RIVERS STATE UNIVERSITY

NKPOLU-OROWORUKWO
P.M.B 5080

A RESEARCH WORK ON:

AN OUTLINE ON THE CONTROL AND DISTRIBUTION

OF MINERAL AND NATURAL RESOURCES IN NIGERIA

PRESENTED BY:

ABBEY, JOY AWOBELEM

LUCKY, TOM CHIBUROMA
DUMPE, ELIJAH NABARI

COURSE TITLE: LAND LAW (PUL 420)

LECTURER: BARR. FRANK U. IGWE

AUGUST,2023
 TABLE OF CONTENT
A) INTRODUCTION
• History and origin of mineral natural resources in Nigeria
• Definition of terms
• Overview of the current status of the country and distribution of mineral
natural resources
B) CLASSIFICATION OF NATURAL RESOURCES IN NIGERIA
• Value of natural resources
• Natural resources utilization and distribution.
• States in Nigeria and their various natural resources
• Impact of natural resources to Nigerians
C) CONTROL AND DISTRIBTION OF MINERAL AND NATURAL
RESOURCES IN NIIGERIA
• Theories of ownership of mineral resources
• Jurisdictional views on the ownership of mineral resources – USA (Texas-
eminent domain), Australia, Canada, etc.
• Control and distribution of mineral resources in Nigeria
• Derivative principle – the issue of federalism and how it affects the control
and distribution of mineral resources.
• Schools of thoughts as regards the control of mineral resources in Nigeria;
prof. Sagay, prof. M.A. Ajomo.
D) LEGAL, INSTITUTIONAL/REGULATORY FRAMEWORK; provisions
and significant impact.
E) WAY FORWARD
• Implication of governmental control and distribution of mineral natural
resources in Nigeria
• Conflicts and challenges in the industry/sector.
• Government responses to such conflicts and challenges.
• Recommendation for future reforms. Need for a comprehensive and co-
ordinate approach to addressing these challenges
F) THE AGRARIAN REFORM
G) CONCLUSION
 ABSTRACT
This paper focuses particularly and especially on the Control and Distribution of
Mineral and Natural Resources in Nigeria. It exalts the fact that the control and
distribution of natural resources plays a crucial role in shaping the socio-economic
and geopolitical landscape of Nigeria by examining the intricate interplay between
political, economic and environmental factors and how it determines the
management, allocation and benefits of Natural resources. It also recognizes that the
control and distribution of Natural resources in Nigeria is within the purview of the
Federal Government in line with the Supreme Court decision in the case of
Attorney General Federation V. Attorney General Abia State, wherein the
Supreme Court, among other things affirmed the federal Government ownership and
control of all-natural resources within its territory. This paper also considers that the
above position of the law is based on the Omnibus provision of Section 44(3) of the
CFRN 1999 as amended as well as Section 1(1) of the Petroleum Industry Act
2021, which provides that the control and distribution of Natural resources is vested
on the Federal Government. It highlights the various theories relating to the control
of Natural resources, capturing the absolute ownership theory which is mutatis
mutandis the practice of Nigeria before the emergence of the Land use Act which
provided for lease holding as opposed to the previous practice of Fee simple.
This paper also considers the qualified ownership of Natural resources as well as the
Non-ownership theory. It also reaffirms that the constitution of Nigeria is imperative
on the control and distribution of Natural and mineral resources and the federal
minister of petroleum who is appointed by the president can upon recommendation
of the commission grant license for the exploration, prospecting and mining of
mineral resources (petroleum). Finally, this paper examines the impacts of the
Natural Resources, the Legal framework and institutional framework in relation to
the control and distribution of Natural Resources, conflicts in the industry and
possible recommendation.
1.0 INTRODUCTION
It is trite knowledge that natural resources preceded human existence. Following the
evolutionary and biblical accounts, man arrived on earth to meet certain natural
resources on ground 1 . Thus since the existence of the first man, nature has been
explored and exploited to tap the various resources on earth for human use. 2
According to Botkin and Keller, Modern society depends on the availability of these
resources.3 Abraham Maslow in his hierarchical structure on needs hinged on the fact
that the psychological need of a man is primary to his existence and survival for the
world to have meaning and for his sustained and continuous transformation, hence the
drive by man to explore these resources for his continuous sustenance and satisfaction.
In the words of A.O Ayeni & J.Y Fashagba 4 , everything which occurs or exist
naturally that are for human use on earth are natural resources.
Availability of natural resources in any country contributes to the country’s wealth
base, especially if it’s in commercial quantity. This will translate to socio-economic
development, generate and sustain growth. However, this may only happen where the
revenue from the resources is properly managed and transparently distributed by those
in control of it for the development of the country.
Nigeria is a nation divinely endowed with numerous natural resources, though it seems
like the majorly concentrated on is mineral resources (petroleum). These resources
have served as a major source of the country’s wealth. The various states are well
endowed with different or similar natural resources which contributes to the country’s
revenue either directly or indirectly.
In view of this, we shall critically examine and analyze the control and distribution of
this mineral Natural Resources in Nigeria.

