The study examined the Impact of Oil and Gas Technology on Nigeria: A Study of Niger Delta from 1970-2010)

By

AKUJURU, CHUKWUNONYE ABOVU. (Doctoral Student, M.Sc., B.Sc., LLB, BL) (08037450542)

Head of the Department, Public Administration,Rivers State College of Arts and Science, Rumuola Port Harcourt.

Email: cakujuru@yahoo.com&

ENYIOKO NEWMAN CHINTUWA (MNIM, MBA, M.Sc., B.Sc.)(0803-6703647)Medonice Consulting and Research Institute, Port Harcourt.

Email: newmanenyioko@yahoo.com

ABSTRACTThe study examined the Impact of Oil and Gas Technology on Nigeria: A Study of Niger

Delta from 1970-2010). The population of the study is defined by Nigerian population of about 167 million people, while the sample size was restricted to the 9 Niger Delta states where oil and gas production is consummated on daily basis. The analyses of the study’s data were restricted to forty – one (41) years (1970 to 2010). The method of ordinary least square (OLS) regression was used to estimate the data generated from NNPC Statistical Bulletins (1970-2010), CBN, Statistical Bulletins (1970-2010) and National Bureau of Statistics on Economy and oil / gas production in Nigeria (1970-2010). Statistical Package for Social Sciences (SPSS) was used to analyse the data statistically. The empirical investigations into the relationship between the indices of oil and gas production technology and the economy of Nigeria as well as Niger Delta variables used oil and gas production as the predictive variable and Real Gross Domestic Products, total oil export, Niger Delta share of oil /gas revenue, oil pollution in Niger Delta and poverty level in Niger Delta as explanatory variables from 1970 – 2010. The study revealed that the inhabitants of the Niger-Delta Region of Nigeria have suffered untold hardship as a result of the criminal neglect, abandonment, exploration and exploitation of oil and gas by the federal government of Nigeria in collaboration with the Oil Companies operating in the region. Oil and gas, with which the Almighty God has endowed the region, has become a curse to the people of the region, instead of being a blessing. From this study it has become conclusive and revealing as well as evident that: there is significant relationship between oil / gas production and real Gross Domestic products and total oil exports in Nigeria (1970-2010). However, oil /gas production has negative impact on Niger Delta region because of inequitable Niger Delta share of oil / gas revenue, oil pollution and poverty level in Niger Delta in the midst of oil and gas endowment / revenue. The study recommends an integrated approach which involves building of human and institutional capacity to improve agricultural and water reservoir management; testing and recommending suitable environmental management measures; reduction of oil pollution incidences, increment of Niger Delta share of oil revenue to at least 25%; initiation of community and commercial as well as youth re-orientation and access to quality education - establishment and access to technical and vocational studies.

Key words: Oil and Gas, Technology, Poverty, Niger Delta, Oil Pollution, Oil Revenue

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IntroductionOil and gas products have been an increasingly important aspect of international

diplomacy and a scarce but vital resource. The strategic calculations of minor and major countries alike place more prominent emphasis on the production, exporting, pumping, refining, transportation and use of petroleum products (Brown, 2008). It is imperative to note that since the discovery of oil in the oil producing countries, their economic fortunes have changed. The mainstay of the economies of these oil producing countries have always revolved around oil products. However, the politics of oil, corruption and mismanagement have not allowed the oil bearing communities to enjoy the maximum benefits derivable from oil resources.

Nigeria, with an estimated population of 167 million, ranks among the top 10 nations in production of oil and natural gas reserves. Of Nigeria’s current 36 constituent states, only nine are classified as oil and gas producers. The nine states are located in the three southern geopolitical zones—Southwest, South-South (Niger Delta), and the Southeast. The six producing states in the South-South geopolitical zone—Delta, Bayelsa, Rivers, Akwa Ibom, Cross River, and Edo—accounted for 91.5 percent of the gross oil production in 2008. In the late 1990s, the majority of oil and gas production was from onshore and shallow water fields. But, as militant disturbances and insecurity of employees increased, suspension and outright abandonment of oil and gas operations in the western part of the Niger Delta region became inevitable.

As at January 1, 2009, the estimated crude oil and natural gas reserves were, respectively, 36.2 billion barrels and 182.4 trillion cubic feet (tcf). Crude oil production has expanded, growing from its initial daily output of about 5,100 barrels in 1956 to as high as 2.5 million barrels per day in the late 1970s and in 2004 to 2010 (OPEC Bulletin, 2010). Continual investments and economic policy incentives have been instituted by the federal government in an attempt to increase Nigeria’s proved oil reserves to 40.0 billion barrels and expand production capacity from 2.5 to 3.0 million barrels per day by 2013 from its current 2.5 million barrels per day. At current extraction levels, Nigeria has a production equivalence of about 30 years in comparison to the global aggregate average of 45 years.

Oil /gas production has always played a very significant role in economic development. It is so because oil is and will for a long time to come be the most useful commodity to all countries of the world. Despite the oil wealth, Nigeria is not rich compared to the developed countries of the world. This contradiction has been making some scholars to query the economic impact of petroleum products in Nigeria. The gross domestic products of Nigeria hardly epitomise the economic wellbeing of the citizenry. Also the oil revenues do not seem to equate the quantum of oil / gas production in the oil bearing communities. Nigeria has been unable to refine the oil / gas she produces to meet the demand for local petroleum product needs, instead Nigeria imports over 60% of her required refined petroleum products, while her refineries operate below capacity utilization.

Owing to both external and internal factors, the growth performance of the Nigeria economy has been less than satisfactorily during the past three decades. Since the first oil price shock of 1974, oil has annually produced over 90% of Nigeria’s export income from 1970 to 1999, oil generated almost $231 billion in rents for the Nigeria economy and these rents have constituted between 21% and 48% of Gross Domestic Product, but yet these rents have failed to raise Nigeria incomes and done little to reduced poverty. Since 1970, Nigeria’s per capita income has fallen by about 4% in constant dollars.

Also, since early 1970, the government has annually received over half of its revenues from oil sectors which are about 85%. These oil revenues are not only large but highly volatile

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and causing the size of government programs to fluctuate accordingly. From 1972 to 1975, government spending rose from 8.4% to 22.6% of GDP, by 1978, it dropped back to 14.2% of the economy. This fluctuation has made the government unable to adhere to wise fiscal policies during the 1970s and 1980s, when oil prices fluctuated sharply, the ability of these governments to spend their funds wisely, and limit corruption has been low.

Although large proceeds are obtained from the domestic sales and export of petroleum products, its effect on the growth of the Nigeria economy as regards returns and productivity and positive impact on Niger Delta is still questionable, hence there is a need to evaluate empirically the relative impact of oil and gas production on broad economic variables (such as Real GDP, total oil exports in Nigeria on one hand ) and regional antecedent variables such as oil pollution, Niger Delta share of oil / gas and poverty level in Niger Delta on the other hand.

Given the above background; this study seeks to examine the Impact of Oil and Gas Technology on Nigeria: The Niger Delta Experience. This shall be achieved through the pursuit of the following specific objectives; they are to:

(a) Determine the impact of oil /gas production on Real Gross Domestic Products in Nigeria. (b) Determine the impact of oil /gas production on total oil exports in Nigeria. (c) Ascertain the extent to which oil /gas production reflects equitably to the share of oil /gas resources allocated to Niger Delta States. (d) Determine the extent to which oil /gas production causes oil pollution in Niger Delta. (e) Evaluate the extent to which oil /gas production increases the poverty level / incidence of the people of Niger Delta.

