The Nigerian National Petroleum Corporation (NNPC)

Subject: 

ECONOMICS

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Term:

FIRST TERM

Week:

WEEK 4

Class:

SS 3

Topic:

The Nigerian National Petroleum Corporation (NNPC)

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Previous lesson: 

The pupils have previous knowledge of

PETROLEUM AND THE NIGERIAN ECONOMY

that was taught as a topic in the previous lesson

Behavioural objectives:

At the end of the lesson, the learners will be able to

• Explain some of the positive contributions of petroleum to the Nigerian economy?
• Discuss the role of OPEC in the production, refining and marketing of petroleum in member nations.

Instructional Materials:

• Wall charts
• Pictures
• Related Online Video
• Flash Cards

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Methods of Teaching:

• Class Discussion
• Group Discussion
• Asking Questions
• Explanation
• Role Modelling
• Role Delegation

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Reference Materials:

• Scheme of Work
• Online Information
• Textbooks
• Workbooks

Content:

The Nigerian National Petroleum Corporation (NNPC)

In order for government to strengthen and establish its control in the oil industry, the Nigerian National Oil Corporation (NNOC) was established by a decree in 1971. In the same year, Nigeria joined the Organization of Petroleum Exporting Countries (OPEC) as the 11^th member country. At that time, the Ministry of Petroleum Resources whose functions were mainly regulatory was also running concurrently with the NNOC. It was not until 1^st April, 1977 that a merger between the NNOC and the Ministry of Petroleum Resources created the Nigerian National Petroleum Corporation (NNPC).

The Roles of NNPC and OPEC in the Exploration, Production, Refining, Marketing and Distribution of Petroleum Products

The Role of the NNPC

1. Oil refining in Nigeria is done under the watchful eagle eye of NNPC
2. In the area of man-power training of Nigerians, crucial role was played by NNPC in order to ensure that they occupy managerial, professional and supervisory grades in all the oil companies operating in the country.
3. Their product movement section is responsible for planning operations to pump products from the source of supply to various destinations in a safe, economic and controlled manner and ensuring adequate stocks in the depots to meet tanker-truck loading demands.
4. They oversee all the activities of all other companies licensed to engage in oil activities in the country to ensure compliance with the laws and regulations relevant to the oil industry.

Organization of Petroleum Exporting Countries (OPEC)

In reaction to the outrageous and unprecedented exploitation by the oil extracting multinational companies, which at that time were controlling oil operations in the oil industry in the host countries? The outcome of the meeting of Iran, Iraq, Kuwait, Saudi Arabia, Venezuela from September 10-14, 1960 aimed at protecting their mutual interest and to counter the atrocious act of foreign oil companies who sell oil in their own interest was the formation of the Organisation of Petroleum Exporting Countries (OPEC). Nigeria joined the organization in 1971. Its membership has risen to fourteen as at May, 2017. Other countries are Algeria, Angola, Ecuador, Equitorial Guinea, Gabon, Libya, Nigeria, Qatar, United Arab Emirate.

Objectives of OPEC

1. To coordinate and unify the petroleum policies of members and the determination of the best means for safeguarding their interests individually and collectively.
2. To devise ways and means of ensuring the stabilization of prices in the international oil market with a view to eliminating harmful and unnecessary fluctuations
3. To ensure the revenue from sales of oil is maximize to member countries.
4. To fix supply that each member will bring to the market in order to prevent glut.
5. To negotiate for the participation of member-nations in the oil exploitation and exploration
6. To ensure that participation of foreign multinational companies in oil exploitation and exploration does not jeopardize the interest of its member nations.
7. To provide financial assistance to poor non-oil producing countries so as to close the gap between the rich and the poor nations.

The Roles of OPEC in the Production, Refining and Marketing of Petroleum Products

1. OPEC has been able to maintain relatively stable price of petroleum.
2. OPEC played direct role in the exploration and production of oil by directing its members in June, 1968 in order to acquire participating interest in such activities in their territories.
3. Another major role played by OPEC is re-directing the political imbalance between the Third World countries and the so-called First World nations.
4. Through the activities of OPEC, it has been able to make improvement in energy efficiency particularly in major industrialized countries.
5. Also, OPEC ensures efficient and regular supply of oil to the world market.

Problems of OPEC

Problems of OPEC include the following:

1. Incessant oil price fluctuations result in oil-glut many times.
2. Stability of oil prices at times proved difficult because not all crude oil producers are OPEC members.
3. Non-compliance with quotas by some members. Some of them do violate the agreement and thereby produce quantities above given quota.
4. OPEC lack of political coherence also counted against the achievement of its objectives in the 1960s.
5. The rivalry for the leadership of the organization is also a big problem to OPEC.
6. The activities of the advanced countries in stock-pilling oil which contributed to the fall of oil price is causing great concern to OPEC.
7. International oil companies supported by various states indulged in political maneuvers among OPEC members in an attempt to play off one exporting countries against others.
8. Political disagreement which sometimes leads to war between member-nations like Iran and Iraq war caused as serious problem to OPEC.
9. The rivalry of the leadership of the organization is also a big problem to OPEC.
10. OPEC is faced with the problem of increasing research by western advanced nations to find substitute for oil.

Solutions to the Problems of OPEC

1. Concessions have been given to some member-nations in order to lessen their home problems.
2. The organization always imposes penalty on its members that side-track their agreed fixed production quota.
3. The organization has established a research department in its headquarters in order to promote efficient exploitation and extensive exploration.
4. OPEC tries to maintain inelastic prices by fixing production quotas for its members.
5. Conferences have been held to discuss the reasons why quotas should be adhered to, particularly to stabilize prices.
6. The adoption of rotating its key-posts to lessen the leadership rivalry position among member-nations.
7. With the support of member nations, OPEC has been able to play a leading role in the international oil market by introducing some new concepts. Some of these concepts include the following:
8. The Oil Producer Exporting Countries Fund (OPEC fund), which was set up to provide a financial cushion and to reward the members.
9. The Oil Supply and Demand Meeting (OSDM) was established to monitor oil supply.
10. OPEC is increasingly taking up energy efficiency and other issues that are of concern to the world community.
11. Overall, it is clear that OPEC plays an important role in ensuring stable oil prices, providing regular supply of oil to the world market, and seeking solutions to the problems facing the organization.

Presentation

The topic is presented step by step

Step 1:

The class teacher revises the previous topics

Step 2.

He introduces the new topic

Step 3:

The class teacher allows the pupils to give their own examples and he corrects them when the needs arise

EVALUATION

1. What are some of the positive contributions of petroleum to the Nigerian economy?
2. Discuss the role of OPEC in the production, refining and marketing of petroleum in member nations
3. What is OPEC?
4. What are the objectives of OPEC?
5. What are some of the problems facing OPEC?
6. What are the objectives of OPEC?
7. What is OPEC’s role in the production, refining and marketing of petroleum?
8. How have OPEC’s objectives changed over time?
9. What is OPEC’s main objective?
10. What secondary objectives does OPEC have?

Conclusion

The class teacher wraps up or concludes the lesson by giving out short notes to summarize the topic that he or she has just taught.

The class teacher also goes round to make sure that the notes are well copied or well written by the pupils.

He or she makes the necessary corrections when and where the needs arise.

Assignment 

Read about manufacturing and construction companies in Nigeria in preparation for the next lesson