DEFINITION OF TERMS AND HISTORY OF OIL OWNERSHIP IN NIGERIA

July 20, 2022 ChinonsoIbeh School News 0

2.1       Introduction

            This chapter also intends to trace the history of oil ownership in Nigeria, whether the ownership of is the exclusive reserve of the Federal Government to entitled it the monopoly of same.

2.2       Minerals

            Minerals are one or more substances, especially in a rock. Nearly all weeks are composed of minerals. In fact, nearly everything we use is made of or contains, minerals, without mineral, none of the devices and structures that surround us in our daily lives could be made. Some minerals are rare and highly for their characteristics.
            According to the Oxford Advanced learner’s Dietinonary mineral means a substance that is naturally present in the earth and is not formed form animal or vegetable matter for example gold and salt. Some minerals are also present in food and drink and in the human body and are essential for good health. From this definition of mineral, it should be noted that mineral is not only found in the earth, but can also be found in food and drives as well as in the human body.
            According to the mineral and mineral Act, the word “mineral’ excludes mineral oil but includes the following.
(1)       Metalligerous minerals, including antimony, arsenic, bismuth, cerium, copper, collabt, colunibiumehromium, calcium, iron, leading, manganese,  mercury, Molybdenum, mekeld, tanfaluin, tin, tin system, zinc and all others of similar nature0to any often and all ones containing them and combinations of any of them with each or with any other substance except those that occur in the form of precious minerals,

(2)       Corbuslible carbonaceous mineral, including

(i)        Tarsand, (ii) coal (iii) Igniti, including brown coal and any coal which the minister may declare to be lignite if advised by the director of Mines that the estimated average ash content is so high or the estimated average thermal value is so low that the coal may properly be classed as lignite.

(3)       Non-metallic mineral, including any mineral used for their abrasive or regulatory qualities and asbestos, barites, bauxite, china clay, fuller’s earth, graphite, gypsum, limestone, marble, mica, nitrate, phosphate pipe clay, potash, salt, state, soda sulphur, falc an all other subs farces of a similar nature to any of them including sands;

(4)       Precious mineral including:

(i)        precious stones, namely: Amber amethyst, beryl, cot’s eyes, chrysolite, diamond, emerald, garnet, opal, ruby, sapphine, turquoise, and all other substances of a similar nature of any of them.

(ii)       Precious metal, namely: Gold, silver and any of the metal of the platnoid group in the un-manufactured state; including ore containing any of these metals, excluding any ore containing any of those metals in combination with other mineral when the metal cannot be worked apart from the mineral and the value of the metal is less than. The cost of producing both the metal and the mineral;

(5)       Radioactive mineral namely:  Mineral, either raw or treated (including residues and fallings) which contain by weight at least 0.05 per cent of uranium or thorium or any combination of uranium of thrium; including but not limited  to:

(1)       Monatie sand and other ores containing thorium, and

(ii)       Carnotite, pitchblende and other ore containing uranium:

6.         The valuable part of any are or other substance for marketing or export;

7.         The product of treating or dressing any ore other substance for marketing or export.

            The mineral and mining Act has gone extensively to define the term mineral and also excluded such things as mineral oil form the definition. Therefore, for a thing to qualify as mineral, it must be listed in the Act. This in because the Act is exhaustive on the definition of mineral.

            Also, according to the Webster’s dictionary mineral means “a naturally occurring, homogenous  substance or material founded by inorganic process and having a characteristic set of physical  properties, a definite range of chemical compositions and a molecular structure usually expressed in crystalline form.

            According to this definition, any substance or material that occurs naturally by inorganic process qualifies as mineral so long as such material or substance has the feature of physical properties.

            Finally, the Wikipedia free encyclopedia online Dictionary defines mineral as  a naturally occurring solid chemical substance formed through biogeochemical processes, having characteristic chemical composition, highly ordered atomic structure, and specific physical properties. By. Comparison, a rock is an aggregate of minerals and/or mineraloids and does n
ot have a specific chemical composition. Mineral range in composition from pure elements and simple salts to very complex silicates with thousands of knows forms. The study of minerals is called mineralogy.

            There are three types of minerals. They are as follows:

(i)        Hard and solid minerals which can be liquidities by beating or fire and can be reduced to sheets and chains. Examples of this type are gold, silver, brass and metal.

(ii)       Hard minerals which cannot be liquidified and include things like diamond, corundum, emerald, etc.

(iii)     Liquid minerals like mercury, crude oil etc.

2.2.1        Solid Deposits:

            The Mineral and Mining Act did not define what solid deposits are, neither was it defined by any other statue. However, for the purpose of this work, solid deposits can be defined as those minerals in their natural state that are discovered in different parts of the country.

            Nigeria now has at least 24 solid deposits in commercial quantity and of international standard across the country. there are more than 450 locations of solid deposit of mineral across the country with new occurrences being. Discovered from time to fine. Recently such minerals as talc, tantalite, lead and Zink and several others.

