Bolawa FadojutimiCRUDE OIL IN NIGERIA;

A Blessing or a Curse

Northwestern University, Capstone PresentationMasters in Project Management

May 2012

CONTENT

•NIGERIA • BACKGROUND INFORMATION•HISTORY OF OIL IN NIGERIA•IMPACTS OF THE OIL INDUSTRY• ECONOMY• ENVIRONMENT• PEOPLE• AGRICULTURE•FUTURE OUTLOOK• CONCLUSION

NIGERIA – BACKGROUND INFORMATION

LOCATION Western Africa

POPULATION 170million (7th largest in the world)

CLIMATETropical Region

RESOURCESNatural Gas, Crude Oil, Tin, Iron Ore, Limestone, Niobium, Lead and Zinc

AGRICULTURAL PRODUCTS Cocoa, Peanuts, Cotton, Palm Oil, Corn, Rice, Sorghum, Millet, Tapioca (cassava), Yams, and Rubber

NIGERIA – BACKGROUND INFORMATION

HISTORY OF OIL IN NIGERIA

OIL IN NIGERIA - HISTORY

1908 Exploration commenced

Brought to an abrupt end by WW I19141937Resumed by Anglo - Dutch consortium

19471956Commercial discovery in the Niger Delta (5100bpd)

CIVIL WAR1967 - 1970

• Oil production grossly affected• Irregularities in sharing formula• Ethnic clashes, 2,000,000 lives lost

Brought to an abrupt end by WW II

OIL BOOM

70’s

• Enormous wealth creation• Other sectors took the backseat

• Refineries built in 1978, 1980 and 1989

Kaduna Refinery

OIL IN NIGERIA - HISTORY

6th Largest producer of oil in the world

Produce 2.46m barrels of oil per day

Import 33m liters per day

OIL IN NIGERIA - PRODUCTION

•Job creation through the sector

90% Foreign earnings

40% GDP contribution In 2011

OIL IN NIGERIA

IMPACTS OF THE OIL INDUSTRY

ECONOMY – BACKGROUND INFORMATION

•Highly dependent on the agricultural sector up until the 70’s

64%1963 - 1964

4.1% I 5.9 %1970 – 1985

REVENUE CONTRIBUTION

ECONOMY

SECTOR 1960 1970 1980 1990 2000 2002

AGRICULTURE 64.10% 47.60% 30.80% 39.00% 35.70% 28.35%

MANUFACTURING 4.80% 8.20% 8.10% 8.20% 3.40% 5.50%

CRUDE PETROLEUM 0.30% 7.10% 22.00% 12.80% 47.50% 40.60%

OTHERS 30.80% 37.10% 39.10% 40.00% 13.40% 25.55%

SECTOR CONTRIBUTION TO GDP

• Economic policies have been centered around oil sector

“…We have suffered a great deal in this country from our inability or unwillingness to manage our oil resources properly. When oil prices are high like now, a great deal of optimism sets in and we tend to spend all that we earn to meet our admittedly tremendous needs…”

Minister of Finance, Dr (Mrs.) Ngozi Okonjo-Iweala,

ECONOMY

EARNED AND PROJECTED VALUE OF EXPORTS

• 2010 – US$ 65.073 billion• 2011 –US$ - 87.92 billion

EARNINGS

ECONOMY

CURSE

BLESSING• Giant of Africa

• Staggering revenues• Access to international loans

• Collapse of infrastructure• Lack of evident development • 21% unemployment rate

• 70% of population below poverty line

ENVIRONMENT – BACKGROUND INFORMATION

NIGER DELTA REGION

70,000km2, 800 communities

Freshwater swamp forestsMangrove forest

Lowland rainforestsBarrier island forests

Non renewable resources Natural gas, Fossil fuels, and Construction materials

Renewable resources Timber, Vegetables, Fruits, Nuts and Seeds and Medicinal plants

60-80% of all Nigerian plant and animal species

ENVIRONMENT – BACKGROUND INFORMATION

Oil exploration activities• Massive dynamiting for geological excavations

• Explosions in aquatic environments• Burying of oil and gas pipelines

• OIL SPILLAGE• A reduction in habitat area.•Death of wildlife and aquatic life

•Disruption of wildlife breeding patterns

ENVIRONMENT - OIL SPILLAGE STATISTICS

ENVIRONMENT - OIL SPILLAGE

Oil spillages of 1.68m gallons of oil

In 2011, SPDC reported

• Spread over 356 square miles• Worst oil spill in the region in the last decade

• Arguments over figures released

Environmental Restoration

30years, $1bn for first 5years

ENVIRONMENT - RESTORATION

UNITED NATIONS ENVIRONMENTAL PROGRAMME

•Extreme levels of pollution•Arable land heavily contaminated•Drinking water contains pollutants

CURSE

2011 ASSESSMENT

PEOPLE – BACKGROUND INFORMATION

140 ETHNIC GROUPS

• Loss of fishing areas• Exposure to varying diseases

• Child birth defects and chronic illnesses• Loss of thousands of coastal lands and

farmlands

PEOPLE

MILITANT GROUPS• Claim to fight for the right of the people

• Involved in kidnappings• Sabotaging government efforts

CURSE• Loss of farmland and water bodies• Deteriorating state of infrastructure

• Lack of access to portable water and educational facilities

AGRICULTURE – BACKGROUND INFORMATION

95% of nations food needs

64.1% GDP contribution

In the 60’s met

Current Situation• Less than 50% of arable land cultivated• Small scale, using age old methods

• Employs 70% of population

• Major revenue generator 1914 – 1970’s• Employed a large percentage of the population

AGRICULTURE

$4bn Importation on food

35.4% GDP contribution In 2011

SECTOR 1960 1970 1980 1990 2000 2002

AGRICULTURE 64.10% 47.60% 30.80% 39.00% 35.70% 28.35%

MANUFACTURING 4.80% 8.20% 8.10% 8.20% 3.40% 5.50%

CRUDE PETROLEUM 0.30% 7.10% 22.00% 12.80% 47.50% 40.60%

OTHERS 30.80% 37.10% 39.10% 40.00% 13.40% 25.55%

SECTOR CONTRIBUTION TO GDP

AGRICULTURE – SECTOR REVITILIZATION

VISION 2020 &MILLENIUM DEVELOPMENT GOALS 2015

• Ensuring local food needs are met • Major exporter of foodstuffs

• Boost the sector

TARGETS AND ASPIRATIONS

partnering

CURSE

AGRICULTURE

• 4.6% allocation in federal budget• Economic policies don’t support sector

• Loss of arable lands to exploration activities

FUTURE OUTLOOK

FUTURE OUTLOOK

?

CONCLUSION

• DECENTRALIZATION OF ECONOMY

• REVAMPING OF ALL SECTORS

• GOVERNMENT ACCOUNTABILITY

•IMPLEMENTATIONOF GOALS

Q & ATHANK YOU