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 nations revenue sources. Its significance in the nations economy cannot be explained solely in terms of barrels produced and sold. Other important variables such as the dynamics of international energy markets the role of organization of petroleum exporting countries (OPEC) the political realities country, are all significant aspects. 

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 unfavorable 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 affect 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 member 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 for 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 it’s 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 shell D’Avcy (now shell BP) continued as the sole concessionaire in Nigeria until 1959 when exclusive exploration right became available to companies of other nationalities.  In 1961, other companies Gulf, Agip, Safrep (now Elf) Tennnesco and Amoseas (now Texaco Nig. Ltd) Mobil.  Ap etc, started jointly the explorers for oil in the on share areas of Nigeria.

As the years went by, petroleum policy was geared towards direct and active participation in the three phases of the industry, namely, exploration and drilling, refining, distribution and marketing.  Hence after reacting a production level of 1.531 mbd in 1973 representing about 31 of total world oil production and the establishing herself as an oil province, Nigeria Joined the Organization of Petroleum Exporting Countries (OPEC).  With the Nigerian enterprises promotion decree 1977, this figure had gone up to about 60 in some of the oil companies.  Similarly the Nigerian National Oil Corporation (Nnod was established in 1971 to give effect to direct exploitation of the countries strategic resources