The main hallmarks of the development of the Nigerian oil and gas industry over the last 50 years, apart from its internationally-notorious environmental and human rights record, have been two-fold:
It has also deliberately eroded community values and systems which would have allowed communities to challenge company practices.
Nigeria has become one of the world's main oil and gas producers...
According to the US Government, Nigeria is the largest oil producer in Africa and 11th largest in the world. It is an increasingly major supplier to the US, averaging 1.1 million barrels per day (bbl/d) in 2004, compared with 589,000 bbl/d in 2002. Crude oil production in 2004 was 2.5 million bbl/d. Oil export revenue is estimated at $20.9 billion for 2003 and forecast to be $27 billion for 2004, an increase of over 22%. The country has significant oil, and even more, gas reserves.[ 9 ]
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The Nigerian National Petroleum Corporation (NNPC) now holds 55-60% interests in the main producing companies. Shell and BP were joined over the years by most of the other oil majors, exploring and producing, both onshore and offshore, and acting as operators in joint ventures with NNPC. Though BP were kicked out of the country by the government in 1979.
About 95% of Nigerian oil (and gas) production is now carried out by Shell, ExxonMobil, ChevronTexaco, Agip and TotalFinaElf - the Big 5 - through joint venture (JV) companies in which the western companies are the operators but hold minority shares. Table 3.1 was compiled by the US Government in April 2003.[ 10 ]
According to one 2002 publication, there were 606 oil and gas fields in the Delta, 355 onshore and 251 offshore, of which 193 were producing in 2002.[ 11 ]
And according to the Shell website,
"SPDC [the Shell Petroleum Development Company Limited] has more than 90 oil and gas fields spread over some 30,000 square kilometres of oil mining leases in the Niger Delta. It is a massive operation involving a network of more than 6,000 kilometres of flowlines and pipelines, seven gas plants, 86 flowstations and other facilities." [ 12 ]
The flaring of AG takes place mainly at the flow stations.
...but most Nigerians have not benefited.
Despite its oil and gas, Nigeria is now one of the poorest countries in the world.
This is difficult to believe. Until it is recalled, for example, that 28 of the 45 years since independence have been under military rule, and that the Economic and Financial Crimes Commission estimates 45% of Nigeria's oil revenues are reportedly wasted, stolen or siphoned away by corrupt officials.[ 13 ]
The World Bank puts GNP per capita at about US$320, below that at independence and below US$370 in 1985. About 66% of the population now falls below the poverty line of roughly US$1 a day, compared to 43% in 1985. [ 14 ] As it stated in 2002:
"the main beneficiaries of the oil sector are foreign oil companies and the Nigerian government. As yet, there has been very little direct impact of oil and gas production on the lives of Nigeria's poor." [ 15 ]
A snapshot of the poverty in the country can be obtained from a comparison with Bangladesh, a country of virtually identical population size living on less than one-sixth of Nigeria's land area, receiving more than twice as much overseas aid, [ 16 ] and sharing with Haiti the ignominy of being the only countries in the world to rank lower than Nigeria in Transparency International's Corruption Perceptions Index 2004.[ 17 ]
Bangladesh has a higher Gross National Income, a higher GNI per capita, and a higher Gross Domestic Product - despite exporting and importing at less than twice Nigerian levels, and despite foreign investment in Nigeria being many times greater. A Nigerian child is more than twice as likely to die before reaching 5 years of age, and is less likely to be immunized against measles. Her life expectancy is considerably shorter, her use of electricity is lower, yet her proportion of short-term debt is nearly four times higher.[ 17A ]
On the other hand, a Nigerian is more likely to be literate compared with a Bangladeshi, is less likely to have suffered malnutrition as a child, and is more likely to have a mobile phone and personal computer.
Incredibly, Nigeria's energy use is five times higher than in Bangladesh (705.6/138.4 kg oil equivalent), whereas electricity use per capita is lower (69.2 / 89.0 kwh).
These statistics do not begin to capture the human experience of living in poverty. But they give a sense of the context in which the outrageous waste of Nigeria's resources through gas flaring has taken place. We next consider the scale of that flaring.
[ 9 ] EIA Country Analysis Brief: Nigeria, April 2005. Available here as a PDF or a web page. The previous Brief (August 2004) cited a range for proven oil reserves from 25 billion (Oil and Gas Journal) to 35.2 billion barrels (OPEC). It stated: "The majority of these reserves are found in relatively simple geological structures along the country's coastal Niger River Delta, but newer reserves have been discovered in deeper waters offshore Nigeria. The majority of the oil lies in about 250 small (i.e., less than 50 million barrels each) fields." The April 2005 version states that Nigeria has an estimated 176 trillion cubic feet of proven natural gas reserves according to the Oil and Gas Journal, putting it in the global Top Ten. We consider that estimates of reserves should be treated with some caution, especially after it was revealed last year that Shell had been lying about its reserves and Nigeria was the biggest single country affected. The full impact of the reserves fiasco on gas flaring has yet to emerge.
[ 10 ] Available here: http://www.eia.doe.gov/emeu/cabs/ngia_jv.html.
[ 11 ] Nigeria Oil Handbook and Review 2002, 11th Edition, page 20. We have little confidence in the reliability of this publication.
[ 12 ] This information was taken from a Shell web page entitled "Flares Out by 2008", on April 25th, 2005. The page was previously accessible from here. This web page has since been removed. However, the SPDC 2004 annual report states that SPDC has 73 flow stations.
[ 13 ] "The EFCC [Economic and Financial Crimes Commission] estimates 45% of Nigeria's oil revenues are wasted, stolen or siphoned away by corrupt officials." BBC news report, 5th April 2005, available here.
[ 15 ] Memorandum of the President of the International Development Association and the International Finance Corporation to the Executive Directors on an Interim Strategy Update for the Federal Republic of Nigeria, February 13, 2002, Report No. 23633-UNI ("World Bank Joint Interim Strategy Update"), paragraph 29. This 68-page document is available here.
[ 16 ] The following statements are interpreted from the data set out in each country's World Bank Data Profile, They are available here: Nigeria Bangladesh
[ 17 ] See: http://www.transparency.org/cpi/2004/cpi2004.en.html#cpi2004
[ 17A ] In the original report, we stated that "A Nigerian mother is less likely to be attended by skilled health staff at the birth of her child than a Bangladeshi mother." This is not correct, and has thus been omitted from this web version of the report. The World Bank Data Profile indicates that in 2003, 35% of births were attended by skilled health staff in Nigeria, and 14% in Bangladesh. We apologise for this misinterpretation of the data.
Executive Summary | Introduction | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Section 8 | Section 9 | Conclusions