at Idoho Field
Agip started production
Department of Petroleum Resources Inspectorate started.

Shell's Forcados Terminal Commissioned
Mobil's terminal at Qua Iboe commissioned

First Participation Agreement; Federal Government acquires 35% shares in the Oil Companies
Ashland started PSC with then NNOC (NNPC)
Pan Ocean Corporation drilled its first discovery well at Ogharefe –I

Second Participation Agreement, Federal Government increases equity to 55%.
Elf formally changed its name from "Safrap"
Ashland's first oil discovery at Ossu –I

First Oil lifting from Brass Terminal by Agip
DPR upgraded to Ministry of Petroleum Resources

MPE renamed Ministry of Petroleum Resources (MPR)
Pan Ocean commenced production via Shell-BP's pipeline at a rate of 10,800 b/d

Government established Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC & MPR extinguished).

Third Participation Agreement (throughout NNPC) increases equity to 60%
Fourth Participation Agreement; BP's shareholding nationalised, leaving NNPC with 80% equity and Shell 20% in the joint Venture.
Changed name to Shell Petroleum Development Company of Nigeria (SPDC)

Agreement consolidating NNPC/Shel1 joint Venture.

Signing of Memorandum of Understanding (MOU)

Fifth Participation Agreement; (NNPC=60%, Shell = 30%, Elf=5%, Agip=5%).

Signing of Memorandum of Understanding & joint Venture Operating Agreement (JOA)

Production Sharing Contracts signed -SNEPCO
Sixth Participation Agreement; (NNPC=55%, Shell=30%, Elf= 10%, Agip=5%).
The coming on-stream of Elf's Odudu blend, offshore OML 100.

SNEPCO starts drilling first Exploration well.
NLNG's Final Investment Decision taken

NLNG's First shipment of Gas out of Bonny Terminal.

NPDC/NAOC Service Contract signed

Production of Okono offshore field.

New PSCs agreement signed.
Liberalisation of the downstream oil sector.
NNPC commences retail outlet scheme