Notably, natural resources (oil and gas) discovered in a country can be the beginning of the country's economic growth, rents from the oil and gas if well managed could promote sustained economic development in the country. Additionally, the exploitation and exploration of hydrocarbon (oil and gas) are always accompanied with various challenges in several countries with respect to its negative impact on the environment, economy collapse and instability. The effect of oil and gas exploration on the citizens and the environment can also be disastrous to the nation. Therefore, it requires a well designed policy to manage, control and monitor the adverse impact of the industry on the environment and engaging stakeholder.
The Case of Nigeria
Oil and gas exploration activities in West Africa's most populated country geographically known as Nigeria dates back to the 1903 (Onuoha, 2008). It was when the Mineral Survey Company flagged off a flurry of activities with studies as to the availability of oil in the region today known as Nigeria, related activities continue relentlessly to find oil until in 1938, then Shell D' Archy was granted prospecting right for the exploration of oil in the country, this was not until 1956 when oil was first found in commercial quantity in Oloibiri, today known as Bayelsa State. However, as commercial quantities of oil was struck in the region (Niger Delta) in 1956, a political, social and economic profound landscape dramatically began to change and was seems to have created high levels of environmental degradations and tension from the stakeholder. The Nigeria Government was reported denial of citizens basic rights such as, the right to the land resources and basic social infrastructure that should be provided by the government was seen as being charities by violence visited on Delta communities, particularly in Ogoni (Badejo, T. Olusegun, & C. Peter, 2006)
The Government of Nigeria thru it National Oil Company (NOC) appear to collect and record oil and gas revenue by methods that appers to be inefficient, especially in the area of transparency and accountability, finding from the Nigeria Extractive Industry Transparency Initiative (NEITI) Audits of 1999-2004 & 2005 showed that the agencies responsible for accounting and engaging stakeholder in the country for both physical quantities of oil produced and exported revenue accrual had no reliable data for its operations, it was rcorded that Nigeria's NOC also relied on data provided by oil companies operating in the country. Ironically, these companies appear to have histories of falsifying records and false accounting (NEITI audits of 1999-2004 & 2005). The methods of Nigeria relied mostly on trial and error which operated without the requirement for publication of oil rents and engagement of stakeholders in the operations, this strongly attributed heavily to Nigeria's long military dictatorship when Nigeria heads of state were accountable to no one in the country (Otukunefor and Biukwu, 2005).
Additionally, the development projects in Nigeria and good governance are hugely reliant on oil and gas revenue in the country, the 2009 budget of Nigeria reported that oil-related revenue accounts for 80% of the aggregate projection of Federation Account receipts in 2008 while non-oil sources of revenue accounted for 20% in the country ( Nigeria Budget, 2009). This means that Nigeria refuses to engage stakeholder constantly and the lacking of standardizes environmental policy, has been the major contributing factors to disruption of oil revenue and at some point in time past, automatically disrupted the Nigerian economy that hugely depends on oil revenue. (The preamble of the 2009 budget), where the government blamed the Niger Delta crisis for the fluctuation in the oil revenue and the reduction in the expected income, (Nigerian Budget 2009). This act of governing the oil and gas industry seems to serve as contributing factor to the Dutch disease-which consider as focusing on one sector or industry (oil and gas) and leaving the other sectors, such as manufacturing or agriculture sector that can serve as contributors to the national development and strengthen the national currency are left untouched, this was review to make some significant impart to enhance in balancing the oil and gas rent with the quest of unleashing sustainable development in the country.
Nigeria after the establishment of the Nigeria's Extractive Industry Transparency n Initiative (NEITI) and the inception of civilian governance in Nigeria, there have been some improvements in the oil and gas industry of Nigeria (Christian, 2010). With respect to the re-enforcing all environmental law to help safeguard the environment after several oil spills in the region, say the Federal Environmental Protection Agency Law of Nigeria (FEPA), that was established by Decree 58 of 1988 and Decree 59 of 1992, the National Policy on the Environment (NPE) that was established in 1989, which have the policy goal of achieving sustainable development, sectoral regulations and including the National Environmental Protection, the Pollution Abatement in Industries and Facilities Generating Wastes and the regulation of 1991.
The Case of Ghana
Ghana started the exploration and production of oil and gas in 1896. Interestingly, it was known that Signal & Amaco Group made the first commercial discovery in 1970. This was at Saltpond in the central part of Ghana. The recoverable oil reserves were estimated at 4.9 million barrels. The production in this field began in 1978 by Agripetco, producing a total of 4,800 barrels each day (modernghanaonline 2009).
In 1985, when production decreased to 580 barrels per day, the field was eventually closed down.
Production however resumed in 2000 and at that time produces about 600 barrels per day (Ghana National Petroleum Corporation 2006). Active research began in the 1980‟s by the Ghana National Petroleum Corporation (GNPC). The Ghana government, with the aim of owning the reserves when the discovery was made, decided to fund the exploration. This approach by the government towards the exploration was not successful due to the high cost associated with the exploration.
