30 de julho de 2019


Por [email protected]



ISSN: 2595-8402

DOI:​​ 10.5281/zenodo.2553638




Idama, Supreme Oghenerobo​​ PhD

Department of Political Science, University of Nigeria Nsukka

[email protected]

08054641605; 08023320845




Nigeria is a country blessed with​​ various​​ natural resources​​ and one of the countries in​​ Africa with regular​​ discovery of new oil fields in the past decades. Nigeria is​​ also​​ endowed with human and better climatic condition which has enhanced the natural resources, which include the​​ renewable and non-renewable resources. Despite these resources,​​ Nigeria has continued to remain poor and​​ underdeveloped than other countries without such potentials, a​​ problem scholars​​ have tagged​​ “resource curse.” Scholars have attributed this paradox to​​ a​​ number of factors ranging from​​ corruption, wastage, poor leadership​​ recruitment​​ and conflict of interest. The study sets​​ out to investigate Oil​​ Resource Management​​ in Nigeria​​ and​​ the Paradox of Development in the Niger Delta. The main objective is to determine whether​​ the poor management of oil revenue​​ is responsible for the​​ paradox of underdevelopment in the Niger Delta.​​ The study deployed the Content Analysis and Focus Group Discussion as sources of data while mixed methods of data analysis was used. The study observed that there are various contending interests over the management and control of crude oil resources in Nigeria. The study is of the view that the underground current and the inter-play among the stakeholder are​​ responsible for the abysmal management of the oil resource in Nigeria​​ and have affected the development of the Niger Delta region. We recommend among others the convocation of a National Conference on Natural Resource Management in Nigeria with a view to taking a common stand on how the oil resource can be better managed for rapid socioeconomic development of Nigeria.

Key Words: ​​ Natural Resource, Management, Conflict of Interest and Development ​​​​ 




The history of oil production in Nigeria is a mixed blessing and curse, with​​ oil production​​ tinting more to curse than​​ blessing. This assertion stems​​ from the fact​​ that Nigeria​​ is​​ one of​​ the largest​​ oil producer in Africa,​​ with over​​ 2.6 million​​ barrels​​ production​​ per day​​ as of 2014, (EIA, 2015).​​ ​​ This make her​​ the sixth largest​​ oil producer in the World, yet one of the poorest in the world.​​ A critical observation​​ by Idama​​ (2014) shows that​​ despite​​ the oil boom​​ of the early1970s​​ Nigeria still​​ depend on oil production​​ for the survival of its economic activities. Oil resources presently account for nearly 57%​​ of the Gross Domestic Product​​ (GDP) and more than 98%​​ of foreign exchange earnings. In addition​​ it also account for more than​​ 85% of​​ the​​ government​​ revenue.​​ The history of oil production​​ in Nigeria​​ is​​ embedded in​​ the struggle​​ for the​​ management and control of oil resource in Nigeria​​ among the three major stakeholders.​​ ​​ One​​ re-occurring​​ decimal​​ since the discovery of oil in 1957​​ at​​ Oloibiri, is​​ the​​ constant struggle between​​ the Oil multinational​​ Organization​​ on one hand,​​ the government​​ and the host communities on the other hand.​​ The struggle over who owns​​ and manages​​ the oil resource​​ in Nigeria has​​ been a subject of scholarly​​ debate with international interest​​ embedded. Although the struggle​​ for the control of oil​​ resource​​ in Nigeria​​ is an internal affair, the​​ effects​​ transcend​​ beyond​​ its shores​​ with​​ the interest remaining​​ diverse​​ and contradictory. ​​​​ ​​ ​​ 

There have been various attempts​​ by government​​ to address the divergent interest in the oil industry since​​ the​​ inception of oil production in Nigeria.​​ For the records, during the colonial era, the government did not pay serious attention​​ to​​ oil​​ production;​​ this however​​ necessitated​​ the​​ sole concessionary​​ right​​ to Shell​​ D’Arcy, a private company​​ to exploit oil​​ throughout​​ Nigeria.​​ ​​ Again​​ it was argued that​​ oil was of low value to the Nigeria economy​​ and​​ so was the interest​​ of the government​​ to​​ invest in it.​​ This sole right​​ that​​ was​​ given to Shell​​ D’Arcy​​ and the​​ low interest shown​​ by the government​​ put Shell​​ at the driver’s seat​​ in the oil industry in Nigeria​​ (Ikein, 1990).​​ This right to​​ management and control​​ was​​ purely​​ at the doorsteps of​​ host community and​​ Shell BP​​ since the government interest then was limited to regulatory. ​​​​ It​​ is arguably true​​ that oil business​​ then​​ was​​ a​​ private​​ affair​​ of Shell. The​​ study observes​​ that​​ the​​ federal​​ government​​ truly​​ created​​ the enabling environment​​ for the oil industry to travel.​​ This is evident​​ in the numbers​​ of​​ new investors in the oil industry​​ in Nigeria.​​ ​​ Idama (2014) note​​ that​​ in​​ 1957 when oil was discovered​​ in​​ commercial quantity in​​ Nigeria,​​ the host communities​​ only​​ had​​ nominal​​ interest​​ in oil exploration,​​ production​​ and management.​​ In other words,​​ their​​ interest was limited to​​ provision of​​ oil bearing​​ land​​ and moral support.​​ At independence in 1960 the nomenclature​​ of​​ oil exploration,​​ production​​ and management​​ changed​​ with the region​​ government​​ demanding​​ 60%​​ derivation from​​ oil proceeds, making the​​ oil producing​​ regions senior partners in the tripartite​​ arrangement​​ (Idama, 2014).​​ The story​​ further​​ changed​​ in 1966 when the military took over power from the​​ democratically​​ elected​​ government to the extent​​ that the​​ oil​​ proceeds​​ were​​ adjusted in​​ favour of the federal government.​​ This adjustment never​​ went​​ down​​ well with​​ the regional government​​ neither was it accepted by the​​ oil host communities. This adjustment​​ later​​ resulted in​​ agitation from the regions.​​ Curtis​​ (2001) observed​​ that in order to have a firm control of the oil industry, the Nigeria government​​ under the aegis​​ of northern​​ military​​ elites​​ promulgated​​ a numbers of​​ decrees and established​​ institutions to manage and control the oil industry​​ in​​ Nigeria. ​​ Idama, (2014)​​ strongly​​ believed that some of those laws​​ promulgated by the military​​ had​​ political undertone and northern​​ interest, as demonstrated by the Gowon, Murtala, Shagari, Buhari, Babangida administration.​​ ​​ 

