1.0 The Global Oil Demand and Supply Problem
Nigeria has set ambitious goals to grow its oil reserves to 40 billion barrels and maintain its position as a global energy player. This ambition necessitates opening the economy to significant windows of investment in the oil and gas sector. Consequently, the downstream petroleum subsector was deregulated by the President Olusegun Obasanjo administration in 2000.
If oil supply is considered a problem now, the next 20 years may present a global nightmare. The world has already consumed approximately 80 million barrels of oil. Of the world’s total oil reserve, estimated at some 2 trillion barrels, approximately 900 to 1,000 billion barrels have already been consumed. At present production rates, global oil supplies are predicted to last another 40 years.
According to geologists Colin J. Campbell and Jean H. Laherrere, the supply of conventional oil would be unable to keep up with global demand within the next decade. These experts warn that conventional wisdom erroneously assumes the last bucket of oil can be pumped from the ground as quickly as today’s gushing wells. The rate at which any well or country can produce oil typically rises to a maximum and then, once half the oil is depleted, begins falling gradually toward zero. From a socio-economic point of view, the exhaustion of oil reserves signals a potential global economic crisis.
Geologist Joseph Riva notes that planned oil production expansion is less than half of what is needed to meet global demand projections. If production rates fall while demand continues to rise, oil prices are likely to spike or fluctuate wildly, raising the prospect of economic chaos, transportation failures, and even international conflict over remaining resources.
2.0 The Evolution of Oil Exploration
While hydrocarbon search was undertaken by companies like the German-Nigerian Bitumen Company and the British Colonial Petroleum Company as early as 1905 in the Okitipupa region, petroleum exploration is an ancient pursuit. The Bible contains many references to the use of pitch or asphalt collected from natural seepages in the Middle East.
In 450 B.C., Herodotus described oil seeps in Carthage and the Greek islands. He detailed oil extraction from wells in present-day Iran, where fluid was extracted using wine skins on long poles. Throughout the first millennium A.D., oil and asphalt were gathered from natural seepages for medication, waterproofing, and warfare.
Ancient and Medieval Utility
From the time of Noah, pitch-oil has been used to make boats watertight. Historically, Alexander the Great used burning pitch to scatter the Indian elephant corps in 326 B.C. Later, in 1739, Nadir Shah set oil-impregnated camel humps ablaze for similar tactical advantages. By 668 A.D., the Greeks utilized asphalt as a component of “Greek Fire,” a potent weapon in Byzantine naval warfare that ignited when wetted.
The Industrial Revolution and Modern Drilling
Until the mid-nineteenth century, oil was primarily sourced from shallow pits. In 1745, the first well sunk specifically for oil appeared in Pechelbronn, France. However, the true giant stride occurred in 1859, when Colonel Drake produced oil at Oil Creek, Pennsylvania. This sparked rapid growth in production, leading to the development of the internal combustion engine in the 1870s and 1880s. This breakthrough transitioned demand from kerosene to lighter petroleum fractions like petrol, paraffin, and diesel.
3.0 The Rise of the “Seven Sisters”
By the First World War (1914–1918), demand for oil surged, leading to an industry dominated by seven major companies, famously termed the “Seven Sisters” by Enrico Mattei. These companies included:
- British Petroleum (BP)
- European-based Shell
- Exxon (formerly Esso)
- Gulf Oil
- Texaco
- Mobil
- Socal (now Chevron)
British Petroleum and Shell sourced their reserves principally in the Middle and Far East, respectively, becoming early leaders in long-distance maritime transport. In contrast, American companies focused on shorter distances, establishing the “barrel” as the standard unit of measurement. In the 1930s, the Arabian-American Oil Company (Aramco) evolved from a consortium of these giants. Following the Second World War, the consortia principle became established globally, with oil companies risking profits from productive areas to explore new frontiers.