Equally, this study is designed to investigate the relationship between the indices of oil and gas production (technology) and the Nigeria economy vis-à-vis Niger Delta Region experience. The hypothesis tested in this study is as follows:The study has earlier hypothesized that: There is no significant relationship between oil / gas production (technology) and Real Gross Domestic products, total oil export, Niger Delta share of oil /gas revenue, oil pollution in Niger Delta and poverty level in Niger Delta, (1970-2010).

Literature Review

Theoretical Frameworks on Oil and Gas Production Technology and Real GDP, Oil Exports, Niger Delta Share, Oil Pollution and Poverty Level in Niger Delta

The growth theory has evolved over the years as a major feature of development economics. One of the earliest attempts to model economic growth is popularly referred to as the ‘Harrod-Domar’ Model associated with the English economist, Sir Roy Harrod and American Economist, Evsey Domar. The model is an early attempt to show that growth is directly related to savings and indirectly related to the capital/output ratio. According to the model, growth (G) can be written symbolically as: G= s k……… (2.1)

Where; G = growth k = incremental capital-output ratio and;

s = the average propensity to save.

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The model indicated that saving affect growth directly, while the incremental capital/output ratio affects growth indirectly or inversely. But Solow’s model of economic growth is based on the premise that output in an economy is produced by a combination of labour (L) and capital (K), under constant returns, so that doubling input results in doubling output. Contemporary versions distinguish between physical and human capital. Thus, the quantity of output (Y) is also determined by the efficiency (A) with which capital and labour is used. Or mathematically: Y = A f (L, K)………….. (2.2)

Solow assumed that this production function exhibits constant returns to scale, that is, if all inputs are increased by a certain multiple, output will increase by exactly the same multiple. The Solow neoclassical growth model uses a standard aggregate production function in which

Yt = At Kt aLt 1-a , 0 < a < 1………. . (2.3) In this case, Y is gross domestic product, K is stock of capital, L is labour and A represents the productivity of labour, assumed to grow at exogenous rates n and g. Lt = L0 ent……....... (2.4) At = A0 egt ……….. .(2.5).

The number of effective units of labor, At Lt grows at rate n+g. For developed countries, these rates have been estimated at about 2 % per year. For developing countries, it may be smaller or larger depending on whether they are stagnating or catching up with the developed countries. In the equation (2.3) above, a represents the elasticity of output with respect to capital (the percentage increases in GDP as a result of a 1 % increase in human and physical capital). It is usually measured statistically as the share of capital in a country’s national income accounts.

The model assumes that a constant fraction of output, s, is invested. Defining k as the stock of capital per effective unit of labour, k = K/AL and y as the level of output per effective unit of labour, y = Y/AL, the evolution of k is governed by:

Kt = syt – (n + g + d) kt………. (2.6) = sktn – (n + g + d) kt . Where; d is the “rate of depreciation”, equation (2.6) above implies that k converges to a

steady-state value k* defined by sk *α = (n + g +d) k*, or k* = [s/(n + g +d)]1/(1-α) ……… (2.7).

The steady-state capital-labor ratio is related positively to the rate of saving and negatively to the rate of population growth. The central predictions of the Solow model concern the impact of saving and population growth on real income.

History of Oil Development in Nigeria

The history of oil in Nigeria dates back to January 1906 when the colonial government issued a number of prospecting licenses to the British Colonial Petroleum Corporation covering an area of 100 square miles on the Rofutoro and Lafagbo Rivers in the Benin district (present day Edo State in the Niger Delta region). Concessions were also granted in 1907 to the better-known Nigerian Bitumen Corporation which drilled thirteen wells in the area near Lekki Lagoon (present day Lagos State in the South West region) between 1907 and 1914, (Steyn, 2004).

The prospects for lucrative oil business in Nigeria were already recognized in 1907 as the following colonial record shows: The admiralty is said to be arranging for the adoption of fuel oil for the Navy, and has secured control of the Nigerian oil fields, which it is anticipated will prove very rich. This fact is significant enough in itself, for it shows beyond a doubt that the Colonial authorities in England have begun to realize the great and vital importance of Nigeria. Indeed...this discovery of oil in large quantities is bound to raise Nigeria

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to the rank of a first- class imperial asset, (Eson, 2009).With the passing of the Mineral Oil Ordinance number 17 of 1914, further oil

exploitation and exploration in Nigeria were limited to British and British colonial companies. After the First World War two British companies- namely the D’Arcy Exploration Company and the Whitehall Petroleum Corporation - briefly explored for oil between 1919 and 1922. Neither company was successful in finding any oil in commercially viable quantities. This disappointment led to a suspension of all serious investigations into the petroleum potential of Nigeria during the 1920s, (Steyn, 2004).

Despite the negative reports of the 1920s, interest in the petroleum prospects of the country was revived in the 1930s with the joint application of Royal Dutch/Shell and British Petroleum (BP) to explore for oil in the colony. A concession covering the whole of Nigeria was granted to Shell-BP in 1937. Their first real break-through came only in 1951, but the source was limited; commercially exploitable oil was discovered only in 1956 at Oloibiri (in former Rivers State now in present day Bayelsa State in the Niger Delta), and at Ebubu and Bomu in the Ogoni (in Rivers State) section of the Delta in 1958. Production at Oloibiri started in 1958 with 6,000 barrels per Day, (Steyn, 2004). The first commercial export of Nigerian crude also took place that year, that is, in 1958, (Eson. 2009). Since then, oil extraction has come to play a very central role in both the politics and economy of the nation. Between 1958 and 1961 the oil industry in Nigeria was completely dominated by Shell-BP. Independence came to Nigeria on 1st October 1960. The Nigerian Federal Government opened up the oil industry to more role players from 1961 onwards and important newcomers including Mobil (American Company), Gulf (now Chevron, American Company) and Safrap (French, now Total Exploration and Production Nigeria Limited).

Oil in Nigeria was discovered in commercial quantity in Oloibiri, Eastern Nigeria (now in Bayelsa State) in 1956 by an Anglo-Dutch Consortium, Shell D’Arcy (later Shell-BP), (Amu, 2003). Two years later, the first export took place. Ownership of the oil was vested in the Crown by the Minerals Act of 1958. Other oil multinationals like Mobil, Safrap (later Elf), Agip, Gulf, Texaco, etc. got various concessions at various times and since then, have been major actors in the Nigerian oil industry. Under the concession agreements, the companies got right to explore and prospect for oil within given acreages at their own expense and risk subject to payment of fixed annual rents plus royalties assessed by the tonnage of oil extracted (Daniel, 2006).

At independence in 1960, Nigeria succeeded as a promising oil industry under the firm grip of multinational companies. However, her lack of technological knowhow and managerial skills necessitated maintenance of the status quo. Arrangement was made for the continuous flow of petroleum profit tax into the government coffers. But ownership of the oil and similar natural resources remained vested in the state. It was vested in the central Government (substituting the Crown). It was the German Bitumen Company which started Exploration in 1908 but it later abandoned it. Shell BP got the second concession to exclusively explore and prospect for oil in the whole of Nigeria in 1937, (Daniel, 2006). It got the concession under the Colonial Mineral Oil Ordinance of 1914 which restricted granting of concessions to only British subjects or companies (Beth, Simmons, and Hopkins, 2005). It began exploration and gradually limited its areas of operations until it finally settled for the Niger Delta area relinquishing the remaining acreage to the government. Shell alone accounts for over 50% of oil production in Nigeria. There are four regimes of oil development contracts: concession agreement, participation or joint venture agreement, production sharing agreement, and risk-service agreement (Daniel, 2006).