Prior to​​ Nigeria​​ independence​​ in 1960​​ the management and control of oil exploration, production​​ and export was​​ an​​ exclusive​​ preserve​​ of Shell,​​ a private company​​ in Nigeria.​​ For instance the first​​ refinery​​ built in Nigeria was​​ constructed​​ by Shell​​ in​​ Port Harcourt. In the same vein​​ the first Petroleum​​ Training​​ Institute​​ was​​ also established​​ by​​ Shell​​ in Effurun-Warri Delta State.​​ All these activities were​​ geared​​ towards effective control of the oil industry​​ in Nigeria.​​ ​​ Adekoye​​ (2006)​​ noted that​​ all these anticipated control​​ by Shell​​ in​​ the oil industry in Nigeria​​ changed as a result of the nationalization​​ policy of the military regime. It is a ground design the non ruling elite in the north to have total control of the oil industry. ​​ Scholars like Ikelegbe (2008), Akusu (2009) and Idama (2014)​​ remark​​ that​​ 1967​​ marked​​ the​​ gradual transition of the management and control of oil resources from Shell​​ to​​ the Nigeria government. This​​ was initiated​​ through series​​ of laws which​​ backed​​ up​​ the​​ transition.​​ For example, the government promulgated the Nationalization decree to ensure the total takeover​​ of the management and control of the oil​​ mineral​​ resource​​ in Nigeria from the MNOC​​ and the​​ oil bearing​​ Regional Government.​​ 

Adekoye​​ (2006)​​ notes that​​ the Gowon military junta​​ promulgated the decree​​ that​​ made oil exploration,​​ production​​ and management​​ an​​ exclusive​​ right of the​​ federal government, thereby making the Host Communities a nominal partner in the oil industry in Nigeria​​ (Ikelegbe, 2008).​​ Some scholars like Akusu (2007), Mayuku​​ (2009) and​​ Iboma (2013) noted that between​​ 1967 and 1999​​ the various military​​ juntas​​ plundered​​ the oil resources​​ with little or no attention to the​​ Host Communities​​ making the host communities​​ demimonde​​ and non-partners​​ in the oil industry. This​​ situation​​ created​​ the present​​ animosity among the major stakeholders.​​ Mayuku (2009)​​ noted that​​ in order to pacify​​ the MNOC, the government​​ decided to revert​​ all laws​​ injurious​​ to​​ the MNOC.​​ This​​ reversal​​ was done​​ through​​ Memorandum of Understanding​​ MOU​​ between the Government and Multinational Oil Companies​​ operating in Nigeria. Akusu (2008) also added​​ that no such MOU​​ was entered into with the host communities​​ neither did the Federal Government seek the understanding of the​​ state​​ government,​​ a​​ situation​​ that has generated conflict​​ among​​ stakeholders.​​ Although there are various MOUs and Joint Venture Agreement​​ JVAs between the Government and Multinational Oil Companies​​ on​​ how to​​ management and control the​​ oil resources​​ in Nigeria,​​ none of such agreement​​ has improved​​ the management of oil resource.​​ Empirical evidence shows that​​ neither​​ the MNOCs​​ nor​​ the government​​ is​​ satisfied with the operating conditions​​ in the oil industry in Nigeria. This has further created conflict and misunderstanding​​ among the stakeholders. It​​ has​​ also created​​ doubt and​​ insincerity​​ among the major stakeholders in​​ the oil industry.

In another desperate​​ move by the​​ federal government​​ to​​ forcefully​​ seize​​ the ownership, management and control​​ of oil resources,​​ was the promulgation of​​ the Petroleum decree 51 of 1969 now known​​ as​​ Petroleum Control Act Cap. 351, Law of the Federation of Nigeria 1990 which expressly​​ stated​​ that all Royalties and revenue from oil must be paid to the federal government.​​ In addition to that the federal government in 1968 ordered all MNOC operating in Nigeria to relocate their administrative and operational headquarters​​ from the​​ host communities to the then federal capital​​ in​​ Lagos​​ (Dara, 2008).​​ These actions of government show​​ that​​ the Government and the Host Community were never​​ on the same page​​ or share​​ the same interest.​​ It also shows that the​​ then​​ ruling​​ military​​ elites with​​ northern agenda​​ were all out​​ to capture​​ the management of the oil industry.​​ Ekpo (1991) noted​​ that since​​ then​​ there​​ have been mutual suspicions​​ among the three​​ major stakeholders in the oil industry in Nigeria. These mutual suspicions​​ have extended beyond​​ the three​​ major​​ stakeholders​​ to include the​​ International Non-Governmental Organizations​​ who sometimes accuses​​ the host​​ communities​​ of​​ economic sabotage. They have also accused the Federal Government of not playing according to the rules of the game.​​ These fissures​​ within the ranks of the stakeholders in the oil industry​​ have created a conflict of interest, leading to abysmal management​​ of oil resource in Nigeria. ​​ 

