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Discovery of Crude Oil in Nigeria; A Blessing or a Curse

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Capstone Presentation at Northwestern University

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Discovery of Crude Oil in Nigeria; A Blessing or a Curse

  1. 1. Bolawa Fadojutimi CRUDE OIL IN NIGERIA; A Blessing or a CurseNorthwestern University, Capstone Presentation Masters in Project Management May 2012
  2. 2. CONTENT •NIGERIA •BACKGROUND INFORMATION •HISTORY OF OIL IN NIGERIA •IMPACTS OF THE OIL INDUSTRY •ECONOMY •ENVIRONMENT •PEOPLE •AGRICULTURE •FUTURE OUTLOOK • CONCLUSION
  3. 3. NIGERIA – BACKGROUND INFORMATION
  4. 4. NIGERIA – BACKGROUND INFORMATIONLOCATIONWestern AfricaPOPULATION170million (7th largest in the world)CLIMATETropical RegionRESOURCESNatural Gas, Crude Oil, Tin, Iron Ore, Limestone,Niobium, Lead and ZincAGRICULTURAL PRODUCTSCocoa, Peanuts, Cotton, Palm Oil, Corn, Rice,Sorghum, Millet, Tapioca (cassava), Yams, andRubber
  5. 5. HISTORY OF OIL IN NIGERIA
  6. 6. OIL IN NIGERIA - HISTORY1908 Exploration commenced1914 Brought to an abrupt end by WW I1937 Resumed by Anglo - Dutch consortium1947 Brought to an abrupt end by WW II1956 Commercial discovery in the Niger Delta (5100bpd) CIVIL WAR 1967 - 1970 •Oil production grossly affected •Irregularities in sharing formula •Ethnic clashes, 2,000,000 lives lost
  7. 7. OIL IN NIGERIA - HISTORY OIL BOOM 70’s Kaduna Refinery •Enormous wealth creation •Other sectors took the backseat •Refineries built in 1978, 1980 and 1989
  8. 8. OIL IN NIGERIA - PRODUCTION6th Largest producer of oil in the world Produce 2.46m barrels of oil per day Import 33m liters per day
  9. 9. OIL IN NIGERIA•Job creation through the sector In 2011 90% Foreign earnings 40% GDP contribution
  10. 10. IMPACTS OF THE OIL INDUSTRY
  11. 11. ECONOMY – BACKGROUND INFORMATION•Highly dependent on the agricultural sector up until the 70’s REVENUE CONTRIBUTION4.1% I 5.9 % 64% 1963 - 1964 1970 – 1985
  12. 12. ECONOMY SECTOR CONTRIBUTION TO GDP 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% •Economic policies have been centered around oil sector Minister of Finance, Dr (Mrs.) Ngozi Okonjo-Iweala, “…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…”
  13. 13. ECONOMY EARNED AND PROJECTED VALUE OF EXPORTS EARNINGS •2010 – US$ 65.073 billion •2011 –US$ - 87.92 billion
  14. 14. ECONOMY BLESSING •Giant of Africa •Staggering revenues •Access to international loans CURSE •Collapse of infrastructure •Lack of evident development •21% unemployment rate •70% of population below poverty line
  15. 15. ENVIRONMENT – BACKGROUND INFORMATION NIGER DELTA REGION 70,000km2, 800 communities Freshwater swamp forests Mangrove forest Lowland rainforests Barrier island forests 60-80% of all Nigerian plant and animal species Non renewable resources Natural gas, Fossil fuels, and Construction materials Renewable resources Timber, Vegetables, Fruits, Nuts and Seeds and Medicinal plants
  16. 16. 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
  17. 17. ENVIRONMENT - OIL SPILLAGE STATISTICS
  18. 18. ENVIRONMENT - OIL SPILLAGE In 2011, SPDC reported Oil spillages of 1.68m gallons of oil •Spread over 356 square miles •Worst oil spill in the region in the last decade •Arguments over figures released
  19. 19. ENVIRONMENT - RESTORATIONUNITED NATIONS ENVIRONMENTAL PROGRAMME 2011 ASSESSMENTEnvironmental Restoration30years, $1bn for first 5yearsCURSE•Extreme levels of pollution•Arable land heavily contaminated•Drinking water contains pollutants
  20. 20. 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
  21. 21. 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
  22. 22. AGRICULTURE – BACKGROUND INFORMATION In the 60’s met 95% of nations food needs 64.1% GDP contribution •Major revenue generator 1914 – 1970’s •Employed a large percentage of the population Current Situation •Less than 50% of arable land cultivated •Small scale, using age old methods •Employs 70% of population
  23. 23. AGRICULTURE In 2011 $4bn Importation on food 35.4% GDP contribution 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
  24. 24. AGRICULTURE – SECTOR REVITILIZATION TARGETS AND ASPIRATIONS VISION 2020 & MILLENIUM DEVELOPMENT GOALS 2015 partnering •Ensuring local food needs are met •Major exporter of foodstuffs •Boost the sector
  25. 25. AGRICULTURE CURSE •4.6% allocation in federal budget •Economic policies don’t support sector •Loss of arable lands to exploration activities
  26. 26. FUTURE OUTLOOK
  27. 27. FUTURE OUTLOOK
  28. 28. CONCLUSION •DECENTRALIZATION OF ECONOMY •REVAMPING •IMPLEMENTATIONOF ALL SECTORS OF GOALS •GOVERNMENT ACCOUNTABILITY
  29. 29. THANK YOUQ&A

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