ABSTRACT
Exploration and exploitation of oil and gas activities in Nigeria have strong reference to 1908 when Shell D’Arcy and other pioneer companies flagged off their search for hydrocarbon in the territory. The activities of the pioneer oil companies were interrupted by World Wars I and II. At the end of World War II exploration activities resumed within the statutory purview of the Mineral Oils Ordinance 1914. The ordinance placed limitations on non-British citizens or non-citizens of British colonies. In this regard the ordinance stated in part:
. . . no lease or licence shall be granted except to a British subject or a British company registered in Great Britain or in a British Colony, and having its principal place of business within Her Majesty’s dominion. . . . 1
The colonial ordinance was enacted to promote British interest and in particular to protect Shell-BP from external competition. The historical account of the Nigerian petroleum industry indicates that Shell-BP was granted a concession covering the whole territorial confines of Nigeria. Exploration and production rights were subsequently granted to companies in areas relinquished by Shell-BP. In the early period of petroleum exploration and production there existed a sharp dichotomy between rights of property and jurisdiction. In the United Kingdom, especially in the 1920s and 1930s, the issue of property rights over hydrocarbon fields was seen as an impediment in the exploration and production activities. The work programmes of oil and gas companies were disrupted by disputes over property rights by citizens who claimed ownership of the territories in which the activities were being executed. For this and other reasons, in 1946 the British Crown through its agents in the colonial administration in Nigeria passed the Minerals Ordinance contained in CAP 121 of 1955 Laws of Nigeria. The underlying intent of the ordinance was to vest in the British Crown the right of ownership of all hydrocarbon resources in the territory of Nigeria. In pursuance of this singular objective the ordinance portrayed the intent of the British Crown in very
vivid terms. The ordinance stated that the entire property and control of all mineral oils in and upon the territory of Nigeria including rivers, streams and waterways shall be under the exclusive command and control of the British Crown.2 The law was harsh in the sense that it was preoccupied by the control of property rights and made no provision for compensation for citizens whose property rights might be classified as encompassing an oil and gas field. The Minerals Ordinance of 1946 created a negative precedent which was to be inherited and perpetrated by subsequent governments in postindependence Nigeria. Currently, all mineral and hydrocarbon property rights are vested in the federal government of Nigeria. Citizens’ rights are encumbered by the enforcement of the law and they cannot therefore seek compensation in a situation where oil is discovered within the confines of their natural abode. In 1955 Mobil Exploration (Nig.) Limited, a branch of American Socony-Mobil Oil Company, was granted a licence to explore for oil in Shell relinquished areas in parts of Sokoto, Kaduna and the Benue Plateau region. In subsequent years, Nigerian Agip, SAFRAP (now Total), Phillips Petroleum Company etc., commenced oil business in the southern region of Nigeria.3 Oil production in 1956 was about 5,100 b/d but had escalated to 2.4 mmbd in 2006. Current oil and gas reserves are estimated to be 36 billion barrels and 187 TCF respectively. The repeal of the Mineral Oils Ordinance 1914 in 1958 and replacement by the Mineral Oils Ordinance Amendment No.5 1958 paved the way for the new non-British companies to search for oil in Nigeria.