However, in 2001, the government of Ghana decided to move away from the nation-centric approach to all inclusive approach which served as an incentive to participation of private bodies. The change in taxes and other levies on oil production during the second quarter of the year 2003 led to the involvement of several major international oil and gas firms like Tullow, Kosmos and Gasop. Notably, with the involvement of private interest groups alongside a re-equipped GNPC, new discoveries of oil and gas in commercial quantities were made by both Kosmos and Tullow in what is known as the Jubilee field. This field had a reserve of about 800 million barrels of light crude oil with an upside potential of about 3 billion barrels (Commerce Ghana 2010). Indeed other discoveries have since been made and are also being developed.
When oil was discovered in large quantities in Ghana, there were several suggestions on how the government should use the oil and gas resources of the country for the greater economic benefits of its citizens. Many stakeholders including politicians, journalists and economic experts also added their opinion on how the oil rents must be utilized to achieve greater economic prosperity for the country.
The “paradox of plenty” is what most social scientists use to describe the “resource curse” that befalls many resource-rich economies. Nations with large deposits of natural resources, such as oil and gas most often perform worse with regards to economic development and good governance than do countries with fewer resources (Sachs & 3 Warner 1995:69). Strangely, despite enormous wealth and opportunities that is associated with oil discovery, such endowments many times impede rather than further balanced and sustainable development. In country after country, natural resource ex-traction has helped raise living standards while failing to produce self-sustaining growth (Sachs & Warner 1995:69). In addition to these growth failures, there is the high possibility of weak democratic development (Ross 2001), corruption (Sala-i-Martin & Subramanian 2003), and even civil war (Humphreys 2005). It is in this light the subject ”oil discovery: a blessing or a curse” has been an important and a major debating point across the length and breadth of the country.
However, Weisbrot et al (2006) assert that there is a great level of variation on the prospects of natural resource among resource-rich countries. Some resource-rich countries, usually developed ones, have performed far better than their counterparts in the developing world. For example, about three decades ago, Indonesia and Nigeria had comparable per capita incomes and heavy dependencies on oil sales. Yet today, Indo-nesia‟s per capita income is almost four times that of Nigeria (Ross 2003). The basic question to ask is that what Indonesia did right that Nigeria could not do?, As Hannes-son (2001) explains, perhaps investing in the highest-returning assets such as basic infrastructure is the best way to make resource wealth permanent. Again, Weisbrot et al (2006) argues that the varied effects of resource wealth on well-being can also be found within the country as well. Resource-endowed countries often suffer from a high level of inequality even though they have performed well. As Sarraf and Jiwanji (2001) elucidate resource wealth is often in the possession of a few corporations and also the public elites which serves as an incentive for rent-seeking activities. The wealth has benefited mostly the elites in the resource-rich countries through certain dubious practices.
WHAT CAN LIBERIA LEARN?
Liberia is also expected to join the league of oil producing countries in 2017 or after, and most of its knows reserves will be extracted in the immediate years after. Therefore, Liberia's emerging oil and gas industry obviously would be followed with environmental challenges during this period, it will also draw major national concern since the country did not performed well in past years in managing environmental problems caused by its mining industry as well as engaging stakeholder concerning the effects. However, the rest of the world observing closely to see if Liberia oil rents will attain what other numerous nations have vowed and failed to honour, which is guaranteeing oil wealth, minimizing, or eradicating poverty of the masses through generating employment prospects and regional economic progress and eventually fostering extensive nationwide economic and social growth. As such, it will be appropriate for Liberia to learn from the situations of other countries like Ghana and Nigeria, since Liberia seem to be poor and the majority of its people live below the poverty threshold amid vast natural resource.
Interestingly, oil discovery brings enormous excitement and anxiety to the citizens of those nations with the hope of greater economic transformation. The oil discovery can affect Liberia's economy either positively or negatively. This depends on the managerial principles and models that would be deployed in the exploration process and the management of the oil rents for the total benefit of each individual in the society. It is therefore necessary to put in place conducive managerial settings to ensure that the positive effects are maximized whereas the negative effects are minimized. Large oil revenue (compared to the size of the economy) will have a significant impact. New oil rents flows, or a significant increase in existing ones, will transform an economy for better or worse. Usually expectations are high in Liberia.
Disappointment often follows. Certainly, oil revenue has the potential to make an economy better-off but it also produces large risks that the potential benefits will not fully be realized, that it may make an economy worse-off than before (Najman, Pomfret & Raballand 2007).
Interestingly, the President of Liberia Madam Ellen Johnson-Sirleaf promised a better future or all Liberians with respect to hydrocarbon discovery in Liberia. At the same time, the National Oil Company of Liberia assured sustainable development in the oil and gas sector of Liberia.
About the author
I am a young Liberian intellectual, academician and an advocate who belief in the theory of social justice, equal opportunity and academy freedom, a graduate of the African Methodist Episcopal University (AMEU) with a bachelor of science (BSc) degree in Economic, Postgraduate Diploma (PGd) in Strategy Management– London School of Business and Finance, UK, Master of Science (MSc) in International Oil and Gas Management – Centre for Energy, Petroleum, Mineral Law and Policy (CEPMLP), University of Dundee, UK.