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Ownership of oil and similar natural resources was vested in the central Government (substituting the Crown in whom the ownership was vested before independence) by the Minerals Act of 1958 (S. 3, paragraph 1) Laws of the Federation of Nigeria (Revised Edition) 1958 Cap. 120, Ss. 3 and 10, Cap. 121, S. 3 (1). The 1963 Constitution (S. 69 and Part 1, item 25 of its Schedule) merely vested in the Federal Government the exclusive power to legislate on mines and minerals, including oil fields, oil mining, geological surveys and natural gas. S. 40 (1) 1979 Constitution vested ownership in the state.

Important developments in the initial phase of the Nigerian oil industry included the passing of the Petroleum Profits Ordinance in 1959, under the terms of which the Nigerian government obtained 50 per cent of the profits of the oil companies; and the opening of the first oil refinery at Alese Eleme (in Ogoniland) close to Port Harcourt in 1966.

The Nigerian oil industry remained small until 1970, after which its rapid development coupled with a corresponding increase in the daily production as well as the importance of oil world-wide, contributed to the emergence of the oil industry as the dominant sector within the Nigerian economy. The income the federal government derived from oil sales and taxes consequently become the main source of income and since the 1970s oil revenue has accounted for more than 90 per cent of Nigeria’s total foreign export earnings. Oil sales account for more than 40 percent of GDP, 80 percent of the government’s budgetary revenue, and more than 95 percent of exports. With an average production of approximately two (2) million barrels per day, but as is the case with many oil-rich developing countries, oil reserves have proved a mixed blessing for Nigeria.

All petroleum production and exploration is undertaken under the auspices of joint ventures between foreign multi-national corporations and the Nigerian federal government. The Nigerian partner in this joint venture system manifests itself as the Nigerian National Petroleum Corporation (NNPC), a nationalized state corporation. All companies operating in Nigeria obey government operational rules and naming conventions (companies operating in Nigeria must legally be sub-entities of the main corporation, often incorporating "Nigeria" into its name). Joint ventures account for approximately 95 percent of all crude oil output, while local independent companies operating in marginal fields account for the remaining five (5) percent. Additionally, the Nigerian constitution states that all minerals, oil, and gas legally belong to the federal government, (The 1969 Petroleum Act).

While the oil industry invariably received much attention from successive Nigerian governments, and foreign oil companies received the necessary incentives to ensure their continued presence, the story of oil in Nigeria is one of missed opportunities, administrative disorganization, and resource mis-management. It must, however, be pointed out that the particular nature of political instability in Nigeria sets it apart from other oil-producing countries, specifically those in the Middle-East.

Despite the frequency of political change, foreign oil investors continue to stay in Nigeria. This according to Khan, (1994) could be that upheavals have not been as dramatic as they were in Iraq and Iran. This can be said to be true as, apart from the Biafran crisis, no change in government has been severe enough to interrupt oil production. Until now: the current Rivers State crisis may change the permutation, if the underlying factors responsible for the crisis are not addressed. This may, however, lead to a very serious conflict.

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Conceptual Issues and Theoretical Framework of Rural Poverty in Niger DeltaGenerally, there is no widely acceptable definition of poverty. This is as a result of

different opinions held by different scholars. For instance, in economics, poverty has been defined by developing a poverty line using the minimum wage/income concept like that developed by Morgan Commission in Nigeria. Any group of people within the income brackets below the wage/income ratio is living below the poverty line. Townsend, (1991) defined poverty as the lack of material resources of certain duration and to such an extent that participation in normal activities and possession of amenities and living conditions become impossible or very limited.

A more comprehensive definition of poverty is that given by Prado and Tobi (1994). To them poverty is a multi-dimensional phenomenon with few commonly agreed definitions across the characteristics of the poor, particularly the urban poor such as excessive labor flow, undifferentiated/unskilled persons who cannot readily be integrated into the production system, sub-culture of personalized ethical code in contrast to the norm of kindred or community behavior, scarcity of essential commodities (food, housing, clothing), growth of slums, unemployment and under-employment and crimes or deviant behaviors. Onibokun, (2005) perceived poverty as living in sub-standard and sub-human environments plague by slums, squalor and grossly inadequate social amenities like health facilities, schools, recreational opportunities etc.

Gaibrath, (1968) also diagnosed poverty as having limited people living in crowded and insufficient food and clothing, peoples living in crowded, cold and dirty shelters and people living painful and comparatively brief lives. Aluko, (1975) presented a pragmatic and materialistic concept of poverty by giving it as an inadequate level of consumption giving rise to insufficient food, clothing and or shelter. Similarly, Olowu and Akinola, (1995) pointed out that poverty is characterized by the lack of or inadequate access to infrastructures among others,while the rural/urban can easily be identified from the types of food they eat and the environment in which they live. According to World Bank, (1994) as cited in Anyanwu, (1997), infrastructure is an umbrella term for many activities referred to as “social overhead capital” and characterized by peculiar technical features (such as economies of scale) and economic features (such as spill-over from users to non-users). These include services from power, pipe water supply, telecommunications, sanitation and solid waste collection and disposal, roads, urban transports, port and waterways. World Bank, (2005) believes that the adequacy of the measure of one country’s success is another’s failure, especially in diversifying production, expanding trade, coping with population growth, reducing poverty, or improving environmental conditions. An adequate infrastructural provision in an environment is one key factor of attraction to investors. This is because it boosts productivity and enhances drastic production costs. This will have a multiplier effect of producing employment, increase income thus, welfare of the people and making them to be much more constructive rather than destructive as in the case in some part of the oil producing area of the country especially the Niger Delta. More so, it will improve welfare and standard of living and enhances environmental sustainability.High Level of Poverty: People are hungry not because there are no foods but they cannot afford to buy it (Eregha, 2001). The statement above shows the link between unemployment and poverty as it affects the region that account for the main source of foreign exchange earnings for the country. It is no doubt to state that if oil sector sneezes the country will catch cold. This emphasized what the Niger-Delta region means to the country. The issue of poverty cannot be overemphasized in the region. The contextual meaning of poverty is really emphasized and

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defined to a lay man by the environment and the ways of life of the people. The incidence of poverty is at increase in the region as revealed in the table in appendix 1. Poverty has become a way of life due to economic stagnation, unemployment, malnutrition, poor quality of life as well as unhealthy environment in the region.

Oil / Gas Production and ExportThe level of production is determined largely by demand and of course the technological

capacity for more exploration and development. Above all however is the availability of the explorable resource. The growth of Nigeria’s oil production is quite impressive. Average production rate was 5000 barrels per day in 1958. Production of about 1.8 million barrels in 1958 rose to about 16.8 million barrels in 1961; about 43.9 million barrels in 1964; and about 116.5 million barrels in 1967 (Olokesasi, 1996). Quantity exported followed a similar growth pattern. As at 1965, there were 3 billion barrels of proven oil reserves. It was in the 1970s that Nigeria launched herself as one of the important oil producers of the world having regard to her scale of production. It was from 1970 that daily average production exceeded one million barrels. Yearly production rate increased to about 558.8 million barrel in 1971; hitting 823.3 million barrels in 1974; with a slight reduction to 766 million barrels in 1977; and then it picked up to 841.2 million barrels in 1979. As a result of more exploration spurred by high global demand, Nigeria recorded 20.2 billion barrels of proven oil / gas reserves in 1975. The bulk of quantity produced was exported throughout the period. Oil exports rose to over 90% of total exports in 1979 (Brown 1998).

