CHAPTER ONE

INTRODUCTION

1.1.    Background of the study

The Nigerian national petroleum corporation (NNPC) was established on April 1, 1977 as a merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. NNPC by law manages the joint venture between the Nigerian federal government and a number of foreign multinational corporations, which include Royal Dutch Shell, Agip, ExxonMobil, Chevron, and Texaco (now merged with Chevron). Through collaboration with these companies, the Nigerian government conducts petroleum exploration and production. The NNPC Towers in Abuja is the headquarters of NNPC Consisting of four identical towers. NNPC also has zonal offices in Lagos, Kaduna, Port Harcourt and Warri. It has an international office located in London, United Kingdom.

In addition to its exploration activities, the Corporation was given powers and operational interests in refining, petrochemicals and products transportation as well as marketing. Between 1978 and 1989, NNPC constructed refineries in Warri, Kaduna and Port Harcourt and took over the 35,000-barrel Shell Refinery established in Port Harcourt in 1965.

In 1988, the NNPC was commercialized into 12 strategic business units, covering the entire spectrum of oil industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments. Currently, the subsidiary companies include:

• National Petroleum Investment Management Services (NAPIMS)
• Nigerian Petroleum Development Company (NPDC)
• The Nigerian Gas Company (NGC)
• The Products and Pipelines Marketing Company (PPMC)
• Integrated Data Services Limited (IDSL)
• Nigerian LNG limited (NLNG)
• National Engineering and Technical Company Limited (NETCO)
• Hydrocarbon Services Nigeria Limited(HYSON)
• Warri Refinery and Petrochemical Co. Limited (WRPC)
• Kaduna Refinery and Petrochemical Co. Limited(KRPC)
• Port Harcourt Refining Co. Limited (PHRC)

In addition to these subsidiaries, the industry is also regulated by the Department of Petroleum Resources (DPR), a department within the Ministry of Petroleum Resources. The DPR ensures compliance with industry regulations; processes applications for licenses, leases and permits, establishes and enforces environmental regulations. The DPR, and NAPIMS, play a very crucial role in the day to day activities throughout the industry.

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