History of Crude Oil in Nigeria


Prior to the discovery of oil in 1956, the Nigerian Bitumen Corporation was involved in conducting exploratory work as far back as 1907.

But when the World War 1 commenced, the firm had to stop operations. Following the end of the war, licences were given to the D’Arcy Exploration Company and Whitehall Petroleum but these companies were unable to find oil of commercial value, subsequently, they returned their licenses in 1923.

Ten year later, Shell D’arcy Petroleum Development Company of Nigeria, a consortium of Shell and British Petroleum (then known as Anglo-Iranian) began exploratory work following the issue of a new license covering 920,000 square kilometres (357,000 square miles).

Drilling activities commenced in 1951 with the first test well drilled in Owerri area and oil was discovered in non-commercial quantities at Akata, near Eket in 1953.

The company spent over 6 million pounds prior to this discovery but they remain unrelenting in their search for crude of commercial quantity.

Finally, the company discovered commercially available oil in Oloibiri, Nigeria which led to many more discoveries over the last 60 years.

History of Crude Oil in Nigeria

Initially, Shell-BP was appointed as the sole concessionaire of oil exploration in the country.

But by 1960, other oil companies had been given exploratory rights in the onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies.

Shell made another giant stride in 1965 when the company discovered the EA field in the shallow waters of the southeastern part of Warri.

After the Biafran war in 1970, there was a rise in oil prices and the country was able to reap the instant riches from its oil production and a year later, Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC).

In 1977, the Nigerian National Petroleum Company (NNPC) was established as a state owned and controlled company involved in the upstream and downstream oil sectors.

During the late sixties and early seventies, Nigeria was producing over 2 million barrels of crude oil per day and by 2010, the figured had increase to 4million barrels per day.

Currently, Nigeria is the largest oil producer in Africa and the production of petroleum in the country plays a dominant role in the economy with over 90% of gross earnings coming from crude oil.

In 2010, Nigeria provided about 10% of overall U.S. oil imports and ranked as the fifth-largest source for oil imports in the U.S. However, Nigeria ceased exports to the US in July 2014 because of the impact of shale production in America; India is now the largest consumer of Nigerian oil. Other countries that buy Nigeria’s oil include UK, Germany and China.

Currently, there are six petroleum exportation terminals in the country. Shell owns two, while Mobil, Chevron, Texaco, and Agip own one each. Shell also owns the Forcados Terminal, which is capable of storing 13 million barrels (2,100,000 m3) of crude oil in conjunction with the nearby Bonny Terminal.

Mobil operates primarily out of the Qua Iboe Terminal in Akwa Ibom State, while Chevron owns the Escravos Terminal located in Delta State and has a storage capacity of 3.6 million barrels (570,000 m3).

Agip operates the Brass Terminal in Brass, a town 113 kilometres (70 miles) southwest of Port Harcourt and has a storage capacity of 3,558,000 barrels (565,700 m3). Texaco operates the Pennington Terminal.

Overall, we’ve highlighted the major events in the history of crude oil in the country below:

History of Crude Oil in Nigeria: Years & Events Timeline

  • 1908 | Nigerian Bitumen Co. & British Colonial Petroleum commenced operations around Okitipupa.
  • 1938 | Shell D’ Arcy granted Exploration license to prospect for oil throughout Nigeria.
  • 1955 | Mobil Oil Corporation started operations in Nigeria.
  • 1956 | First successful well drilled at Oloibiri by Shell D’Arcy
  • 1956 | Changed name to Shell-BP Petroleum Development Company of Nigeria Limited
  • 1958 | First shipment of oil from Nigeria
  • 1961 | Shell’s Bonny Terminal was commissioned and Texaco Overseas started operations in Nigeria.
  • 1962 | Elf and Agip Oil started operations in Nigeria.
  • 1963 | Elf discovered Obagi field and Ubata gas field
  • 1965 | Agip found its first oil at Ebocha and Phillips Oil Company started operations in Bendel State
  • 1966 | Elf started production in Rivers State with 12,000 b/d
  • 1967 | Phillips drilled its first well (Dry) at Osari – I and made its first oil discovery at Gilli-Gilli -I
  • 1968 | Mobil Producing Nigeria Limited) was formed and the Gulf’s Terminal at Escravos was commissioned
  • 1970 | Mobil started production from 4 wells at Idoho Field and Agip started production as the Department of Petroleum Resources Inspectorate commenced operations.
  • 1971 | Shell’s Forcados Terminal and Mobil’s terminal at Qua Iboe commissioned
  • 1973 | 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
  • 1974 | Second Participation Agreement, Federal Government increases equity to 55% and Elf formally changed its name from “Safrap.” Ashland’s first oil discovery at Ossu –I
  • 1975 | Agip carried out its first Oil lifting from Brass Terminal and the DPR was upgraded to the Ministry of Petroleum Resources
  • 1976 | MPE renamed Ministry of Petroleum Resources (MPR) and Pan Ocean commenced production via Shell-BP’s pipeline at a rate of 10,800 b/d
  • 1977 | Government established the Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC & MPR extinguished).
  • 1979 | 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
  • 1984 | Agreement consolidating NNPC/Shel1 joint Venture
  • 1986 | Signing of Memorandum of Understanding (MOU)
  • 1989 | Fifth Participation Agreement; (NNPC=60%, Shell = 30%, Elf=5%, Agip=5%).
  • 1991 | Signing of Memorandum of Understanding & joint Venture Operating Agreement (JOA)
  • 1993 | SNEPCO signed the Production Sharing Contracts in a Sixth Participation Agreement with the likes of NNPC=55%, Shell=30%, Elf= 10% and Agip=5%. It was this year the Elf’s Odudu blend, offshore OML 100 cam on-stream
  • 1995 | SNEPCO starts drilling first Exploration well.
  • 1999 | NLNG’s First shipment of Gas out of Bonny Terminal
  • 2000 | NPDC/NAOC Service Contract signed
  • 2001 | Production of Okono offshore field.
  • 2002 | New PSCs agreement signed and the downstream oil sector was liberalised. It was the same year NNPC commenced its retail outlet scheme


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