PETROLEUM AND THE NIGERIAN ECONOMY Lesson Note
Learning Objectives
This SS3 Economics lesson note covers PETROLEUM AND THE NIGERIAN ECONOMY for First Term, Week 3.
Lesson Note
Learning Objectives
At the end of the lesson, students should be able to:
1. Explain the meaning of petroleum.
2. Describe the development of the petroleum industry in Nigeria.
3. State the contributions of petroleum to the Nigerian economy.
4. Explain the positive and negative roles of the Nigerian National Petroleum Company Limited (NNPC Ltd.) in the petroleum industry.
5. Explain the roles of Organization of the Petroleum Exporting Countries (OPEC).
A. MEANING OF PETROLEUM
Petroleum is a naturally occurring liquid mineral resource, also called crude oil, found beneath the earth's surface. It is refined into useful products such as petrol (PMS), diesel (AGO), kerosene (DPK), aviation fuel, lubricants, and cooking gas (LPG).
B. DEVELOPMENT OF THE PETROLEUM INDUSTRY IN NIGERIA
The development of the petroleum industry in Nigeria started several years ago the first attempt made towards oil exploration was in 1908 by a German company called butman corporation this was closely followed in 1937 by shell D Aery an angle dutch company ,by 1956 shel B.P embarked on a more economic production of petroleum in the niger delta region of Nigeria .it was in the year 1956 that shell B.P discovered it's first commercial crude oil in the country at oloibiri in the present river state in 1958 full scale production had taken off later other companies joined in the exploration by1960 when Nigeria became independent the volumn of crude oil export rose to six million barrels by 1965 crude petroleum products had reach about 100 million ever since 1976 till date petroleum has remained the major source of government revenue
C. CONTRIBUTIONS OF PETROLEUM TO THE NIGERIAN ECONOMY
1. Generates revenue for the government.
2. Provides foreign exchange through crude oil exports.
3. Creates employment opportunities.
4. Promotes industrial development.
5. Supplies energy for homes, transport, and industries.
6. Attracts foreign direct investment (FDI).
7. Contributes significantly to Nigeria's Gross Domestic Product (GDP).
D. MEANING AND ORIGIN OF NNPC
NNPC means Nigerian National Petroleum Corporation.
NNPC was established by the Nigerian government in 1977 through the merger of:
The Nigerian National Oil Corporation (NNOC), established in 1971, and
The Ministry of Petroleum Resources
The main purpose was to enable the Nigerian government to participate directly in the exploration, production, processing and marketing of petroleum resources
E. POSITIVE ROLES OF NNPC Ltd.
1. Explores crude oil and natural gas.
2. Participates in crude oil production through joint ventures.
3. Refines crude oil into petroleum products.
4. Markets petroleum products within and outside Nigeria.
5. Distributes petroleum products nationwide.
6. Manages government interests in the petroleum sector.
7. Encourages investment in the oil and gas industry.
F. NEGATIVE ROLES/CHALLENGES OF NNPC Ltd.
1. Inefficiency in some operations.
2. Corruption and mismanagement allegations.
3. Pipeline vandalism and oil theft affecting operations.
4. Poor maintenance of some refineries over the years.
5. Environmental pollution associated with oil activities
G. OPEC (MEANING)
OPEC means Organization of the Petroleum Exporting Countries. It is an international organisation made up of countries that produce and export petroleum
Its main purpose is to coordinate and unify the petroleum policies of its member countries and help promote stability in the international oil market
OPEC was established in September 1960 at a conference held in Baghdad, Iraq
Nigeria joined OPEC in 1971.
H. ROLES OF OPEC
1. Coordinates petroleum policies among member countries.
2. Regulates oil production to help stabilize world oil prices.
3. Promotes cooperation among oil-producing countries.
4. Protects the interests of member nations.
5. Helps ensure a stable supply of petroleum to the global market.
6. Encourages fair and stable prices for producers and consumers.
Evaluation
OBJECTIVE QUESTIONS
1. In which year was crude oil first discovered in commercial quantity in Nigeria?
A. 1956
B. 1960
C. 1971
D. 1977
2. Where was crude oil first discovered in commercial quantity in Nigeria?
A. Kano
B. Oloibiri
C. Lagos
D. Jos
3. Oloibiri is located in which present-day state?
A. Rivers State
B. Bayelsa state
C. Delta State
D. Akwa Ibom State
4. Which company discovered crude oil in commercial quantity at Oloibiri in 1956?
A. Shell
B. Mobil
C. Chevron
D. Total
5. Nigeria became a member of OPEC in ______.
A. 1960
B. 1965
C. 1971
D. 1977
6. One positive contribution of OPEC to Nigeria is that it ______.
A. Coordinates petroleum policies among member countries
B. Controls Nigerian agriculture
C. Manufactures petroleum equipment
D. Provides free education to Nigerians
7. NNPC was established in ______.
A. 1960
B. 1971
C. 1977
D. 1985
8. One important contribution of NNPC to the Nigerian economy is ______.
A. Participation in petroleum exploration and production
B. Production of agricultural crops
C. Regulation of primary schools
D. Construction of residential houses only
9. OPEC helps petroleum-producing countries by promoting ______.
A. Stability in the international oil market
B. Free importation of all goods
C. Decline in oil production
D. Agricultural exports
10. Which of the following is a positive contribution of NNPC to Nigeria?
A. Generation of government revenue and foreign exchange
B. Encouragement of oil theft
C. Reduction of petroleum production
D. Promotion of environmental pollution
Theory Questions
1a. Define petroleum.
1b. Explain the development of the petroleum industry in Nigeria.
1c. State five contributions of petroleum to the Nigerian economy.
2a. Mention five positive roles of NNPC Ltd.
2b. State five challenges or negative roles associated with NNPC Ltd.
2c. Explain five roles of OPEC.