Although scholars like Ikelegbe (2008), Ekpo (1991) Dara (2009) and Ezirim (2008) have written copiously on Oil Resource​​ Management and Conflict,​​ ownership and control​​ in the oil industry. There is dearth of empirical studies on​​ Oil​​ Resource​​ Management​​ in Nigeria​​ and​​ the Paradox of Development in the Niger​​ Delta​​ between 1999 and 2014. This is the gap this study attempts to fill. ​​ ​​​​ ​​ ​​ 

To fill this gap, the study​​ attempts​​ to​​ investigate​​ the Oil​​ Resource​​ Management and​​ the Paradox of development in the Niger Delta, using​​ conflict of Interest in​​ the​​ Nigeria​​ oil industry​​ as​​ the​​ bases for the​​ assessment of Oil Resource​​ Mismanagement in Nigeria.​​ The study pose​​ a fundamental​​ question thus: Does the conflict of interest​​ among stakeholders​​ in the oil​​ industry​​ undermine​​ the effective management​​ of​​ oil resource in​​ Nigeria?​​ The main objective is to determine whether the conflict of interest in the oil industry is responsible for the mismanagement of oil resources in Nigeria and​​ lack of development in the Niger Delta.​​ The study deploys​​ Content Analysis and​​ Focus Group Discussion as method of data collection​​ while mixed methods of data analysis is​​ used in this study.​​ The author​​ relied on natural resource curse​​ theory to explain​​ the​​ nexus between the variables in this​​ study.​​ 

In the next section of this report, the study takes​​ a critical look at the history​​ of​​ natural resource management in​​ Nigeria, the origin of the conflict of interest in the management​​ of​​ oil exploration and production. Finally the study​​ empirically shows the nexus between the​​ conflict​​ of interest​​ and management​​ of oil resource​​ in Nigeria, with conclusion and recommendations.



This study is anchored on resource-curse theory which suggests that the abundance of mineral resources is often a curse than a blessing, particularly in developing countries like Nigeria. Scholars like Malomo (2008) and Ezirim (2008) note​​ that natural resources​​ are seen to be more of economic curse than​​ blessing. This assumption began to emerge in 1980s and it is widely deployed by scholars in the Social Sciences. The resource curse thesis was first used by Richard’s Aunty in 1993 to describe how countries with rich natural resources ​​​​ were ​​​​ unable ​​​​ to ​​​​ use ​​​​ their ​​​​ wealth ​​​​ to ​​​​ boost ​​​​ their ​​​​ economies. The theory also affirms that these countries have lower economic growth rate than countries without abundance of natural resources and often times poor. ​​​​ In similar studies by Jeffrey (2005) and Warner (2008), a link between natural resource abundance and poor economic growth was shown. They noted that there was a disconnection between natural resource wealth and economic growth. This can be explained by critical observation of the Nigeria oil industry. Many scholars have argued that this kind of situation is paradoxical.

Paradoxically, resource-curse theory or the paradox of plenty or Dutch disease refers to the paradox ​​​​ that ​​​​ countries ​​​​ and ​​​​ regions ​​​​ with abundance ​​​​ of ​​​​ natural ​​​​ resources ​​​​ tend ​​​​ to ​​​​ have ​​​​ less economic ​​​​ growth ​​​​ and ​​​​ worse ​​​​ development ​​​​ outcomes ​​​​ than ​​​​ the ​​​​ countries ​​​​ with ​​​​ fewer ​​​​ natural resources. There are various reasons for this paradox of plenty or Dutch disease. This critical observation is attributed to divergence of interest which often leads to mismanagement​​ of resources. Idama (2014) noted​​ that any commodity that belong to everybody truly belong to nobody. In order words it is quite easy for an individual in a community to build a mansion but very difficult for a community to build a fence of a house. This further explains​​ that once there are divergent interest, efficiency and effective management become scarce and wastage, carelessness and​​ abuse of resource become prevalence.​​ 

Although some scholars like Mayuku (2009), Iboma (2013) and Mayor (2007) explained that weak government institutions, poor enforcement of extant laws, unstable political system and corrupt institutions are responsible for poor management of natural resource. Other possible reasons are due to the easy model of diverting revenue stream from extractive industries. Scholars have appreciated the role of the oil industry’s real exchange rate leading to de-industrialization and volatility of revenues from natural resource sector due to exposure to global commodity market swings. As noted by Juan Pablo Perez Alfonzo, a Venezuelan politician and one of the founding members of OPEC argued that ten years from now,​​ maybe​​ twenty years from now​​ oil will bring us ruin”. This assertion is being fulfilled even as we speak. The Niger-Delta is on fire. People are​​ being​​ killed, houses burnt and communities are annihilated. Can we call this a blessing or a curse?




