History Of Oil Production In Nigeria
OpenLife Nigeria reports that Nigeria is the largest oil and gas producer in Africa.
The Crude oil from the Niger Delta basin comes in two types: light, and comparatively heavy – the lighter crude has API gravity of approximately 36 while the heavier crude has API gravity range 20 -25. Both types are paraffinic and low in Sulphur.
Nigeria’s economy and budget have been largely supported from income and revenues generated from the petroleum industry since 1960.
Statistics as at February 2024 show that the Nigerian oil sector contributes to about 90% of the GDP of the nation.
The need for holistic reforms in the petroleum industry, ease of doing business, and encouragement of local content in the industry birthed the Petroleum Industry Bill by the Goodluck Jonathan administration on 18 July 2008.
History of oil exploration
The history of oil exploration in Nigeria goes back to 1903, when the Nigerian Bitumen Corporation conducted exploratory work in the country.
At the onset of World War I, the firm’s operations were stopped. Due to lack of technological and financial resources of small oil companies, large and strong other oil companies took over the exploration of commercial oil in the country.
Thereafter, licenses were given to D’Arcy Exploration Company and Whitehall Petroleum, but neither company found oil of commercial value and they returned their licenses in 1923.
A new license covering 920,000 square kilometres (357,000 square miles) was given to Shell D’arcy Petroleum Development Company of Nigeria, a consortium of Shell and BP (then known as Anglo-Iranian). The company began exploratory work in 1937.
The association was granted license to explore oil all over the territory of Nigeria but, the acreage allotted to the company in the original license was reduced in 1951 and then, between 1955 and 1957. Drilling activities started in 1951 with the first test well drilled in Owerri area.
Oil was discovered in non-commercial quantities at Akata, near Eket in 1953.
Prior to the Akata find, the company had spent around £6 million on exploratory activities in the country.
In the pursuit of commercially available petroleum, Shell-BP found oil in Oloibiri, Nigeria, in 1956.
Other important oil wells discovered during the period were Afam and Bomu in Ogoni territory. Production of crude oil began in 1957, and in 1960, a total of 847,000 tonnes of crude oil was exported.
Towards the end of the 1950s, non-British firms were granted license to explore for oil: Mobil in 1955, Tenneco in 1960, Gulf Oil, later Chevron in 1961, Agip in 1962, and Elf in 1962.
Prior to the discovery of oil, Nigeria (like many other African countries) strongly relied on agricultural exports to supply its economy.
However, after nearly 50 years searching for oil in the country, Shell-BP discovered oil at Oloibiri in the Niger Delta. The first oil field began production in 1958.
Regulatory Oversight
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) oversees the exploration and production of oil and gas, focusing on tax generation, ensuring business continuity, and promoting production sustainability.
Challenges and Progress
Crude Oil Theft:
Theft of crude oil from pipelines is a persistent problem, leading to significant losses and environmental damage.
Environmental Impact
The Niger Delta region, the heart of oil production, has suffered from significant environmental contamination from oil spills.
Recent Production Increases:
In 2025, a concerted effort including regulatory changes, incentives, and security initiatives like Operation Delta Sanity has successfully reduced oil theft and boosted production, with a goal of reaching 2 million barrels per day.
Economic Benefits
Increased oil production is expected to reduce the budget deficit and foster economic growth, making Nigeria more attractive to investors.
Top Oil-Producing States
1) Akwa Ibom: Produces 504,000 barrels per day, accounting for nearly a quarter of Nigeria’s total oil output. The state has major offshore oil fields operated by ExxonMobil and TotalEnergies.
-2) Delta: Produces 346,000 barrels per day, with significant oil reserves and key industry players like Shell and Chevron.
3) Rivers: Produces 344,000 barrels per day, with a strong focus on oil exploration and refining. The state houses several refineries and oil servicing companies.
4) Bayelsa: Produces 290,000 barrels per day, with oil production mainly from deepwater fields like Bonga and Egina, operated by Shell and TotalEnergies.
5) Ondo: Produces 60,000 barrels per day, with offshore oil fields in the Ilaje area operated by Chevron and local companies.
6) Lagos: Produces 40,000 barrels per day, with the Aje Field offshore being a significant contributor.
7) Edo: Produces 33,000 barrels per day, with onshore oil fields in Oredo and offshore prospects.
8) Imo: Produces 17,000 barrels per day, with oil deposits in the Oguta and Egbema areas.
9) Abia: Produces 11,000 barrels per day, with oil production mainly from the Ukwa West fields.
10) Anambra: Produces 3,000 barrels per day, with significant potential for growth and exploration.
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