COMPARATIVE ASSESSMENT OF THE SOCIO-ECONOMIC EFFECT OF CRUDE OIL EXPLOITATION

1.1 Introduction

The oil exploration and exploitation industry which is majorly centred in the Niger Delta region is without doubt currently the most important earner of foreign exchange to the Nigerian economy. The Niger Delta is best known as a region that sustains much oil exploration and exploitation by the agents of western economic powers. The Niger Delta basin is considered the mainstay of the Nigerian economy for its significantly high level of oil reserves. The region is also naturally endowed with viable deposits of hydrocarbon and gas reserves. It was discovered that severe environmental degradation has been inflicted on the oil bearing communities of the Niger Delta as a result of oil spillages and other factors to the extent that economic activities in the area have been adversely affected leaving the people completely impoverished, with no meaningful alternative source of livelihood.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research questions and hypothesis, Limitation of the study and Definition of terms.

1.2 Background of Study

Since then exploration and exploitation of crude oil has resulted in environmental degradation, soil impoverishment, pollution, loss of aquatic life and biodiversity etc. This study reveals that the causes of the crises in the Niger-Delta region is sequel to the inability of the multinational companies involved in the explorations and exploitation of crude oil, and the federal government to adequately mitigate the consequences of their activities in the region. The history of oil exploration in Nigeria dates back to 1903 when Nigerian Bitumen Corporation conducted exploratory work in the country, at the onset of World War I the firm‘s operation were stopped (Ikejiaku, 2009). Due to the lack of technological and financial resources by small oil companies, large oil companies took over the exploration of commercial oil in the country (Essaghah, 2008).

Petroleum is among the various resources produced by nature. They are used by human to satisfy their needs such as transportation, cooking, electricity power supply and others (Mike, 2012). The exploitation of natural resources such as crude oil is the use of natural resources for economic growth, of sometimes with a negative connotation of accompanying environmental degradation (Cronin, 2009). It started to emerge on an industrial scale in the 19th century as the extraction and processing of raw materials (such as in mining, steam power, and machinery) developed much further than it had in pre-industrial eras. During the 20th century, energy consumption rapidly increased.

In the last fifty-five (55) years, the Niger-delta region has experienced increased activities in the area of oil exploration and exploitation, refining and products marketing operations while the same activities have generated immense finance for the country as a whole, it has created health and environmental problems to the host communities in the Niger Delta Region. According to Omajemite (2008), the operation of the oil industries have introduced pollutants such as liquid discharge and oil spills into the air, land and water component of the environment. This oil activities though contributed to the Nigerian economy, notwithstanding the area has been subjected to series of degradation and the member of the host communities suffering untold hardship.

The whole process of obtaining fuel mineral, from exploration, extraction processing and transportation as well as storage and consumption generate one form of pollution or the other. For example, during exploration, drill cutting, drilling mud and fluids are used for stimulating of crude oil, damage to pipeline and accident involving road trucks and tankers generate oil and hydrocarbon emission. These have a far more reaching effect on the environment (FEPA, 2001).

The entire process of oil extraction negatively affects the environment basically through pollution which invariably leads to other kinds of problem stated the crude oil is so dangerous that when the oil touches the leaf of food crops or whatever economic tree in the area, the plants dries off immediately. This destructive effect of oil exploitation on plants invariable leads to poor agricultural yield in the region.

The exploration of crude oil Nigeria has led to a considerable economic growth in the country. Crude oil was discovered in commercial quantities in the Niger Delta Region, specifically in the present Oloibiri in 1956 (Omofonwa and Odia, 2009). Since then oil exploration and exploitation as continued resulting in to what is termed environmental destruction and degradation due to neglect and less concern of the multinational companies in environmental management in the area. The first shipment of oil to Europe was in 1956 from a modest production of 5,000 barrels per day in 1958, it reached a peak of 2.3 million barrels per day in 1979. By the 1970's oil has become the fiscal basis of the Nigeria state, effectively replacing agriculture as the basis of revenue generation in Nigeria (Mike, 2012).

The Central Bank of Nigeria (CBN) in its 1981 annual report inferred that oil accounted for than 90%of Nigeria Exports by value and about 80% of total government revenue as at December 31st 1981, there is no doubt that the Nigeria oil industry has affected the country in a variety of ways at the same time. On one hand it has fashioned a remarkable economic landscape for the country. One major pollutant that has stimulated pollution of crude oil can occur as spillage from on-share or off-shore operation of the petroleum industry. It is therefore believed that when these oil spills occur, they affect the flora and fauns aquatic animal which constitutes major protein resources for man.

In the course of crude oil exploration various materials are also released into the environment, such as Benzes and poly-nuclear aromatic hydrocarbon on oil and water bodies. The toxicity of the oil adversely affects the soil, plants, animals and water resources. According to Mike (2012) during exploration and exploitation of oil, rural communities have to the destruction of farm lands vegetation and pollution of streams.