1
Natural resources: distribution, governance and politics by A.O Ayeni and J.Y Fashagba. Pg. 379
2
Ibid
3
2000, p. 595
4
Natural resources: distribution, governance and politics by A.O Ayeni and J.Y Fashagba. Pg. 379
1.1 HISTORY
The origin of natural and mineral resources in Nigeria as established earlier precede
man as such dates back from time immemorial. However, the drive for the exploration
of mineral and Natural resources in Nigeria can be traced from the British colonial
intervention. From the annexation of Lagos in 1861, the colony of Lagos was ceded
to the British crown in 1903.
The search for mineral particularly oil started in 1908 5 . Prior to this time the
Legislation on petroleum in Nigeria was the ordinance of 1889, which was followed
by the Mineral Regulations (oil) ordinance 1907 in Nigeria. Both laid down a basic
framework for the development of petroleum and its resources. The 1907 Ordinance
stipulated among other things that only British subjects or companies controlled by
British subjects would be eligible to explore Nigeria’s oil resources. This provision
was not enforced as the first company to undertake the exploration in Nigeria was the
Nigerian Bitumen Company, a German firm in 1908. 6 They started drilling and
exploring for oil with Araromi and Okitipupa area of Ondo state, the south western
Nigeria. Their findings however were not in commercial quantity. This engagement
ended abruptly following the outbreak of world war 1 in 1914.
In 1936, the British colonial government allowed for the Nigerian Bitumen Company
to resume exploration after the Germans, defeated by their British counterpart
discontinued their exploration. This was as a result of the lack of competent British
oil company to undertake exploratory operations and subsequently this led to the
merger between Royal dutch Shell and William Knox D’arcy.7 This merger lead to
the establishment of Shell D’arcy, Petroleum development Company of Nigeria,
an affiliate of the mineral oil companies; shell petroleum company and British
petroleum company, and as a result of this, in 1937, interest in the possibility of
discovering oil in Nigeria was revived.
In November 1938, Shell BP received an oil exploration license (OEL) covering the
whole of Nigeria from the British colonial government. 8 After the five years of

5
Oil and gas law in Nigeria; Theory and Practice by Lawrence Asegbua Pg. 7
6
Order No. 19 of 1909 laws of southern Nigeria
7
Laws on oil and gas exploration and production in Nigeria edited by M.C Ogwezzy. Pg. 29
8
L.H Schatzel, Petroleum in Nigeria (Ibadan: Oxford university press, 1969) 1
interruption caused by the second world war, Shell BP intensified its exploration
activities during the period of 1946-1951.
In 1951, the first test well was drilled at a location near Ihuo Village, north west of
Owerri. Further drilling operations began at a well called Alaska 1, near Eket in 1953
but still, oil was not discovered in commercial quantity.9 Shifting from the cretaceous
area rimming the Niger Delta in the southern Nigeria, turned to the tertiary area of
Niger Delta. Consequently, the first commercial discovery was made in 1956 at
Oloibiri community at Ogbia local government area located in Bayelsa state.
Towards the end of 1956, another discovery was made at Afam, Rivers State.
Based on this established fact, it is crystal clear that the inception of the British into
Nigeria was thus for the ulterior motive of exploring and exploiting her Natural
resources and this they did establishing legal and regulatory framework to guide such
exploration and production, giving legal backing to their actions. Among these
provisions are section 3(1) Mineral Ordinance 1916, which vest ownership in the
British crown, section 6(1) Mineral oil ordinance 1914, bars non-British companies
from acquiring mineral oil rights in Nigeria. It also vests exclusive power on the
colonial administrator to grant oil prospecting rights to Nigerians. Also, the Mineral
Regulations (oil) ordinance in 1907, provided that only British subject could be
eligible to control and explore natural resources (oil) in Nigeria.

