Oil · Act II — Shell-BP and Oloibiri

In November 1937 the colonial government in Lagos awarded an Oil Exploration Licence covering the entire 923,000 square kilometres of mainland Nigeria — every river, swamp, basement-complex hill and northern desert — to a single company: Shell D'Arcy Petroleum Development Company of Nigeria, a joint venture of Royal Dutch Shell (which held the Dutch and West African concessions) and the Anglo-Iranian Oil Company (the future BP, which held the D'Arcy concession in Persia). One company. One country. Fifty-year tenure. The terms were not negotiated; they were drafted in London and presented to the Lagos government, which signed without amendment.

World War II suspended exploration almost as soon as it began. Shell D'Arcy returned in 1947 with new seismic technology and a recognition the Germans had reached in 1908: the prospective basin was not at Araromi but 300km east in the Niger Delta. Between 1951 and 1955 the company drilled a string of dry and uneconomic wells — at Iho (Owerri), Ihuo, Akata — each one chewing through £80,000–£120,000 and bringing the venture closer to closure. The London board considered withdrawal in late 1955. They authorised one more well.

That well was Oloibiri-1, drilled in the swamps of present-day Bayelsa State in the dry season of 1955–56. On 15 January 1956, at a depth of 12,008 feet, it struck oil at an initial rate of 5,100 barrels per day — a flow large enough that Shell's resident manager, J.A. Reeve, cabled London to abandon all withdrawal plans. The discovery transformed the politics of decolonisation overnight. Within eighteen months Shell-BP had brought Afam, Bomu and Ebubu online; on 17 February 1958 the first cargo of 6,376 long tons of crude sailed from the new Bonny Island terminal aboard the tanker *MV Hemifusus*, bound for the Shell refinery at Stanlow on the Mersey. Nigeria, still two and a half years from Independence, was now an oil-exporting country.

Three facts about that first decade are routinely forgotten. First, the royalty rate was 12.5% of posted price — the same rate Shell paid in Venezuela in 1943, and lower than the 50/50 split that Iran (1954), Saudi Arabia (1950) and Libya (1955) had already won. Second, the entire 923,000-km² monopoly was not broken until 1961, when Mobil, Gulf, Tenneco and Texaco-Chevron were finally awarded competing concessions — by which time Shell-BP had already selected every prime acreage. Third, the Oloibiri field itself was abandoned by 1978, having produced just 20 million barrels in twenty-two years. The village got a primary school, a memorial signpost, and the polluted water that comes with a hundred dead wells. The country got an industry built on a 1937 contract no Nigerian had signed.