There have been various​​ attempts by scholars to explain the true meaning of​​ the two major variables in this study,​​ management​​ and​​ development.​​ ​​ In order​​ to operationalized the concept,​​ Idama (2014) sees​​ management as the​​ skilful handing​​ of resources for the benefit of all.​​ In a similar manner he see development as progressive change in the socioeconomic life of the people.​​ Akusu (2010) explain that management​​ is the ability to co-ordinate​​ all factors of production to achieve efficiency for the organization.​​ While his idea of development, is a direct change towards modernization.​​ Although there​​ are no universally acceptable definitions​​ of management​​ and development,​​ there are some common traits​​ that run through them.​​ For instance​​ skills;​​ resource,​​ coordination and passion​​ are some of the​​ characters that are found in​​ management and development.​​ In this study, we see management and development as the ability to harness natural resources for the benefit of all.​​ ​​ However,​​ the​​ management of​​ the​​ Nigerian​​ oil​​ industry​​ lacks​​ some of these traits, which ought to​​ enhance the​​ effective​​ coordination and​​ management of​​ oil resource transparently.​​ Arising from these​​ factors are the​​ conundrums​​ of conflict of interest​​ in the management and control of oil resources​​ in Nigeria.​​ Although some scholars​​ have​​ argued that​​ interest is a very difficult​​ concept to measure.​​ Otis (2009) believed that interest is​​ a​​ measurable​​ variable, using indicators like,​​ level of commitment;​​ equity​​ contribution,​​ activeness​​ and​​ risk​​ taken​​ as the benchmark for measurement. He noted that all these factors are the​​ determinate of interest.​​ Mayor (2010)​​ also​​ noted that interest in​​ a​​ business venture can be measured through​​ indicators like Land, Labour and Capital.​​ He argued that land being the first​​ factor of production has a​​ higher interest while labour and capital are second and third respectively.​​ He noted that​​ at various times land has been used as an instrument​​ of political control. For instance, kings,​​ feudal lords​​ and capitalists have used land as​​ instrument​​ of control.​​ But in contemporary time, capital and labour​​ have​​ tried to​​ displace​​ land thereby creating conflict​​ of interest in the management of oil resource in Nigeria.​​ ​​ 

Akusu (2008) believes​​ that the conflict of interest​​ in the management​​ of oil resource in Nigeria​​ is​​ anchored​​ on faulty federal structure​​ and​​ selfish​​ laws​​ enacted by leaders with regional interest. For instance, section 44 (3)​​ of the 1999 constitution,​​ stated​​ that the Federal Government shall control​​ all minerals, including oil​​ and​​ gas​​ resources​​ in, under or upon​​ any land in Nigeria, including​​ territorial waters​​ and exclusive economic zone.​​ It further stated that the​​ Federal government​​ shall manage the mineral resources​​ in such a manner as maybe prescribed by the National Assembly.​​ In other words, all matters relating to the regulation and management of oil resource are within the purview​​ of the federal​​ government.​​ For example the collection of export duties,​​ income tax, profit tax, capital gains​​ tax,​​ the licensing​​ and regulation​​ of the oil companies​​ among others​​ fall​​ within their power.​​ This section of the​​ 1999​​ constitution was inherited from the​​ General Yukubu Gowon’s military regime.​​ Prior to​​ 1968​​ the colonial government​​ consider​​ the oil industry in Nigeria​​ as​​ a private​​ business managed by​​ Shell British Petroleum (Shell BP)​​ with the payment of royalty​​ and other taxes to the Central Government. The Regional Government​​ did not​​ share profit with​​ Shell BP​​ but had a derivative sharing formula of 50%.​​ In other words the Regional Government receive 50 percent​​ of oil proceeds​​ as​​ derivable from​​ oil.​​ This 50 percent derivation from oil revenue was​​ to a reasonable extent​​ judiciously​​ utilized​​ in the​​ Western​​ regions.​​ Although​​ this gesture was​​ not extended to all oil bearing​​ communities, some of​​ the oil bearing​​ communities​​ were beneficiary of some of the government policies like free education.​​ The​​ non-inclusion of​​ some of the​​ oil bearing​​ communities​​ in the management of oil resources​​ in 1967​​ trigged​​ series of​​ agitation from the minority ethnic groups​​ in​​ the oil producing​​ regions​​ of Nigeria. ​​ While​​ the​​ minority’s​​ agitation was on,​​ Shell BP saw​​ it​​ as​​ an opportunity​​ to​​ invest​​ more​​ and​​ by​​ adding​​ values to the crude oil​​ produced​​ in Nigeria. For example​​ Shell BP​​ built the first​​ Nigeria​​ refinery in Port Harcourt in the 1970s​​ and​​ established​​ the​​ first​​ Petroleum Training Institute​​ in Warri Delta State. ​​​​ They also opened up the hinterlands for oil exploration, ​​​​ ​​ a sign of commitment and seriousness to​​ develop the oil bearing communities.​​ This aggressive investment in the oil industry​​ by​​ Shell BP​​ led to the increase in oil production.​​ In other words,​​ their investment in the oil industry was​​ not only​​ to increase their​​ equity share​​ but also to be a major player​​ in the oil industry in​​ Nigeria.