Production decreased in the 1980s with an average 2.3% share of the total world daily production as opposed to the 3.8% share in the mid 1970s. Between 1981 and 1988, yearly production was in the region of 450 to 540 million barrels. This was due to the economic slump of the decade. Large-scale production resumed towards the end of the decade and it has largely been seeing a steady increase since then with a level of 828 million barrels – 918 million barrels between 2000 and 2005. Table 2.1 gives details of the levels of production and export from 1970 to 2007, (NNPC Annual Statistical Bulletins 2005, 2006 & 2007).

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Table 1: Nigeria’s Oil / gas Production and Export (1970-2007, million barrels)Year Daily average production Total production Daily average exports Total exports1970 1,083.1 395,835,825 1,050.8 383,446,3591971 1,531.2 558,878,882 1,486.4 542,545,1311972 1,815.7 665,283,111 1,756.1 650,640,7791973 2,054.3 750,452,286 1,978.1 725,017,5841974 2,255.0 823,320,724 2,179.4 795,710,0441975 1,783.2 651,509,039 1,713.3 627,638,9811976 2,066.8 758,058,376 2,013.2 736,822,9981977 2,085.1 766,053,944 2,030.2 744,413,3551978 1,897.0 692,269,111 1,827.1 667,357,0651979 2,302.0 841,226,770 2,210.1 818,726,9431980 2,058.0 752,223,285 1,960.2 700,138,6141981 1,439.6 525,500,562 1,228.4 447,814,0271982 1,287.0 470,687,221 1,002.8 366,410,1791983 1,235.5 450,974,545 935.2 341,360,9101984 1,388.0 507,998,997 1,094.1 400,428,0851985 1,498.9 547,089,595 1,333.3 453,758,5911986 1,466.6 535,296,671 1,221.2 445,673,7291987 1,323.0 482,886,071 1,065.2 388,815,4491988 1,341.3 490,440,000 1,110.5 406,443,0001989 1,716.3 626,449,500 1,525.9 556,953,5001990 1,726.7 630,245,500 1,550.0 565,750,0001991 1,893.1 690,981,500 1,610.0 587,650,0001992 1,957.0 716,262,000 1,585.0 580,110,0001993 1,905.2 695,398,000 1,557.0 568,305,0001994 1,820.9 664,628,500 1,590.0 580,350,0001995 1,842.6 672,549,000 1,665.0 607,725,0001996 1,863.1 681,894,600 1,812.9 620,135,0001997 1,876.7 855,736,287 1,855.5 767,949,7571998 1,939.0 806,443,999 1,832.8 706,265,4981999 1,781.5 774,703,222 1,705.1 678,111,4792000 2,053.6 828,198,163 1,986.4 714,356,1612001 2,017.6 859,627,242 2,009.4 780,093,7032002 1,801.7 725,859,986 1,798.2 663,326,4942003 2,166.3 844,100,267 2,163.5 791,016,2602004 2,356.8 911,044,764 2,356.0 871,286,5942005 2,365.9 918,972,465 2,326.0 843,533,3312006 2,233.9 869,196,506 2,248.4 817,388,2272007 2,059.3 803,000,708 2,144.1 791,826,522Sources: NNPC Annual Statistical Bulletins 2005, 2006 & 2007; OPEC Annual Statistical Bulletins 2004, 2005, 2006 & 2007.

There are a total of 606 oilfields in the Niger Delta out of which 355 are onshore while 251 offshore. Average daily production as at the time of this study is 2.8 million barrels per day. It is planned that production level will hit 4 million barrels per day by 2013. Nigeria is now the largest oil producer in Africa. It is second only to Venezuela in OPEC outside the Middle East and they virtually compete in exports.

Oil Exploration and Environmental Degradation The exploration and exploitation of crude oil in the Niger-Delta has resulted to a number of environmental problems for the region. These environmental problems related to oil operations in the region are examined in this section. Since 1956 when the first oil well was drilled at

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Oloibiri in the present Bayelsa State over 1,481 oil wells have sprang up, producing from about 159 oil fields. There are more than 7,000 kilometers of pipelines and flow lines and 275 flow stations operated by more than 13 oil companies (UNDP Report, 2006). The productive and environmental impacts of the number of operators are at increase everyday in the region. The percentage of the land of the region occupied by the oil industry is less than five percent but the adverse effects associated with its operations are innumerable and region-wide. This oil related environmental problems are discussed below.

Oil Pollution The Niger-Delta region is located in the coastal part of Nigeria and this is a waterlogged area as more than eighty percent of the oil producing communities is on water. Before the discovery of oil in the region, it was characterized by natural clean long stretch fresh water and healthy water lettuce that add beauty and flavor to the environment. According to Bisina, (2006) the oil activities in the area has resulted to situations whereby complete polluted water is bequeathed to the children. The communities’ shorelines have been washed away or eroded due to the high volume of deep-sea exploration and exploitation activities. One of the major oil induced water pollution is oil spillage. With the expansion of oil production, the incidence of oil spills has greatly increased. Available records show that a total of 6,817 oil spills occurred between 1976 and 2001 with loss of approximately three million barrels of oil in the region. Approximately twenty-five percent spilled in swamps and sixty-nine in off-shore (UNDP Report, 2006). Besides oil spills as source of water pollution, canalization and wastes discharged into freshwater swamps and into the sea are other sources (Akpofure, 2008). In an attempt to shorten travel time and improve access to oil fields and production facilities, oil companies have constructed canals that in some cases have caused salt water to flow into fresh water zones destroying freshwater ecological systems. The table in appendix 1 shows the number of oil spills in the region on yearly basis.

Impact of Oil and Production on Oil Bearing Communities in Niger Delta

The petroleum industry operates on the petroleum market. Petroleum is vital to nearly all other industries, if not industrialized civilization itself, and thus is critical concern to many nations (Amu, 2003). Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world at large consumes 30 billion barrels of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States alone (Yergin, 1993). For more than three decades world’s dependence on oil has been near total. For long it has been the ‘heart of the nations’. It is world’s most important mineral resource.

The advent of oil in the world economy has had both positive and negative effects (Petroleum Economist, 2003).

(A)Positive Effects

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The positive contributions of petroleum became more pronounced with the oil boom of the 1970s. Within the period, oil changed the producing countries fortune from aid-seeking countries to countries that give aid to less fortunate neighbours. It raised the status of these countries in the world community. Its positive effects are:(i) A Source of Government Revenues: Petroleum is the most important revenue

earner for the government. Between 1970 and 1984 oil contributed more than 70% of member government revenue. Oil therefore greatly enriches the purse of governments. Revenue is derived from oil-producing companies in the form of royalties and profits tax. It has, therefore acted as a major source of capital for development.

(ii) A Source of Foreign Exchange Earnings: Agriculture as the major foreign exchange earner, since 1970, oil has on the average accounted for over 80% of foreign exchange. In 1970, the sector accounted for 58.1% of foreign exchange; in 1972 – 87.2% and by 1984 – 95.1%. The high contribution of oil to total export earnings was a result of the high price of oil in the late 1970s. The price of oil reached a peak of $40, in January 1981, after which the oil glut set in.

(iii) A Source of Employment: It contributes to employment generation in member countries, both directly and indirectly. Gainful employment has been provided for very many people at the prospecting, mining, refining, and distribution stages. Very many people therefore, depend on oil for their livelihood. This led to a high standard of living especially during the ‘oil boom’ years.

