CHAPTER ONE:
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The amount of the producer’s wealth is a guess depending on price, method, and level of out put and peace of production. Nigeria is an Oil producing nation, and oil occupies a very important position among the nation’s revenue sources. Its significance in the nation’s economy cannot be explained solely in terms of barrels produced and sold. Other important variables such as the dynamics of international energy marketers the role of organization of petroleum exporting countries (OPEC) the political realities. With the very strategic position oil revenue occupies in the Nigerian economy, accounting for over three quarters of government revenue from all sources, Nigeria has always dreaded unfavourable changes from oil prices in general and from OPEC’s holds the you and the knife. This phenomenon has earned the popular saying that “when OPEC’s oil polices in particular as these changes severely and jointly effects our national development process, OPEC determines the number of barrels of oil to be produced and sold per day by any member country. In this pragmatic position. OPEC holds the yam and the knife. He determines whatever portion any members nations eats. This phenomenon has earned the popular saying that when OPEC sneezed, member nation economy cried out”
Presently, revenue from oil is trying to wake up from a deep slumber it fell into so many years now. With the current OPEC production, export volume, domestic consumption level, Nigeria expects a brighter future and has based the budgets on the proceeds. these show not only Nigerian economy on oil revenue for instance the majority of the estimated federally collectable revenue comes from oil source while non-oil source are expected to yield a minority of total estimated revenue. At the time oil was discovered in commercial quantity in Nigeria in 1956 up to the time production and exploration took place in 1958, the country had relied on imported petroleum products to meet its domestic requirements. As oil had not started to occupy the commanding height of the national economy, exploration and production were in the hands of a British company (shell D’AVCY 9 Shell BP). The emphasis of the government dividing this period was to provide a roper advisory an regulatory body to supervise the activities of the foreign oil companies. This company shall D’AVCY (now shall BP) continued as the sole concessionaire in Nigeria until 1959 when exclusive exploration right become available to companies of other nationalities . in 1961, other companies Gulf, Agip, Safrep (Now EIF) Tennesco and Amoseas (now Texaca Nig. Ltd0 Mobile, AP etc, started jointly the explorers for oil in the on share areas on Nigeria.