. ​​​​ ​​ ​​ ​​ ​​ In 1968 the management architecture​​ in​​ the oil industry drastically changed​​ with military intervention in politics.​​ The military regimes promulgated series of​​ decrees that​​ altered​​ the ownership, management​​ and control of oil mineral resource in Nigeria.​​ The​​ change in the oil industry was​​ occasioned by​​ certain factors such as, the​​ Nigeria membership of​​ Organization of Petroleum Exporting Countries (OPEC), military intervention in politics,​​ even development, funding for the Nigeria Civil War​​ among others.​​ The ownership and control​​ of​​ oil resources​​ was a pre-condition​​ for​​ membership​​ of the cartel. Therefore in line with OPEC​​ regulation​​ in 1973​​ the federal government​​ nationalized​​ all​​ Multinational oil companies​​ MNOC​​ assets​​ in Nigeria.​​ In addition​​ the federal​​ promulgated decrees​​ which​​ deny the Regional Government access to the ownership​​ and control of oil resource.​​ In other words denying​​ the Regional Government, who represent the host community​​ in the oil​​ industry of their 50% derivation.​​ In order​​ to consolidate​​ on​​ the gains achieve from the restructuring exercise in the oil industry, the federal government​​ established four major institutions​​ to manage the oil industry, namely​​ the Presidency,​​ Ministry of Petroleum Resource​​ (MPR), Directorate of Petroleum​​ Resource (DPR)​​ and the Nigeria National Petroleum Corporation​​ (NNPC). Their functions are clearly spelt out in extant laws and regulation.​​ For instance​​ the constitution required​​ the President​​ to be​​ the​​ Commander-in-Chief​​ of the Army Forces​​ but not a​​ Minister of Petroleum.​​ A situation that has often time generated conflict of interest.​​ In order to understand the working of the petroleum industry, the President may appoint a minister to​​ oversee the affairs of the ministry, including junior Minister and other aids​​ for the day to day running​​ of the oil industry (Gilles, 2008).

The DPR is the next statutory agency with the main function of regulating, overseeing​​ all​​ activities​​ of the oil companies including​​ licencing of​​ oil companies​​ including the​​ operations of the​​ NNPC.​​ They are​​ equally charged with the responsibility​​ of all​​ leases in the oil industry​​ and to ensure​​ the full compliance with​​ all national regulations. They are required to enforced safety​​ and environmental standards and keep updating​​ records of all oil related activities. It is the duty​​ of the DPR​​ to ensure that payment​​ of royalty and​​ rents​​ are paid to the Federal​​ Government timely among​​ other duties.​​ Suberu​​ (2008)​​ observed that​​ the DPR existence​​ as a unit within​​ the NNPC​​ has​​ created​​ the untenable situation of the regulator being subordinate to the industry’s largest player.​​ This situation has​​ also​​ created room for conflict of interest within the oil industry,​​ as the NNPC is a regulator and at the same​​ time a player.​​ ​​ 

It is imperative to note that​​ NNPC is the commercial and business agency of the federal government in the oil industry.​​ They are involved​​ in​​ various joint venture​​ arrangements​​ with many MNOC. For example,​​ the Production and Sharing Contract​​ and the Commercial​​ and Partnership​​ Agreement between​​ NNPC and MNOC in Nigeria​​ were initially put​​ forward​​ as a​​ means of managing the oil industry in Nigeria.​​ Recently the NNPC got​​ involved in two​​ other​​ broad​​ arrangements,​​ such as Joint Venture Agreement​​ (JVA)​​ and​​ Memorandum of Understanding​​ (MOU),​​ which​​ are governed basically by royalty and​​ taxation plus a government​​ majority participation interest.​​ Folabi (2009)​​ explained that the Production Sharing Contract (PSC) and the Service Contract were introduced by the federal government so as to benefit maximally​​ from oil production in Nigeria.​​ The terms of these agreement​​ is that MNOC​​ provides the funding for exploration​​ and development operation​​ with profit sharing arrangement​​ that permits the MNOC to recover their cost​​ with 40% cost recovery limit,​​ 55% tax​​ and 70/30​​ profit sharing​​ formula​​ in​​ favour of the government.​​ He noted that this agreement was first signed in 1973​​ between the Government and​​ Ashland​​ oil. ​​​​ It was further extended to other MNOC.​​ In all these agreements, the oil bearing communities are not consulted, thereby creating animosity among the stakeholders.

NNPC a major stakeholder in the operations of the oil and gas industry in Nigeria, has be entangled in the web of corruption. It is on record that, ​​ over the years, the NNPC has​​ always​​ declared losses​​ questioning the effectiveness its supervisory role? ​​ Despite the modification​​ in the operating agreement in the oil industry​​ in Nigeria, the results remain the same.​​ These abysmal performances​​ in the​​ management of the Nigerian​​ oil industry by the NNPC​​ have left everyone in doubt​​ as to their managerial competency.​​ Many oil bearing communities have argued that their exclusion from all the agreements created avenues for corruption in the oil industry.​​ 

The recent audited report​​ by the Nigeria Extractive​​ Industries Transparency Initiative (NEITI) has​​ exposed, confirmed and reinforced​​ the worries of many Nigerians​​ about the​​ incompetence​​ and neutrality​​ of NNPC​​ in the management​​ of the oil industry in Nigeria.​​ Ekpo​​ (1991)​​ explained that​​ the​​ employees of​​ NNPC do not have the skills​​ and the technical know how​​ to manage the oil resource​​ in Nigeria,​​ considering​​ the recruitment process in​​ the​​ organization.​​ In most cases,​​ ethnic and religious​​ considerations are​​ more​​ prevalent in​​ the​​ recruitment​​ than merit.​​ And the position an employee​​ occupies​​ in NNPC​​ is predetermine by the region​​ and religion.​​ Akusu (2007)​​ noted that over 75% of the employees in NNPC​​ are from the Northern​​ region of​​ Nigeria​​ while the​​ South​​ Western​​ States​​ have 17%​​ employees. The​​ South​​ Eastern States have​​ 7.5% and the South-South​​ states (Niger Delta Region)​​ have​​ just​​ 0.5%, making the employment lopsided.​​ A critical observation of the recruitment process shows that​​ employees in NNPC are​​ selected based on federal character​​ principle and not on merit.​​ Although some scholars have stricture​​ NNPC​​ for incompetency and mismanagement of the oil resource​​ in Nigeria, this study believe​​ that​​ the NNPC​​ has​​ too many masters​​ (interest)​​ to serve.​​ For instance the NNPC has​​ the Presidency, the Ministry of Petroleum​​ Resource,​​ the National Assembly and the DPR​​ who are the​​ official​​ regulator of the oil industry​​ in Nigeria​​ and other local and international interest to protect.​​ In all these known​​ interests​​ that need to be protected​​ by​​ the NNPC, who​​ now​​ protects the interest​​ of the​​ host communities?​​ ​​ In addition to the various governmental interests​​ in the oil industry​​ are the​​ MNOC and Host Community​​ interest in​​ the oil industry in Nigeria.​​ And if all those interests are not properly aligned, managing the​​ oil resource in Nigeria​​ for development​​ will be a mirage​​ and curse.​​ 