2.2.2        Federal Government

            Federal Government, in Nigeria we have three tiers of Government, ie the Federal Government, state government and the local government. These tiers of government are provided in the constitution of the Federal Republic of Nigeria. In this chapter, our concern is the Federal Government.
            According to the classic encyclopedia federal Government is a form of government of which the essential principle is that there is a Union of two or more states under one central body for certain permanent common objects. In the most perfect form of federation, the states agree to delegates to a supreme federal government certain powers or functions inherent in themselves in their sovereign or separate capacity, and the federal government, in turn, in the exercise of those specific powers act directly, not only on the communities making up the federation, but on each individual citizen.
            The free online dictionary defines federal government as a government of a union of a state in which sovereignty is divided between a central authority and component state authorities. A federation differs from a confederation in that the central power acts directly upon individuals as well as upon states, this creating the problem of dual allegiance. Substantial power over matters affecting the people as a whole, such as external affairs, commerce, cornage and the maintenance of military forces, are usually granted to the central government. Nevertheless, resention of jurisdiction over local affairs by state is compatible with the federal system and makes allowance for local feelings. From the above definition, it is observed that a federal government is a system of government in which powers and responsibilities are divided into national levels to address national an regional needs. It therefore means the federal government does not only take care of the need of those at the federal level but also those at the  states or regional level as the case may be.
            Finally, the Wikipedia online dictionary defines federal government as a type of governing characterized by a union of partially self governing state or regions united by a central (federal) government. The self-governing status of the component state is typically constitutionally entrenched and may not be altered by a unilateral decision of the central government.
            In Nigeria, Powers are shred between the tier of government. That is to say the areas which each level is entitled to over see. These powers are given to them by the constitution. In relation to this topic, the federal is given the power over all mineral and solid mineral deposits in Nigeria for the purpose of exploitation and exploration.

2.3       History of oil Ownership in Nigeria

            The search for crude oil in Nigeria started as far back as 1908. then there was no legislation on exploration and production until 1914 when the Mineral ordinance was promulgated to regulate the right to search for, win and explore mineral oil. It was in 1946 that the first legislation on ownership came to force. The law previewing for ownership of petroleum and the right to search for and win and own mineral oil was contained in the mineral ordinance, which provided thus:
“The entire property in and control of all mineral and mineral oils in, under and upon any land in Nigeria and of all rivers, streams and waters throughout Nigeria is and shall be vested in the crown”
            This was the legislation in force in Nigeria during the pre-independence administration of Nigeria. Three years thereafter and precisely. In 1963, Nigeria through their elected representatives enacted the republic constitution. Section 158, vested petroleum among other properties in the president of Nigeria. It provides that:

“all property which immediately before 1st October, 1969 was held by the crown or on behalf of the crown should vest in the president of the federation on behalf of and for the benefit of the federation”

            The petroleum Act 1968 which is the principal law governing oil in Nigeria provided that:

“The entire ownership and control of all petroleum in and under or upon any land to which the section applies shall be vested in the state”.

            It is worthy to note here that the Exclusive Economic zone (ECZ) Act of 1978 vests in the federal Republic of Nigeria the sovereign and exclusive right with respect to the exploration and exploratory of the natural resources of the sea bed, subsoil and super and adjacent water of the Exclusive Economic zone. Section 1 of the Act Delimits the exclusive economics zone as “an area extending form the external limits of the territorial miles form which the break of the territorial waters of Nigeria is measured”.
            The Federal Republic of Nigeria as
it is now know as endowed with abundant mineral resources and hydro carbons, besides such other variable resource as bitumen, coal columbite, tin gold and lime stone As vast oil fields are concentrated in the Nigeria Delta region, which comprises Akwa Ibom, Baryelsa, (cross River, Delta, Edo and Ondo states. Oil was first discovered or found in Nigeria in 1956, in a town call Oloibiriwhich is located in the present day Bayelsa state. This resource has been vested in the Federal Government of Nigeria through various legislation.

2.4       Does the Federal Government own oil in Nigeria?

            The Federal is the first tier of government in Nigeria. It exercises those functions contained in the exclusive legislative list in the 1999 constitution (as amended). It also has concurrent powers with the state government with respect to matter provided in the concurrent legislative list, like in the area of education, sports, health etc. Before answering the above question, it is important to consider the concept of ownership in brief.

            The Osborn concise law dictionary, eight edition defines ownership as:

“the right to the exclusive enjoyment of a thing strictly at denotes. The relationship between a person and any right that is vested in him. Ownership is absolute or restricted. Absolute ownership involves the right of free as well as exclusive enjoyment, including the right of using, altering, deposing of or destroying the thing-owned-districted ownership is the ownership listed to some extent as for example, where there are several joint owners or a life tenancy or where the property is changed with the payment of a sum of money or subject to an easement”

            From the above definition, ownership involves the right to free as well as exclusive enjoyment including the right of using and disposing or destroying  the thing owned.