(iv) The Transfer of Technology: It has an avenue for the introduction of foreign technology through the participation of foreign firms. Foreign skilled manpower and entrepreneurship are highly involved in the oil industry in the member countries. This has, therefore, aided the transfer of technology to these countries.

(v) The Provision of Technology Energy Requirements: The products of the petroleum industry such as gasoline, fuel oil, kerosene, and cooking gas are used as fuel for industrial and domestic purposes. The establishment of a petrochemical industry would further enhance the contribution of the sector (Uche, 2001)

(vi) The Development of the Economy: The increased revenue from oil has led to tremendous improvements in many sectors of the economy of the member countries.a. Development of Infrastructure: There have been rapid developments in

infrastructural facilities such as electricity, water supply, telecommunications, dams, stadia, modern airports, new harbours, flyovers, gigantic buildings, and super-highways. It has led to a boom in the construction industry and resulted in the transformation of the structure of the landscape.

b. Improved Health Facilities: Very many health centres, clinics, maternities and hospitals- have been built and more personnel provided. It is said that life expectancy has increased from 40 years in 1970 to 50 years in 1983.

c. Improved Educational Facilities: There has been a significant increase in both the provision of educational facilities and school enrolment. In general, the number of primary and post-primary institutions (with better amenities) more than tripled. The number of tertiary institutions increased more than four-fold.

d. Industry: Significant improvements have also been made in the industrial sector. Major industrial projects such as the Iron and Steel complex, oil refineries, vehicle assembly plants, cement industries, and breweries, were embarked upon.

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e. Tertiary Production: Activities like banking, insurance, and commerce also witnessed a boom. All the above have helped to diversify the economy to some extent and laid a sound foundation for an industrial take-off.

B) Negative EffectsThe advent of oil, which has helped in shaping member countries, has had some bad effects on the economy.

1. Neglect on the Agricultural Sector and Increased Food Import Bills: Before oil came to dominate the economy, some of these oil-producing countries were agricultural economy. Agriculture employed more than 80% of the economically active population and agricultural exports accounted for more than 85% of foreign exchange of these countries. Much of the local demand for food was met by home production. However, the increasing wealth realized from oil in the 1970s led to the neglect of agriculture and the need for food has had to be met by increased importation, contributing to the balance of payments deficits for some oil producing countries.

2. Urban Congestion: Increased wealth from oil made people abandon the rural areas in search of an easier life in towns. There was therefore, an increase in rural-urban drift of population, leading to a population explosion in urban centres, with its attendant social problems.

3. High Rate of Inflation: The increased spending both by governments and private individuals during the period of the oil boom is the origin of the galloping inflation in member nations. There has been squandermania in both public and private life with a consequent increase in the price level.

4. Oil Spillage: The extraction of oil / gas has led to environmental pollution with its attendant hazards. Oil spillage has constituted a hazard to both plant and animal life in the areas where drilling activities are being carried out.

Research Methodology

The Study Area

The study area is specifically Nigeria which occupies a geographical area of 923.8 thousand square kilometers and with a population of about 167 million people based on the 2006 population census. Nigeria is made up of over 250 ethnic groups and is richly endowed with oil deposits thereby placing her as the 6th largest producer of oil in the world. The study is narrowed down to the nine (9) Niger Delta states (Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers) where oil and gas are produced in Nigeria; (See figure 1 below).

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Figure 1: Map of Nigeria showing Niger Delta Region

Research Design In this study, a cross sectional survey design involving the survey of existing data

(secondary sources) was adopted. Methods of Data Collection and Technique of Analysis

Time Series Annual data was employed ranging from 1970 - 2010 with a sample size of 41years. The research instruments used in collection of data for this study were mainly secondary data from the NNPC Website, CBN & OPEC Annual Statistical Bulletins respectively.

Descriptive and inferential statistics were used to analyze the data for this study. Also ratios, frequency distribution, multiple regression, t-test statistical tools were used to test the hypothesis formulated in this study.

Model Specification: This study used the econometric technique of Ordinary Least Square (OLS) in form of Multiple Linear Regressions to the relative regression coefficients. The regression model was estimated through the use of Statistical Package for Social Sciences (SPSS). The mathematical model for the study is as follows: TOGPT = f (RGDP, TOGEXR, NDSOGR, NOPND, LPND)Where; TOGPT = Total Oil and Gas Production TechnologyRGDP = Real Gross Domestic Products in NigeriaTOGEXR =Total Oil and Gas Exports / Revenue

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NDSOGR = Niger Delta Share of Oil and Gas / RevenueNOGPND = Number of Oil and Gas Pollution in Niger DeltaLPND = Level of Poverty in Niger DeltaThe Econometric Model used for estimate in a Linear Form is: TOGPT = βo + β1 RGDP + β2 TOGEXR + β3 NDSOGR + β4 NOGPND + β5 LPND + µt Where; βo = The parameter which represents the interceptβ1 - β5 = Coefficient or the regression parameters used in determining the significance of the effect of each of the independent variables β1 - β5

on the dependent variable TOGPT,TOGPT = Impact (Oil/Gas Production Technology in Nigeria)β1 = Real Gross Domestic Products in Nigeria β2 = Total Oil and Gas Exports / Revenueβ3 = Niger Delta Share of Oil and Gas / Revenueβ4 = Number of Oil and Gas Pollution in Niger Delta β5 = Level of Poverty in Niger Delta µt = Error or Random disturbance term.

Priori Expectation of the Model: The expected signs of the coefficients of the explanatory variables are: β1>0, β2>0, β3>0, β4>0, β5>0.TOGPT is used as a measure of predictive variable. The model above was used to estimate the OLS Regression.

Results and Discussions

Regression Results The summary of the Impact of Oil and Gas Technology on Nigeria: The Niger Delta

Experience (1970-2010) regression results from the Two - Stage Least Squares Analysis are as shown in the model summary below. The summary presents the results of the empirical regression estimates for the specified equation in the model.Summary of the Results_R = 0. 989R2 = 0. 978Adj. R = 0. 975R2 ChangeStd Error of estimate

==

0..9782.23903

Durbin – Watson = 1.205F Value = 310.703DF = 40-5 = 35 i.e. F-tab = 2.021

PV (Significant) = 0.000

Appendix 1 shows the comprehensive data on Nigeria’s oil and gas production (technology), real GDP, oil exports, Niger Delta oil share, oil pollution in Niger Delta and

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poverty level in Niger Delta covering 1970-2010. All the computations of the regression analysis in this study were based on the secondary data generated from NNPC Annual Statistical Bulletins, National Bureau of Statistics and CBN Statistical Bulletins.

With a p-value of zero to three decimal places (revealed from the regression analysis) and f-statistics value of 310.703 compared to the statistical table value of 2.021, the model is statistically significant. The R2 is 0.978, meaning that approximately 98% of the variability of Total Oil and Gas Production (Technology) affect the behaviour of the explanatory variables (i.e real Gross domestic products, total oil exports/ revenue, Niger Delta Share of the Oil / Gas revenue, Oil Pollution in Niger Delta and Poverty Level in Niger Delta) in the model. In this case, the adjusted R2 indicates that about 98% of the variability of Total Oil and Gas Production is accounted for by the model, even after taking into account the number of explanatory variables in the model.