Scholars like Mayuku (2008) and Iboma (2009)​​ believe measuring business interest helps to situate the true owners of the business.​​ They argue​​ that there are certain indicators to show​​ who​​ the real stakeholders are.​​ For example​​ the level of financial​​ contributions, the level of concern, the risk and the percentage of shares​​ control. In applying these criteria​​ to the management​​ of oil resource in​​ Nigeria, they noted that​​ Land is the more preferred in the factors of production, closely followed by labour and capital.​​ This was why oil bearing​​ regions​​ in Nigeria​​ received 60% derivation from oil proceeds​​ in the 1960s.​​ In most developed countries​​ oil resources are distributed​​ as follows, Land owners or oil bearing communities are entitled to over 60%​​ of the proceed, investors​​ 35%, royalty to central​​ government 5%. The table below​​ shows Contemporary Allocation​​ of​​ Interest​​ in the​​ oil Industry​​ in most developed countries.


Table 1:​​ Contemporary​​ Interest​​ Allocation in the oil Industry

Name of Stakeholder






Oil Bearing Communities






Oil Multinational Companies






Oil Multinational Companies






Federal Government (NNPC)






Other interest

Moral support

General support




Source: Idama 2014


Table above shows that oil bearing communities contributes land and the resource thereof.​​ Their major concern of the oil bearing communities is​​ environmental​​ conservation and sustainable development.​​ They take the highest risk. For instance,​​ they bear health risk,​​ destruction of bi-diversity, pollution of land, water and air.​​ In​​ fact the​​ risk​​ cannot​​ be​​ quantified​​ monetarily.​​ In most​​ developed​​ countries,​​ land owners are allowed to​​ develop​​ or lease​​ their oil field on agreed​​ rate and condition. In most cases​​ profit sharing takes the following​​ format,​​ land owner receive​​ 50%, capital invested 30%, Labour​​ 10%, Royalty​​ and Rent 9%​​ and others 1%.​​ With this arrangement,​​ all stakeholders know​​ their boundary.​​ Observations have​​ shown that​​ in​​ most developing countries​​ with natural resource,​​ there​​ are no well-defined and agreed legal frameworks​​ on natural resource management thereby creating​​ conflict of interest.​​ 



It is imperative to establish the nexus between the contending interests in​​ the oil​​ industry in Nigeria. A number​​ of scholars​​ have argued that there are some hidden benefits​​ that​​ attract​​ various​​ interests​​ in the oil industry in Nigeria.​​ Frynas (1998), Brunner (1996) and Danler​​ (1996)​​ explain​​ that the Nigeria oil industry is one of the most​​ lucrative oil sectors​​ in the World. It has​​ robust​​ and attractive conditions for​​ fraudulent​​ investors​​ with a track​​ record of fraudulent​​ concessionary​​ right,​​ Joint​​ Venture Agreement and Service Contract Agreement​​ that tend to favour​​ the MNOCs.​​ These evils​​ in the oil industry​​ are​​ perpetrated​​ by the Nigeria elites in connivance​​ with officials​​ of MNOC.​​ These kinds​​ of investors see the​​ Nigeria oil industry​​ as a safe​​ haven for investment.​​ A personal observation in the oil industry in Nigeria shows that​​ the Nigerian​​ elites who​​ manage​​ the oil resource are on the same page with the​​ elites of MNOC.​​ This observation is anchored​​ on the fact that both elites​​ have common interest​​ ie​​ to make money​​ at the expense of​​ the general interest.​​ Nevertheless there are slight differences​​ between​​ the two elites,​​ for example,​​ the Nigerian​​ oil​​ elites betray their nation and protect​​ their​​ selfish interest​​ while the MNOC elites protect their​​ organizational​​ and national​​ interest.​​ For example,​​ a former​​ Petroleum Minister was caught with $490 million while a former Group Managing Director of NNPC was caught with over $149 million (AIT report)​​ 

