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Oil Refineries in Nigeria and the Gulf Region Research Paper


Oil Refineries as the Main Determinant of Success

The similarity is that both Nigeria and the Gulf Region considerably depend on oil refineries as the latter bring plenty of financial benefits.

Nigeria belongs to the group of poorest countries in the world. About 60 percents of the population live below the poverty line. At the same time, Nigeria is the largest oil-producing country in Africa, and the economy of the country is directly dependent on this raw material. There are three main oil refineries in Nigeria: Kaduna Refinery, Port Harcourt Refinery, and Warri Refinery consisting of the Nigerian National Petroleum Corporation (NNPC). Oil refineries of Nigeria provide approximately 20 percent of GDP and 95 percent of all foreign exchange earnings (Historical Society of Nigeria, & Osun State University, 2011). Experts assess Nigerian oil as of high quality that leads to the demand for it on the world market. Despite it is one of the leading oil-producing countries in the world, Nigeria is experiencing a shortage of fuel.

The main global oil producer of the Gulf Region in Saudi Arabia. Oil refining is provided not by private but by state-owned Saudi Aramco Company (Calvert, 2014). It produces the entire Arabian oil that is nearly a quarter of oil reserves in the world. The United Arab Emirates has a little less than ten percent of world reserves. Other countries including Oman, Kuwait, Bahrain, and Qatar also possess a great part of the world oil refineries. The existence of rich deposits is ideally complemented by the favorable geographical location of the Gulf Region that defines minimal production and transportation costs. Oil revenues allow not only to develop the oil refining industry but also to provide food purchases, financing of large investments in infrastructure and energy, agriculture and food industry, production of construction materials, and other aspects.

All in all, the oil refineries of Nigeria and the Gulf Region are key elements of their economy.

Stability of Oil Refineries

Oil refineries in Nigeria are unstable due to the disproportion of control over it. On the contrary, Persian Gulf Region remains stabilized due to its elaborated policy.

However, about one percent of the Nigerian population controls revenues from oil export, and NNPC is regulated by foreign companies. Such imbalance causes permanent disorders among locals who are trying to get international corporations and local authorities to share with them their income. In order to achieve these goals, they blow up oil pipelines in Nigeria and kidnap employees of foreign companies. The main problem in Nigeria is the decrease in oil production due to the instability in the Region of the Delta of the major river Niger that is the main commercial field. “To reduce anger and frustration from indigenous peoples of oil-bearing areas, their fair participation in the exploration, production, and transportation of oil might be necessary” (Anifowose, Lawler, Horst, & Chapman, 2012). For example, Shell Company has even been forced to fold part of its production capacity due to fires and explosions in Nigeria.

In its turn, the Gulf Region’s oil refineries provide concise organization and policy contributing to the stability of the business. In order to reflect the above statement, it seems appropriate to consider several examples. For example, the UAE is not such democratic as in the political system. The oil industry in each of the emirates is controlled by the government. Black gold deposits exploited not by seven different companies as one would assume (in other words, one in each of seven emirates), but by one state-owned oil company called Abu Dhabi National Oil Company.

It should be noted that such an organization of oil production appeared in the UAE in the early 70s of the XX century (Etheredge, 2011). Before, western corporations regulated this issue. The fact is that since the XIX century, the United Arab Emirates were under British protectorate. Arabs lived in poverty in the desert until the exploitation of natural resources of the Region engaged by the British. Once the Emirates gained independence, they quickly took oil refineries and immediately became one of the richest countries in the world. Why Arab sheiks refused to help effective Western monopolies and gave their bowels to the state monopoly? The answer is easy – because they wanted to control it and receive benefits.

Likewise, Qatar monarchy headed by the Emir also tightly controls its main source of income. The State oil company of Qatar named Qatar General Petroleum Corporation is engaged in the exploration and production of oil. The state structure is responsible for oil refining. Another monarchy controlled by the Sultan of Oman later than other countries in the Region started the oil production and export. But the system is still the same – the state Petroleum Development Oman controls oil refineries. Such an organization of the control over oil refineries promotes its stability and prosperity.