Table 2: Regression Analysis Results Showing the Coefficient Value for the Variables in Oil Production

Model 1

Unstandardized Coefficients

Standardized Coefficients t

Sig.B Std. Error Beta(Constant) 71065058.823 16892416.691 4.207 .000Real GDP -6.731 2.650 -.081 -2.540 .016Total oil export 1.020 .033 1.038 30.950 .000Niger Delta Share -1482867.797 374221.940 -.166 -3.963 .000Oil Pollution in Niger Delta -8287.737 31718.787 -.010 -.261 .795Poverty level in Niger Delta 85940.198 247523.365 -.017 -.347 .731

Constant = Total oil and gas production technology

The coefficients for each of the variables indicates the amount of change one could expect in total oil and gas production technology given a one-unit change in the value of that variable under consideration, given that all other variables in the model are held constant. For example, the variable - total oil and gas export revealed an increase of 1.020 (based on B coefficient) or 103.80% (beta coefficient) in the total oil and gas production score for every one unit increase in revenue amount, assuming that all other variables in the model are held constant.  The -8287.737 (negative value) changes in oil pollution really means that one might compare the strength of that coefficient to the coefficient for another variable, say total oil exports. To address this problem, the results are revealed in Beta coefficients’ column, also known as standardized regression coefficients.  The beta coefficients have been used here to compare the relative strength of the various explanatory variables within the model, the detail results reveal as follows: real GDP -0.081 i.e. 8.1% negative impact on the real sustainable development in Nigeria; total oil export 1.038 i.e 103.80% contribution or impact on revenue generation to Nigerian Government; oil pollution -0.010 i.e 1% negative impact on the Niger Delta environment for every increase in oil/gas production technology elicited by Nigerian Government or oil companies; poverty level in Niger Delta 0.017 i.e 1.7% harsh bite of poverty on the people of Niger Delta for every single line of oil and gas production technology operated in the environment and Niger Delta share of oil / gas revenue -0.166 i.e. 16.60% negative impact. Because the beta coefficients are all measured in standard deviations, instead of the units of the variables, they can be compared to one another. In other words, the beta coefficients are the

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coefficients that one obtains if the outcome and predictor variables were all transformed to standard scores, also called z-scores, before running the regression. In this study, total oil exports have the largest Beta coefficient, 1.038, and Niger Delta share of revenue has the smallest Beta, -0.166 which is an indication of negative impact on the people because they do not get the equitable share from the oil and gas revenue.  Thus, a one standard deviation increase in total oil exports leads to 1.038 standard deviation decreases in predicted Total Oil and Gas Production, with the other variables held constant. Equally, a one standard deviation increase in real GDP, in turn, leads to a 0.081 standard deviation decrease in total Oil and gas production with the other variables in the model held constant. In interpreting this output, it is important to note that the difference between the regular coefficients and the standardized coefficients is the unit of measurement.  For example, to describe the coefficient for oil pollution, the results revealed that "A one-unit decrease in oil pollution would result to -8287.737 unit decrease in the total Oil Production / revenue since the production technology in the oil sector in Nigeria is yet to adapt to the best practice model used in other developed nations." However, for the standardized coefficient (Beta) the study revealed that, "A one standard deviation decrease in Niger Delta share of oil revenue would yield a 1482867.797 standard deviation increase in the Total Oil and Gas Production / revenue to the Federal Government / oil companies."

The Extent to which Total oil and gas production impacts on Real Gross Domestic Products in Nigeria

Table 3: Shows the analysis of the data and the extent to which total oil and production impacts on real GDP

Total Oil Production Technology

Real GDP

Pearson Correlation

Total oil production technology 1.000 0.270Total oil export 0.974 0.321Oil pollution in Niger Delta 0.274 -0.211Real GDP 0.270 1.000Poverty level in Niger Delta 0.358 0.247Niger Delta Share 0.088 -0.065

Sig. (1-tailed) Total oil production technology -- 0.044Total oil export 0.000 0.020Oil Pollution In Niger Delta 0.041 0.093Real GDP 0.044 --Poverty Level In Niger Delta 0.011 0.060Niger Delta Share 0.292 0.343

Source: SPSS Computations based on the Data in Appendix 1

The study revealed that total oil production plays significant role in determining the gross domestic products. Based on the Regression Analysis with respect the correlation aspect, 27% of

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the real GDP are accounted from the contribution of the total oil production. Accordingly, with p-value of 0.044 i.e 4.4% < 5% it means the correlation is significant. To a large extent oil/gas production’s contribution to real GDP has not revealed high percentage outcome because Real GDP indicates sustainable development unlike current or nominal GDP which connotes growth without corresponding development.

The Extent to which Oil and Gas production Impacts on Total Oil Exports in Nigeria

Table 4: Shows the analysis of the data and the extent to which oil production affects oil exports.

Table 4: Oil / Gas Production and Oil Export (Correlation Analysis)

Total Oil Production Technology

Total Oil Export

Pearson Correlation

Total Oil Production Technology 1.000 0.974Total oil export 0.974 1.000Oil pollution In Niger Delta 0.274 0.169Real GDP 0.270 0.321Poverty level in Niger Delta 0.358 0.247Niger Delta share 0.088 0.246

Sig.(1-tailed) Total Oil Production Technology -- 0.000Total oil export 0.000 --Oil Pollution In Niger Delta 0.041 0.145Real GDP 0.044 0.020Poverty Level In Niger Delta 0.011 0.060Niger Delta Share 0.292 0.061

Source: SPSS Computations based on the Data in Appendix 1

The study revealed that total oil and gas exports by Nigeria are very high. From the correlation analysis, it is revealed that oil production accounts for 97% of the oil exports in Nigeria. It is therefore conclusive from the study that to a large extent oil and gas production technology impacts highly positive on total oil exports 97% of the time. With the significant level figure p-value of 0.000 the correlation impact of oil and gas production on oil export is very significant.

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The Extent to which Oil /Gas production causes Oil Pollution in Niger Delta

Table 5: Shows the analysis of the data and the extent to which oil and gas production causes oil pollution in Niger Delta.

Table 5: Oil and Gas Production and Oil Pollution in Niger Delta (Correlation Analysis)

Total Oil Production Technology

OilPollutionIn NigerDelta

Pearson Correlation

Total oil Production Technology 1.000 0.274Total oil export 0.974 0.169Oil Pollution In Niger Delta 0.274 1.000Real GDP 0.270 -0.211Poverty Level In Niger Delta 0.358 0.650Niger Delta Share 0.088 -0.487

Sig.(1-tailed) Total Oil Production Technology -- 0.041Total Oil Export 0.000 0.145Oil Pollution In Niger Delta 0.041 --.Real GDP 0.044 0.093Poverty Level In Niger Delta 0.011 0.000Niger Delta Share 0.292 0.001

Source: SPSS Computations based on the Data in Appendix 1

The study has revealed that oil and gas production impacts the environment negatively with oil pollution up to the level of 24.40%. This is because the study has revealed that with a (p-value) significant level figure of 0.041 @ 5% critical value the impact of oil pollution in Niger Delta is significant.

The Extent to which oil and gas production Technology Causes poverty in Niger Delta

Table 6: Shows the analysis of the data and the extent to oil and gas production increases poverty in Niger Delta.

