**2. The Niger delta and the distribution channels of its oil wealth**

The Niger Delta area is in the southern part of Nigeria, south of the confluence of the Benue and Niger Rivers, and around the water fingers branching off Nigeria's great waterways [6]. The delta is a vast sedimentary basin constructed over time, by successive thick layers of sediments dating back to 40-50 million years. It is a lush coastal plain of about 70, 000 square kilometers. Its geographical perimeter extends from the Benin River in the west to the Cross River in the east, and from the southernmost tip at Palm Point near Akassa to Aboh in the north2 , where the Niger River bifurcates into its two main tributaries – the Forcados and the Nun Rivers [8–10].

The vegetation zones of the Delta range from tropical rainforest, freshwater swamp forest, and saltwater mangrove forest [9]. The natural resources – crude oil, palm oil, and wood – from the Delta form the bedrock of Nigeria's economy. The natural endowment of the area accounts for about seventy percent of Nigeria's hydrocarbon resources, especially crude oil and natural gas. By 2009 the proven oil reserve of the Delta is estimated at 36.2 billion barrels [11].

Oil extraction in the Delta started in 1956 after the discovery of marketable oil resources in Oloibiri. Between 1969 and 1999, the number of oilfields in the Delta rose from fourteen to as many as a hundred and seventy- six [7]. Forty-four of these are located offshore [7]. By the first decade of the new millennium, there were three hundred oilfields, five thousand two hundred and eighty-four oil wells (twelve of which are in Egbema), and seven thousand kilometers of oil pipelines in the Delta [1]3 . Tons of crude oil have been shipped from these oilfields. The quantity of oil,

<sup>2</sup> Some sources locate the Delta's northern boundary to the Anambra River [7].

<sup>3</sup> Ike Okonta and Oronto Douglas [12] acknowledge only 150 oilfields. If Watt's [1] calculations are correct, it implies that as many as one hundred and fifty oilfields were discovered between the time Okonta and Douglas went to the press in 2003 and the time Watts's article was published in 2008.

which each oil well produces, is buried in the same mystery that surrounds the financial operations of oil companies [12].

The oil extraction in the Niger Delta has since inception yielded an estimated (US)\$400 billion or more4 [12, 14, 15]. The collaboration between the state office holders and business enterprise has led to the steady increase in oilfields and barrels of oil produced each day in the Delta. Most of the biggest Transnational Oil Companies (TNOCs), such as Shell, Chevron, ExxonMobil, Total, and Agip (Eni), are well represented in this collaboration.

The oil rents and revenues from the Niger Delta are centrally collected and distributed to different politically established institutions5 . However, from these institutions, the oil wealth is siphoned into private hands through different distribution channels. Large scale constructions, issuance of import license, employment in civil service, and the creation of sub-federal political units – states, Local Government Areas (LGAs), autonomous communities – constitute the channel through which the greatest part of the Delta's oil wealth goes into private hands [1, 15]. The actors taking advantage of this main channel are mainly office holders, international construction businesses and their executive contractors [15].

A second distribution channel of the Delta's oil wealth is associated with practices such as the occupation of oil infrastructure, extortion of protection money from the oil companies and their contractors, intervention or manipulation of compensation cases, and the kidnapping of oil employees. Many of those who are excluded from the main channel of distribution find their own share of the oil wealth by engaging in these practices [15]. Grabbing a share of the oil rents and spoils in this way can be as coercive as to involve the use of arms and weapons.

The third distribution channel includes some of the practices listed as part of the 'parallel economy funded by [Nigeria's] oil sector' [17]. The list includes practices such as, the diversion of 'special funds' funded by oil receipts; bribes or 'taxation' paid on oil contracts and the extensive smuggling of refined petroleum across Nigeria's borders, the illegal lifting of crude oil (bunkering), and secret accounts held by the NNPC [17].

The last distribution channel of Delta's oil wealth relates to the tendency to modify traditional practices and reconstitute traditional alliances, with the primary purpose of securing, or gaining access to oil rents and spoils. The Igbo of Obufia bring this tendency to life. As mentioned briefly in the introductory section, it is a story of the effects of oil money paid as a compensation for an expropriated land around a lake named *Kutu.* The *Kutu* lake hosted an exclusive fishing festival once in three years, until the arrival of the SPDC engineers who discovered oil and gas reserves around the lake. The discovery of oil and gas reserves around the lake is accompanied by payment of monetized compensation, which initiated a transformation that has brought the creative instincts of the Igbo to light. I will discuss this in detail in the coming section.

<sup>4</sup> Some authors rate it at US\$600 billion [13].

<sup>5</sup> There are four political institutions for distributing Nigeria's oil wealth [16]. The first is the Federal Account that includes rents appropriated directly by the federal state. The second is the state Derivation principle which vests each of the 36 states with the right to a proportion of the taxes which its inhabitants are assumed to have contributed to the federal treasury. It also vests each state with minimum revenue from natural resources derived from it. Currently, it stands at thirteen percent. The third is the Federation of States' Joint Account. By means of the latter, revenue is allocated to states based on need, population and other criteria that will be decided by the parliament. The fourth institution is the Special Grants Account, which includes funds designated specifically for the Niger Delta such as the Oil Mineral Producing Areas Development Commission (OMPADEC), and the Niger Delta Development Commission (NDDC).

*Creative Living off the Margins of the Niger Delta: Implications for Corporate Governance DOI: http://dx.doi.org/10.5772/intechopen.100134*