Thus, Nigeria is dependent on foreign investors suffers from the lack of fuel while the Gulf Region countries being independent in their decisions experience economy rise.

Location of Oil Refineries

One more difference is the location of oil refineries. If Nigeria citizens suffer from pipeline ruptures and oil vapors as oil deposits were built near their housing, the Gulf Region residents do not face such problems as their oil refineries primarily located in the desert or not so close to the living area.

Mainly, the oil refineries of Nigeria are located in the Niger Delta. When the bright equatorial sun sets behind the horizon, the dark sky over the Nigerian Delta flashes from lights of plenty of oil rigs. However, despite the natural wealth, inhabitants of swampy delta live in extreme poverty, often without electricity, clean water, and even fuel (Augustus, 2011). There are about one and a half thousand villages and settlements with up to four million people who are waiting for favors from oil companies. If one does not take into account the myriad military and police checkpoints along ruined roads, the government does not seem to pay little attention to residents. From time to time, pipelines break, and oil spills occur. Some oil companies such as Shell are attempting to support the population by paying them compensation and building roads. However, the need to address this issue remains.

Unlike Nigeria, the Gulf Region countries did not locate their oil refineries near residential areas. Therefore, citizens do not concern the issue of the harmful impact of oil refineries. For example, in Kuwait, oil is refined Mesaieed, where people live in a certain distance from the refinery. However, there is some extent of air pollution as well (Alhaddad, Ettouney, & Saqer, 2015). In addition, traffic and power plants also cause air contamination.

Therefore, the location of the oil refinery is significant, too.

References

Alhaddad, A., Ettouney, H., & Saqer, S. (2015). Analysis of air pollution emission patterns in the vicinity of oil refineries in Kuwait. Journal of Engineering Research, 3(1), 1-24.

Anifowose, B., Lawler, D. M., Horst, D. V., & Chapman, L. (2012). Attacks on oil transport pipelines in Nigeria: A quantitative exploration and possible explanation of observed patterns. Applied Geography, 32(2), 636-651.

Augustus, A. O. (2011). Effects of Warri Refinery Effluents on Water Quality from the Iffie River, Delta State, Nigeria. American Review of Political Economy, 9(1), 45-56.

Calvert, J. (2014). The Arabian Peninsula in the age of oil. Broomall, PA: Mason Crest.

Etheredge, L. (2011). Persian Gulf states: Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates. New York, NY: Britannica Educational.

Historical Society of Nigeria, & Osun State University. (2011). Economy and society in Nigeria: The challenges of infrastructure development. Abuja, Nigeria: Osun State University.

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IvyPanda. (2020, September 29). Oil Refineries in Nigeria and the Gulf Region. Retrieved from https://ivypanda.com/essays/oil-refineries-in-nigeria-and-the-gulf-region/

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"Oil Refineries in Nigeria and the Gulf Region." IvyPanda, 29 Sept. 2020, ivypanda.com/essays/oil-refineries-in-nigeria-and-the-gulf-region/.

1. IvyPanda. "Oil Refineries in Nigeria and the Gulf Region." September 29, 2020. https://ivypanda.com/essays/oil-refineries-in-nigeria-and-the-gulf-region/.


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IvyPanda. "Oil Refineries in Nigeria and the Gulf Region." September 29, 2020. https://ivypanda.com/essays/oil-refineries-in-nigeria-and-the-gulf-region/.

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IvyPanda. 2020. "Oil Refineries in Nigeria and the Gulf Region." September 29, 2020. https://ivypanda.com/essays/oil-refineries-in-nigeria-and-the-gulf-region/.

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IvyPanda. (2020) 'Oil Refineries in Nigeria and the Gulf Region'. 29 September.

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