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Table 6: Oil / Gas Production Technology and Poverty Level in Niger Delta (Correlation Analysis)

Total Oil Production Technology

PovertyLevelin Niger Delta

Pearson Correlation

Total oil production technology 1.000 0.358Total oil export 0.974 0.247Oil pollution in Niger Delta 0.274 0.650Real GDP 0.270 0.247Poverty level in Niger Delta 0.358 1.000Niger Delta share 0.088 -0.674

Sig.(1-tailed)

Total oil production technology --. 0.011Total oil export 0.000 0.060Oil Pollution In Niger Delta 0.041 0.000Real GDP 0.044 0.060Poverty Level In Niger Delta 0.011 --.Niger Delta Share 0.292 0.000

Source: SPSS Computations based on the Data in Appendix 1

The study has revealed that the poverty level caused by oil / gas production in Niger Delta is 35.8%. Equally evident from the study is the fact that poverty incidence in Niger Delta is very significant because the p-value of poverty caused by oil / gas production in Niger Delta is 0.011 i.e 1.1%.

The Extent to which oil and gas production causes impacts on the Niger Delta Share of Oil Revenue

Table 7: Shows the analysis of the data and the extent to which oil and gas production impacts on the Niger Delta share of oil revenue.

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Table 7: Oil and Gas Production and in Niger Delta Share of Oil Revenue (Correlation Analysis)

Total Oil Production Technology

Niger Delta Share

Pearson Correlation

Total Oil Production Technology 1.000 0.088Total oil export 0.974 0.246Oil pollution In Niger Delta 0.274 -0.487Real GDP 0.270 -0.065Poverty Level In Niger Delta 0.358 -0.674Niger Delta share 0.088 1.000

Sig. (1-tailed) Total oil production Technology -- 0.292Total oil export 0.000 0.061Oil Pollution In Niger Delta 0.041 0.001Real GDP 0.044 0.343Poverty Level In Niger Delta 0.011 0.000Niger Delta Share 0.292 --

Source: SPSS Computations based on the Data in Appendix 1

The study has revealed that oil and gas production impacts negatively to the Niger Delta share of oil revenue as only 8.80% correlated as the only dividend arising from oil endowment. At p-value 0.292 oil and gas production did not show any significant correlation to the Niger Delta share of oil / gas revenue in spite of huge oil exploration in the region.

Test of HypothesisThe study has earlier hypothesized that: There is no significant relationship between oil /

gas production (technology) and Real Gross Domestic products, total oil export, Niger Delta share of oil /gas revenue, oil pollution in Niger Delta and poverty level in Niger Delta, (1970-2010). Therefore using the results of the regression analysis the study looked at the coefficient for the explanatory variables to determine if they are statistically significant, the study also tested sets of variables, using t- test, to see if the set of variables are significant; the results are as follows: Real Gross Domestic Products = 2.540 > 2.021 (Significant); total oil exports = 30.98 > 2.021 (Significant); Niger Delta oil share = -3.963 < 2.021(Not significant), oil pollution in Niger Delta = -0.261 < 2.021 (Not significant) and poverty level in Niger Delta = 0.347 < 2.021 ((Not significant).As revealed in the SPSS Output reports (appendix 2) the significance of the overall model with all the 5 explanatory variables based on the F value is 310.703 and that indicates statistical significance.Based on the Decision Rule the study has rejected the null hypothesis in two (2) variables (namely; Real Gross Domestic products and total oil exports) and accepted the null hypothesis in three (3) variables ( namely; Niger Delta oil share, oil pollution in Niger Delta and poverty level in Niger Delta). Accordingly: There is significant relationship between oil/gas production and real Gross Domestic products and total oil exports in Nigeria (1970-2010). However, there is no

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significant relationship between oil /gas production and Niger Delta oil share, oil pollution in Niger Delta and poverty level in Niger Delta (1970-2010).

ConclusionThe inhabitants of the Niger-Delta Region of Nigeria have suffered untold hardship as a

result of the criminal neglect, abandonment, exploration and exploitation of oil and gas by the federal government of Nigeria in collaboration with the Transnational Oil Companies (TOC) operating in the region. Oil and gas, with which the Almighty God has endowed the region, has become a curse to the people of the region, instead of being a blessing. What an irony of fate for the people. From this study it has become conclusive and revealing that: there is significant relationship between oil / gas production and real Gross Domestic products and total oil exports in Nigeria (1970-2010). However, oil /gas production has negative impact in Niger Delta because of inequitable Niger Delta share of oil / gas revenue, oil pollution and poverty level in Niger Delta in the midst of oil and gas endowment / revenue, (1970-2010).

RecommendationsIn the light of the findings and based on the conclusions, the following recommendations are

hereby adduced:1) In view of the fact that the oil sector is so strategic to the economy of Nigeria and

coupled with the fact that huge sums of money are being sunk into oil production technology and exportation on daily basis, it is recommended that the Federal Government (which is in control of the oil sector) should exert enough political will to ensure that the long awaited ‘’Local Content Bill’' for the Oil and Gas industry recently presented to the National Assembly by President Goodluck Jonathan is passed and religiously followed to give Niger Delta people the much expected benefits from oil and gas production technology.

2) It is also recommended that the Federal Government should make sure that funds generated from oil exportations should be effectively and efficiently used for the purpose of enhancing development in order to improve the standard of living of the masses who have been constantly pauperized by government retrogressive and unyielding policies on oil production. Such funds could equally be used for the development of infrastructure especially, good road networks and electricity.

3) The Federal Government should deregulate oil production through impartial methods that would give the stakeholders / citizenry equal chances to participate and acquire shares in the oil sector, and forestall the concentration of shares in particular income class or sets.

4) It is equally recommended that the Federal Government should not see the recommendation to deregulate oil production as an attempt to discriminate and do funny dealings leading to total hands-off from governmental responsibility. There are still some strategic responsibilities which the government must as a matter of necessity reserve to itself in the interest of the citizenry/ the economy, for instance providing enabling environment, water, healthcare and education etc.

5) An integrated approach which is a combination of several development strategies. This calls for the establishment of community based integrated approach that needs joint committed efforts from the government and the multinational companies as well as other stakeholders. This integrated approach should focus on: building of human

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and institutional capacity to improve agricultural production and management; testing and recommending suitable environmental management measures; reduction of oil pollution incidences, increment of Niger Delta share of oil revenue to at least 25%; initiation of community and commercial as well as central agricultural programmes; youth re-orientation and access to quality education; establishment and access to technical and vocational studies.

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Appendix 1Table 1B: Oil and Gas Technology /Production in Nigeria and Economic Indicators,

Niger Delta Share of Oil, Oil Pollutions and Poverty Level in Niger Delta

Years

Total Oil/Gas Production

(Oil ProductionTechnology) (Barrels)

Real GDP(Outputs)

Total oil Export (Barrel)

Niger Delta Share (Derivation) (%)

No. of Oil Spills (Oil Pollution)

Poverty Level (Incidence) in Niger Delta(%)