            The 1999 constitution of the Federal Republic which replaced the 1978 constitution in section 44(3), which is impariteria with section 40 of the 1978 Constitution provides that “not withstand the forgoing provision of this section, the entire property in the control of all mineral out and natural gas is, under or upon any land in Nigeria under or upon the terrtional waters and the exclusive economic zone of Nigeria shall be vested in the government of the Federation and shall be managed in such a manner as may be prescribed by the National assembly. This section expressly makes known that the control of oil and natural gas vested on the government of the federation and nor the state governments or the individuals.

            It is hereby submitted, going by the definition of ownership, that the Federal Government does not perse own mineral oil in Nigeria. This is because it cannot dispose or enjoy it with the exclusion of the state who land the oil is explored. In fact, the revenue occurring to the federation Account is distributed to all the states of the Federation with the oil producing states enjoying the 13% derivation priciple.

2.5       Federal Monopoly of Mineral and solid mineral deposits and the idea behind it.

            The monopoly of mineral oil by the Federal Government has statutory and constitutional backing. In the eye of the Lawmakers, it will be utilitarian for the Federal Government to have monopoly of it.

            The cardinal purpose of the exclusive Economic zone Act of 1978 is to facilitate the development of oil and gas and other natural resources in the zone solely under the jurisdiction. Law and control of the Federal government. This provision was reenacted in our 1999 constitution. Section 44(3) provides thus:

“…the entire property in and control of all mineral, mineral gas in, under or upon any land in Nigeria or under or upon the territorial waters and the Exclusive economic zone of Nigeria shall ves in the Federal Government and shall be managed as may be prescribed by the National Assembly”.

            The effect of section 44(3) of the 1999 constitution (as amended) and previous Legislation relating thereto is that no individual or state Government in Nigeria has any legal claim to mineral and solid mineral deposits under or within his or her individual land or the geographical boundaries of the states or within the seabed  of the waters adjourning the states. From the digest of the above statutory provision, it is clear that the Federal government has been given proprietary right over mineral and solid mineral deposits in Nigeria. This reinforced Nigeria’s national jurisdiction over mineral oil both in off-shore and on-shore operations.

            In the light of the pre-going, it can be presently conceived that Nigeria has an uncomprisingly clear and unambiguous policy of the Federal monopoly of all minerals. This policy has a colonial antecedents by virtue of the Mineral ordinance of 1946. Which vests ownership of all mineral throughout Nigeria in the crown.

            As has been emphasized earlier in this chapter, the provision which vests ownership of oil in the Federal Government do not strict census vest absolute ownership in the Federal Government because of the reasons stated above. Each state  is allocated its own share from the federation account. what exists between the federal government and the states of the Federation is a “beneficial monopoly” and not absolute monopoly. It is ownership or monopoly in theory but not in practice.

            The reasons for this is that such exercise of monopoly as is provided in section 44(3) of the 1999 constitution is strictly that of national interest for the over all development of the nation. It is against this back ground that the demand for resource. Control will be vary difficult to actualize, under the present Federal structure of the country. Such demand may be tenable under a non-Federal system of government where the component states are stronger than the central government and constitutionally granted autonomy in certain states.

            What the littoral states should agitate and press for is the modification of the provision of the constitution in relation to the derivative principles with a view to ensuring that a reasonable percent age above 13% is allocated to them.

            For the sake of national interest and even development the federal government cannot cave in to such demand for resource control. In order to buttress my view of the national interest position applicable to the crude oil in Nigeria, it is germane to make a survey of the United Nations Resolution on the subject. The principle laid in those  Resolutions reflect and may have some bearing upon the prevailing legal thinking
in those third World countries today.

2.6       United Nations Resolution and Approach to Ownership of Natural Resources.

            The current position of several countries with respect to ownership over mineral rights can be traced to various actions of the United Nation General Assembly. The first document adopted in this area which concerned the sovereignty of the nations over its natural resource sis titled the integrated Economic Development and Trade Agreements. The first paragraph provides that:

“Underdeveloped countries have the right to determine freely the use of their natural resources and they must utilize such resources in order to be in a better position for further the realization of their plans of economic development in accordance with their nation interest and to gather the expansion of World economy”.

            The operating words in the above question relating to the resolution 523(vi) of the United National interest”. This underscores the probable reason why the federal Government should have monopoly of mineral and solid mineral deposits in Nigeria. Nigeria with its federal structure, has 36 states add diverse ethnic groups. Some states are endowed with natural resources like oil while others are not. If the littoral states are allowed to control their development, it would be lopsided and it will be to the disadvantages of the less privileged ones or less endowed.

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