The World Bank Report​​ of​​ 1995 was able to identify some​​ major​​ nauseous for​​ the proliferation of interests in the oil industry in Nigeria.​​ They​​ identified inadequate regulatory​​ framework, the absence of requirement for community participation in the planning and​​ development of oil activities,​​ corruption and inadequate compensation for damage​​ property.​​ One critical observation of this study​​ is the constant​​ conflict​​ between the oil companies and host​​ communities​​ which​​ revolved around​​ land ownership and compensation.​​ The fissure between the two steams​​ from the fact​​ that the host communities argued that they​​ deserved adequate compensation for their degraded​​ land​​ while the MNOC believed that​​ the NNPC with 60% equity​​ share in the joint venture is​​ in​​ position to pay​​ compensation​​ to the host communities​​ and adequately develop the oil bearing communities.​​ These double positions have created divergent interests​​ with the​​ host communities advocating​​ environmental conservation​​ and development​​ in the region​​ while​​ the​​ MNOC advocate​​ minimize​​ cost and maximize profit,​​ thereby creating a conflict of interest​​ in the management of oil​​ resource​​ in Nigeria.​​ A top management staff of Shell​​ once informed the author that​​ the​​ various Agreements and MOUs between NNPC and MNOCs​​ never had​​ clause​​ like environmental conservation and compensation​​ or​​ development plan​​ for the oil bearing communities.​​ He noted that the Nigeria​​ government​​ has​​ no concern for the environmental protection​​ and do not​​ care for the host communities. The government​​ only concern is the revenue that​​ accrues to them.​​ ​​ 

There are empirical evidence to show that​​ the​​ elites who manage​​ the oil resource in Nigeria​​ sometimes sacrifice​​ the environmental protection,​​ the host communities and national interest for personal​​ interest.​​ For example the ruling elites who also double as the oil elites have connived​​ with the MNOC​​ to oppress, suppress​​ and intermediate the host communities. There are copious reports indicting MNOC​​ of instigating​​ the Nigerian​​ security forces against host communities​​ with the view​​ to intermediating​​ them​​ against any planned protest.​​ The author personally observed that​​ most​​ MNOC​​ like Shell can go to any extent to cover​​ up​​ their wrong did, especially oil spillage.​​ In most cases,​​ their​​ form of defence is to accuse host communities​​ of​​ sabotage.​​ Iboma (2008) observed that​​ the government​​ often times​​ act on​​ the​​ sabotage​​ thesis before investigation.​​ One strategy deployed by the government is to call on the security agencies​​ to attack the host communities​​ in the name of protecting​​ oil facilities.​​ And once​​ the process of annihilation​​ of the community is completed​​ the​​ capacities to demand​​ compensation and development from the MNOC and the Government may have been weakened. These have been the​​ strategy​​ for the avoidance​​ of payment of compensations​​ and development of the Niger​​ Delta region.​​ The International Peace Committee Report​​ 2003 shows that there were​​ various​​ cases of large-scale human​​ right violation by oil companies especially Shell.​​ The​​ World Bank​​ also​​ estimated​​ cases​​ of corruption​​ in the oil industry in Nigeria,​​ noting that​​ over​​ 80 percent of the oil revenues​​ accrue to the​​ domestic front​​ benefit only 1 percent of the population (cited in EIA, 2005a). The United​​ Nations (2006)​​ also​​ ranks Nigeria 159th out of​​ 177 countries on its Human Development​​ Index​​ (HDI). ​​​​ Also​​ the UN report note​​ that more than 90 percent​​ of​​ oil bearing communities​​ in​​ Nigerians live on less than US$1 a day.​​ The report​​ further noted that the oil bearing communities​​ are among the worst​​ in​​ terms of HDI​​ in the World. ​​ One obvious reason why​​ the​​ divergence​​ interests​​ in the oil industry​​ is​​ largely​​ due to​​ the disparities that exist between the host communities and capital cities​​ like Abuja, Lagos, and Kano​​ among others. These cities​​ have contributed nothing​​ but gained everything.​​ A community leader in​​ Olomoro​​ an oil bearing​​ community once noted​​ that, if those without a drop of oil​​ in their​​ community​​ have all the necessities​​ of​​ live, why​​ should​​ the​​ oil​​ bearing communities​​ live in poverty?​​ He concluded that​​ they rather die than to continue with the existing​​ sharing​​ format.

A​​ recent pronouncement​​ by​​ President Buhari​​ on​​ the abolition​​ of​​ the​​ Derivation Principle and​​ the Amnesty​​ programme shows that​​ ethnicity and regionalism are still​​ significant​​ factor​​ in​​ the management and control​​ of oil resource in​​ Nigeria.​​ The federal architecture of​​ the​​ Nigeria​​ state​​ has​​ once shown that​​ the minority will have their say but majority will have their ways.​​ ​​ The oil industry in Nigeria is dominated by the loose coalition​​ of the elites of the majority ethnic groups​​ of Hausa, Yoruba and Igbo at the expense of the large numbers of ethnic minorities, including those of the oil bearing communities in the Niger Delta region.​​ ​​ Empirical evidence shows that out of the 79 marginal oil field​​ leased​​ for operation​​ in​​ 2010,​​ 65 marginal fields​​ are​​ exclusively for the​​ ruling​​ elites​​ of​​ Northern​​ Nigeria, 10 marginal fields are​​ for the elites of the​​ South West Nigeria while the remaining 4 marginal fields were left for the Igbos while the oil bearing communities in the Niger Delta are​​ without a single marginal oil field​​ (Omeje, 2006). One way through which the majority ethnic elites are able to achieve their success in​​ the oil industry​​ is through​​ the equity​​ interest​​ in​​ the joint venture​​ partnership.​​ For example​​ a Military General from the North​​ is a major shareholder​​ of​​ Consolidated Oil Ltd​​ (Coin Oil)​​ with MNOC​​ having​​ equity interest, in return the MNOCs like Shell​​ offers a​​ juicy​​ position to their cronies.​​ Some of the​​ MNOCs​​ like Shell​​ have equity​​ interest in all the marginal oil fields allocated to the top Generals from Northern Nigeria. Recently the Niger Delta Avengers published the names of the owners​​ of​​ oil fields​​ in the region,​​ with Gen, T Y Danjuma and Gen,​​ Babangida among the top​​ ten​​ on​​ the list.​​ Dara (2009) noted that the​​ elites from Northern Nigeria​​ will stop at nothing​​ in ensuring the destruction of NNPC​​ so​​ as to privatize it​​ to them.​​ And once​​ a consensus for privatization is reached​​ they can use their​​ international cronies in the oil industry​​ to acquire it.​​ ​​ Ajayi (2016) noted that just few years into the Buhari’s administration, he is calling for​​ the​​ selling of national asset​​ to fund the national budget for 2016. Many​​ analyst and social critics​​ see this call as a ground plan of the northern elites to own​​ the oil industry especially the vital asset such as​​ NNPC and its subsidiaries.