1970 395,689,000 4,219.00 383,455,000 45 0 0

1971 558,689,000 4,715.00 542,542,000 45 0 0

1972 665,295,000 4,892.60 650,640,000 45 0 0

1973 719,379,000 5,310.00 695,629,000 45 0 0

1974 823,320,000 15,919.70 795,710,000 45 0 0

1975 660,148,000 27,172.00 627,638,000 45 0 0

1976 758,058,000 29,146.50 736,822,000 45 128 0

1977 766,055,000 31,520.30 715,240,000 25 104 0

1978 696,324,000 29,212.40 674,125,000 25 154 23.4

1979 845,463,000 29,948.00 807,685,000 25 157 25.3

1980 760,117,000 31,546.80 656,260,000 0 241 15.3

1981 525,291,000 205,222.10 496,095,000 0 238 32

1982 470,638,000 199,685.30 401,658,000 1.5 257 35.5

1983 450,580,000 185,598.10 392,031,000 1.5 173 39.0

1984 507,487,000 183,563.00 450,580,000 1.5 151 43.0

1985 547,088,000 201,036.30 486,580,000 1.5 187 43.82

1986 535,296,671 205971.4 445,673,729 1.5 155 46.0

1987 482,886,071 204806.5 388815449 1.5 129 45.5

1988 490440000 219875.6 406443000 1.5 208 45.0

1989 626449500 236729.6 556953500 1.5 228 44.5

1990 630245500 267550 565750000 1.5 166 44.0

1991 690981500 265379.1 587650000 1.5 258 43.5

1992 716262000 271365.5 580110000 3 378 43.86

1993 695398000 274833.3 568305000 3 453 49.0

1994 664628500 275450.6 580350000 3 495 54.7

1995 672549000 281407.4 607725000 3 417 60.0

1996 681894600 293745.4 620135000 3 158 59.02

1997 855736287 302022.5 767949757 3 162 65.5

1998 806443999 310890.1 706265498 3 187 69.5

1999 774703222 312183.5 678111479 7.5 205 72.0

2000 828198163 329178.7 714356161 7.5 311 74.0

2001 859627242 356994.3 780093703 7.5 378 83.1

32

2002 725859986 433203.5 663326494 13 432 88.0

2003 844100267 477533 791016260 13 412 46.9

2004 911044764 527576 871286594 13 387 43.05

2005 918972465 561931.4 843533331 13 410 68.9

2006 869196506 595821.6 817388227 13 251 78.5

2007 843937714 634251.1 791826522 13 597 82.3

2008 768745932 674889 724479796 13 727 84.4

2009 780,347,940 7954925 769,195,205 13 0 54.4

2010 896,043,406 8014739.6 864,702,101 13 0 69.0

Sources:Historical Inflation Rates: 1914-2012, CBN Statistical Bulletin., 2010.

Appendix 2Table 2: Derivation: Niger Delta State and Federal Shares of Petroleum Proceeds 1953–Present To Producing Earmarks via Federation Account States (%, Regional and Remaining Allocated by Development Distributable Pool (%) Proportion of Agencies or “Special Production) Projects” (%)

1953–1958 100 — — 1958–1969 50 Niger Delta Development Board (1960–1966): nil 50 1970–1971 45 — 55

1970–1977 45 minus offshore proceeds

Niger Delta river Basin Development authority (1972–): nil

55 plus offshore proceeds

1977–1979 25 minus offshore proceeds —

75 plus offshore proceeds

1979–1981 — — 100

1982–1984 — “1.5% commission”: 1.5 and .5 of “Special projects” managed by the FG are considered “derivation” funds 98.5

1984 — “1.5% commission”: 1.5 98.5 1992–1998 — OMPADEC: 3 97

NDDC: nil

1999–2001

13 (constitutional “minimum”) minus offshore proceeds, gross equivalent to 7.5

Funds: (a) 15% state statutory allocations due to the oil-producing states; (b) 3% oic operating budgets; (c) 50% State ecological Fund; (d) aid or other contributions. 92.5 approx.

2002– Date13 (constitutional “minimum”) including offshore proceeds

NDDC: nil Funds: see above 87

Source: Adapted from UNDP 2006, HRW 1999 and other sources

33

Appendix 3Regression Results: The Impact of Oil /Gas Production Technology on Nigeria: The Niger

Delta Experience (Statistical Computations with Statistical Packages for Social Sciences SPSS)

Correlations

TOTAL OIL PRODUCTION TECHNOLOG

Y

TOTAL OIL

EXPORT

OILPOLLUTIO

NIN NIGER

DELTAREAL GDP

POVERTYLEVEL

IN NIGER DELTA

NIGER DELTA SHARE

Pearson Correlation

TOTAL OIL PRODUCTIONTECHNOLOGY

1.000 .974 .274 .270 .358 .088

TOTAL OIL EXPORT .974 1.000 .169 .321 .247 .246

OIL POLLUTION IN NIGER DELTA

.274 .169 1.000 -.211 .650 -.487

REALGDP .270 .321 -.211 1.000 .247 -.065

POVERTY LEVEL IN NIGERDELTA

.358 .247 .650 .247 1.000 -.674

NIGERDELTASHARE .088 .246 -.487 -.065 -.674 1.000Sig. (1-tailed)

TOTALOILPRODUCTIONTECHNOLOGY

. .000 .041 .044 .011 .292

TOTALOILEXPORT .000 . .145 .020 .060 .061OIL POLLUTION IN NIGER DELTA

.041 .145 . .093 .000 .001

REALGDP .044 .020 .093 . .060 .343POVERTY LEVEL IN NIGER DELTA

.011 .060 .000 .060 . .000

NIGER DELTA SHARE .292 .061 .001 .343 .000 .N TOTALOILPRODUCTIONT

ECHNOLOGY41 41 41 41 41 41

TOTALOILEXPORT 41 41 41 41 41 41

OILPOLLUTIONINNIGERDELTA

41 41 41 41 41 41

REALGDP 41 41 41 41 41 41

POVERTYLEVELINNIGERDELTA

41 41 41 41 41 41

NIGERDELTASHARE 41 41 41 41 41 41

34

Descriptive Statistics

Mean Std. Deviation N

TOTAL OIL PRODUCTION TECHNOLOGY 700478298.4146 141099650.12091 41REAL GDP 621267.3366 1698184.21191 41TOTAL OIL EXPORT 639125166.0000 143583255.13819 41NIGER DELTA SHARE OF OIL MONEY 13.7927 15.83153 41OIL POLLUTION IN NIGER DELTA 226.6829 174.94791 41POVERTY LEVEL IN NIGER DELTA 43.2183 27.31525 41

Model Summaryb

Model RR

SquareAdjusted R Square

Std. Error of the

Estimate

Change Statistics

Durbin-WatsonR Square Change F Change df1 df2 Sig. F Change

1 .989a .978 .975 2.23903E7 .978 310.703 5 35 .000 1.205

a. Predictors: (Constant), NIGERDELTASHARE, REALGDP, TOTALOILEXPORT, OILPOLLUTIONINNIGERDELTA, POVERTYLEVELINNIGERDELTAb. Dependent Variable: TOTALOILPRODUCTIONTECHNOLOGY

ANOVAb

Model Sum of Squares Df Mean Square F Sig.

1 Regression 7.788E17 5 1.558E17 310.703 .000a

Residual 1.755E16 35 5.013E14

Total 7.964E17 40

a. Predictors: (Constant), NIGERDELTASHARE, REALGDP, TOTALOILEXPORT, OILPOLLUTIONINNIGERDELTA, POVERTYLEVELINNIGERDELTAb. Dependent Variable: TOTALOILPRODUCTIONTECHNOLOGY

35

Coefficientsa

Model

Unstandardized CoefficientsStandardized Coefficients

t Sig.B Std. Error Beta

1 (Constant) 71065058.823 16892416.691 4.207 .000

REALGDP -6.731 2.650 -.081 -2.540 .016

TOTALOILEXPORT 1.020 .033 1.038 30.950 .000

NIGER DELTA SHARE OFOIL -1482867.797 374221.940 -.166 -3.963 .000

OILPOLLUTION IN NIGER DELTA

-8287.737 31718.787 -.010 -.261 .795

POVERTY LEVEL IN NIGER DELTA

85940.198 247523.365 -.017 -.347 .731

a. Dependent Variable: TOTAL OIL PRODUCTION TECHNOLOGY

36

37