The PSCs on the other hand focus on the sharing of output of oil and gas operations in agreed proportions between the oil company, as a contractor to the government, and the NNPC as a representative of government interest in the venture. Some MNOCs have formed into indigenous oil companies’ concessions where they provide the technical expertise and funding required for exploration and production operations. 1.1.3 Current state of the petroleum industry in Nigeria Peel (2010) claims that Nigeria has become a guinea pig for a fossil-fuel-obsessed world, and is self-inflicting its woes as a result of an oil-dominated economy. He reports that the global clamour fo r Nigeria’s oil is evident, since Nigeria accounts for 10% of total imports of oil to the United States of America (USA). Furthermore China in the past decade has captured exploration contracts with promises of investment in infrastructure, Russia is in a joint venture with the NNPC, and the European Union (EU) has offered financial and political assistance to the country in return for the direct export of its gas to Europe. Nigeria stands as the largest exporter of crude oil in Africa when in full production, and is amongst the top ten in the world (Peel, 2010). Nigeria is of strategic value to the MNOCs and their home countries, due to the magnitude and quality of its crude oil and gas reserves, its physical location as it is geographically closer to the USA than the Middle East, and its conciliatory government. The high quality of Nigeria’s
6 crude oil makes refining it into petroleum very easy. Furthermore, its enormous and incessantly expanding gas reserves are having a significant impact on the global move towards gas (Peel, 2010). Of the 606 oil fields in the Niger Delta region of the Nigeria, 355 are located on- shore, and 251 are offshore. Of these, 193 are currently operational while 23 have been shut down or abandoned due to poor productivity or drying up of wells. Outside the Niger Delta region, there are two oil wells in Anambra state, one well each in Edo state and Benue state, while the Chad basin has 24 wells (NNPC, 2006). A network of about 7 000 kilometres of pipelines and flow lines criss-cross communities and creeks in the country wending their way like submerged snakes of which: 105 kilometres is for condensates; 1 896 kilometres for natural gas; 3 638 kilometres for crude oil, and 3 626 kilometres for refined products (UNDP, 2006). A great deal of the crude oil exploration and production activities is carried out by drilling and transporting it via exposed oil wells and pipelines running through host communities on both land, water ways, and in the creeks transient through-flow stations to export terminals on the coast (Peel, 2010). Nigeria’s production rate stands at 25.93 billion barrels of oil, 3.80 billion barrels of condensate and 158 trillion cubic feet of gas as at 2000, up from a modest figure of 0.184 billion barrels of oil and 2.260 billion cubic feet of gas in 1958 (NNPC, 2004).
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