Many activists, scholars and Niger Delta elites have long​​ envisaged​​ this​​ attempt by the northern​​ elites​​ to dispossess the people of the Niger Delta of their natural resource.​​ They came to this conclusion judging from the​​ activities of the​​ Nigeria​​ northern elites regarding​​ the oil resource in the Niger Delta.​​ For example the Nigeria State under the leadership​​ of​​ the Nigeria​​ northern elites​​ often​​ intervenes on behalf of the MNOC​​ using legislation, public policy and military reprisal​​ against​​ host​​ communities’​​ in​​ favour of the MNOC.​​ There are​​ thousands​​ of empirical evidence​​ to show​​ how​​ the Nigeria Government​​ under the leadership of the Nigeria northern elites​​ attacked oil bearing​​ communities​​ in the name of protecting oil installations and fighting illegal​​ oil​​ bunkers, see Ogoni Report​​ 2006 and 2007, Amnesty​​ International Report​​ on the Niger Delta 2008, United Nations Special Report on the Niger Delta​​ 2013​​ among others.​​ These various report clearly shows that​​ there are conflict of interest in the management and control of the oil industry in Nigeria. The interest of the​​ Nigeria​​ northern elites is​​ always geared towards​​ supporting the MNOC even when the actions of the MNOCs are at variance​​ with​​ International Best Practise in the oil industry.​​ Idama (2014) noted that​​ as a result of the support from the​​ Nigeria​​ northern​​ ruling elites​​ most Trans-national Oil Companies TNOCs in Nigeria are insensitive to​​ the​​ environmental degradation​​ in​​ the​​ oil​​ bearing communities​​ and they​​ are​​ also insensitive to the developmental challenges of the region. As Iboma (2007) points out,​​ the​​ federal government of Nigeria​​ has​​ no​​ interest in the development​​ of the​​ Niger Delta​​ region.​​ This explains the window​​ dressed​​ agencies and commission set up to address​​ the developmental challenges of the region. Iboma further noted that​​ these agencies and commission are​​ designed to fail ab-initio.​​ They​​ are interested in the​​ inflations of contract,​​ subversion of​​ tax payment​​ through the​​ collusion with state official​​ among​​ other corrupt practices​​ in the system.​​ Omeje (2006) summarises​​ his​​ observations​​ by stating​​ that the present woes in the management of oil resources in Nigeria are​​ made possible by the accumulation​​ of​​ wealth​​ by​​ rent-seeking​​ political economy​​ gravitated by the northern ruling elites.​​ This gravitas​​ by the ruling​​ elites in​​ conniver​​ with​​ MNOCs​​ have not gone on noticed by the international community.​​ Recently​​ the elders in the Niger Delta​​ have called on the​​ international community to prevail​​ on the​​ Nigeria President​​ Buhari​​ to create​​ a conducive environment for stakeholder’s​​ dialogue​​ that will include: the United State, United Nation, the European Union and the Africa Union as observer​​ so as to fashion​​ a new strategy for the management and control of oil Proceed​​ in Nigeria.​​ ​​ 



Since the​​ discovery​​ of​​ oil in the Niger Delta​​ in the 1950s, the​​ issue of resource ownership,​​ management and​​ control​​ has​​ been​​ a subject​​ of​​ high level debate among​​ various interest groups within and outside​​ Nigeria. Over​​ the​​ time​​ the narratives for the struggle​​ for the ownership, management​​ and control​​ of oil resource by the Host Community​​ took​​ a drastic turn​​ for the worst with​​ the federal government​​ dictating who gets what, when and how in the oil industry.​​ And since the​​ pendulum​​ of power swing​​ more​​ towards​​ the federal government, it was only natural for the MNOC​​ to​​ join forces with the federal government whose aim is profit maximization. Whereas the interest of the host community cut across spectrum​​ of​​ other​​ interest.​​ As a result of these sharp differences​​ between the federal government and the host communities,​​ effective and efficient​​ resource management like oil​​ has​​ been​​ an issue.​​ 

In the same manner,​​ countries​​ where​​ ownership, management and control of​​ natural resources​​ are clearly defined, conflict of interest are reduced to the lowest​​ minimum​​ with land owners​​ interest taking the centre stage.​​ Furthermore,​​ observation have shown that​​ high stakes accumulation are​​ widely celebrated and​​ glamorized in​​ the​​ Nigerian society, irrespective of how​​ the​​ money is made. Nigerians​​ celebrate​​ and​​ glamorise​​ illegal oil deals​​ through​​ wanton​​ destruction​​ of oil facilities. ​​ In order to prevent​​ further​​ mismanagement​​ and​​ wastage​​ in the oil industry​​ in Nigeria, the​​ study recommend​​ among others​​ the convocation of a National Conference on Natural Resource Management in Nigeria​​ where various​​ interest in the oil industry​​ can be harmonized for the benefit of all.



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