Accordingly, Badego and Nwilo (2005) noted that the exploration of crude oil is a major environmental problem in Nigeria. They posited that between 1976 and 1996, Nigeria recorded a total number of 4,835 oil incidents which resulted in a loss of 1,896, 960 barrels of crude oil to the environment (NNPC Statistical Bulletin, 2015). Between 2006 and 2010, according to Lawrence, Musari and Okere, (2010), Nigeria recorded a total 23 percent were caused by equipment failure, operational maintenance error and corrosion while 45 percent had been attributed to sabotage and vandalisms (NNPC Statistiacal Bulletin, 2015). The remaining 32 percent was attributed to leakages and other mechanical and human errors.

Previous studies have focused mainly on oil exploitation and gas flaring activities and its environmental impacts in Nigeria especially oil producing states but none have laid emphasis on the socio-economic effect of crude oil exploitation in Ughelli and Warri. This study therefore seeks to fill the gap that exists in literature on the topic under consideration.

Due to the crude oil exploration, the resultant effects on the surrounding environment have caused significant tension between the people living in the region and multinational oil companies operating in the area. It is against this background that this study is conducted to comparatively assess the socio-economic effect of crude oil exploitation in Ughelli and Warri respectively.

1.3 Statement of Problems

Investigation revealed that oil exploration and exploitation has been very lucrative, and a major revenue earner in Nigeria. But, like most industrial activities, it produces environmental hazards that are detrimental to the people and the environment where the oil is deposited. The situation in the Niger Delta is both curious and is an annoying paradox. The people live in difficult coastal areas surrounded by water, and yet, do not have enough water to drink.

Presently, oil exploitation has posed serious threat to the socio-economic activities of various oil producing communities especially in Warri. These socio-economic activities ranges from trading, farming activities, to various businesses. It is of no doubt today that, oil exploitation has hindered socio-economic growth in various oil producing areas (community) since most people depend on the natural resources for their source of survival and major means of livelihood.

Also, the exploitation of oil in Ughelli and Warri respectively have negative socio-economic impact leading to housing problems, increase in crime rate in the core city, health issues, educational decay and insecurity as a result of various conflict that emanate from oil exploitation activities especially among the youths (Mike, 2012).

In other development, the Niger Delta youths in their thousands, if not millions are largely unemployed. The qualified ones among them have to struggle with other Nigerians to get employments and positions in the oil companies. The oil companies have their headquarters in Lagos and Abuja, not in the Niger Delta.

This study is therefore conducted to address the aforementioned problem(s) and suggest possible ways to solve the problems associated with oil exploitation and its socio-economic effect on the study areas.

1.4 Aim and Objectives of Study

The aim of the study is to comparatively assess the Socio-Economic Effect of Crude Oil Exploitation in Ughelli and Warri. In achieving this aim, the following specific objectives were laid out as follows:

1. To examine the socio-economic effect of crude oil exploitation in Ughelli;
2. To compare the effects of crude oil exploitation on socio-economic activities in Ughelli and Warri;
3. To examine the socio-economic consequence of crude oil exploitation in Warri; and
4. To postulate achievable measures to solve the socio-economic effect of crude oil exploitation in Delta State.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Are there significant effects of crude oil exploitation on socio-economic activities in Ughelli and Warri?
• Is there socio-economic consequence of crude oil exploitation in Warri?
• What is the socio-economic effect of crude oil exploitation in Ughelli?
• What are the achievable measures to solve the socio-economic effect of crude oil exploitation in Delta State?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: There is no significant difference in the socio-economic effects of crude oil exploitation between Warri and Ughelli.
• H1: There is significant difference in the socio-economic effects of crude oil exploitation between Warri and Ughelli.

1.7 Significance of Study

The relevance of the findings will provide us with the opportunity of studying oil exploration in Ughelli and Warri; and the major areas in Nigeria especially in the study areas seriously affected by crude oil exploitation; and take a deeper look at the effects of oil exploration on the inhabitants of Ughelli and Warri and proffer solutions to the problems identified because if problems are not properly looked into and controlled, the situation could get out of hand and this will not be too good for the inhabitants of Ughelli and Warri.

The study will proffer possible solution of reducing gas flaring within Warri and Ughelli communities during crude oil exploitation activities. The rate in which the associated gas has been flared within the area, if not property checked will be worsen and it will continually give rise to socio-economic problems and environmental degradation.

It will also help to enlighten and create the awareness to the general public area about some disease that are associated with oil exploitation and some measures to check the spread of the disease and the health of the people living around the refinery on the better ways of preventing themselves and safe guarding their properties.

1.8 Scope of Study

The scope of the research is focused on the Comparative Assessment of the Socio-Economic Effect of Crude Oil Exploitation using Ughelli and Warri as a reference point.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
3. Lack of Initial Cooperation from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.

1.10 Definition of Terms

Oil and Gas Industry:

It is a company that participates in every aspect of the oil or gas business, which includes the discovering, obtaining, producing, refining, and distributing oil and gas. An integrated organization usually organizes its different tasks and operations into the categories upstream and downstream.