1.2 DEFINITION OF TERMS

For the purpose of this work, certain terms will be explained as it will be very key
and instrumental in understanding and having a complete digestion of the concept.
• Mineral Resources; According to the Black’s law dictionary 10th edition,
mineral resources are defined as any natural inorganic matter that has a
definite chemical composition and specific physical properties that gives it
value. It can also be defined as a subsurface material that is explored, mined
and exploited for its useful properties and commercial value.

9
Laws on oil and gas exploration and production in Nigeria edited by M.C Ogwezzy. Pg. 30
Section 1 Mineral Resources Act cap M7, Canada defined mineral as any natural
solid inorganic or fossilized organic substance and such other substance as is declared
to be under section 3 of the Act, but does not include;
i. Ordinary stone, building or construction stone.
ii. Sand, gravel, peat, peat moss or ordinary soil.
iii. Gypsum or limestone.
iv. Oil or natural gas
v. Bituminous shale, oil shale or intimately associated products or substances
derived therefrom.
Section 164 of the Nigerian Mining and Mineral Act 2007 (interpretation) defines
mineral as any substance whether solid or liquid or in gaseous form occurring in or on
the earth formed by or subjected to geological processes including occurrences or
deposit of rocks, coal, bed gases, bituminous, shale, tar sands, any substance that may
be extracted from coal, shale or tar sands, mineral water and mineral component in
tailing and waste piles but with the exclusion of petroleum and waters without mineral
content. Lucky Ihanza & anor v Global fleet oil and Gas.
Having established that mineral are inorganic natural resources, example are diamond,
gold, copper, crude oil and fuel etc.

• Natural Resources; is any energy source, organism or substance found in

nature that people use. 10 According to the Black’s law dictionary, 10th
edition, natural resources is defined as any material from nature having
potential economy value or providing for the sustenance of life such as
timber, mineral, oil, water and wildlife. Paige v Fairfield plan & Zouning
commission.
WTO 2010, defines natural resources as a stock of materials that exist in the natural
environment that are both scarce and economically useful in production or
consumption either in the low state or after a minimal amount of processing.
N/B Based on this premise, it will suffice to say that natural resources encompass both
mineral and non-mineral resources. Thus, mineral resources are just an ambit of

10
Merriam Webster Dictionary
natural resources. Hence it is a wrong position to use the word mineral resources and
natural resources interchangeably. As the latter constitute the former among so many
others.
Some natural resources are exhaustible like fossils, fuel, gold, forest, diamond etc,
while some are inexhaustible e.g. sunlight, water, air etc.
Natural Resources are categorized as;
a) Renewable and non-Renewable
b) Biotic and Abiotic
➢ Renewable natural resources are resources that are consistently available not
depletable. It replaces itself after utilization. Non renewable are natural
resources that cannot be substituted or recovered once they have been
destroyed. They exist in finite amount. E.g. coal, crude oil, natural gas, oil shale,
tar sand and fossil fuels generally called Minerals. All these resources are
regularly exploited for economic purposes either for local or international trade.
➢ Biopic natural resources originate from the ecosphere derived from organic and
living materials. These include forests, fossil, fuels e.g. petroleum, oil and coals.
Abiotic natural resources are resources that originate from non organic and non
living materials. They include; water, land, air and heavy metals like iron,
copper, silver, gold.

• Control; control according to Merriam Webster dictionary means to have

power or authority to guide or manage. To be vested with a right over a thing
or person. To reserve the right or authority over something.
Black’s law dictionary defines it as a direct or indirect power to govern the
management and policies of a person or entity, whether through ownership of voting
securities by contract, or otherwise. The power or authority to manage, direct or
oversee.
• Distribution; is defined as the act or process of apportioning. To divide
among several or many. According to the Black’s law dictionary 10th
edition, to distribute means to apportion, to divide among several. To arrange
by class or order. To deliver. To spread out. To disperse.
1.3 OVERVIEW OF THE STATUS OF THE COUNTRY AS REGARDS
MINERAL OPERATIONS.
Nigeria possesses vast mineral resources which spread across the states which are
categorized as energy, industrial, metallic ores and precious stones. Their exploration
is aimed at discovering viable minerals for exploitation as raw materials for industrial
production. Currently, about 44 different minerals are found in commercial quantities
in 450 locations across the country
Nigeria is endowed with over 155 mineral deposits across the country. Out of these
mineral deposits, Nigeria has identified 14 types of minerals of various mix and
proven qualities, some of which are concentrated in certain region.
Seven minerals (Gold, limestone, Barite, Lead/Zin, Iron ore, Bitumen and coal) have
been identified by the federal government for effective development. These minerals
are pertinent in industrial process as well as in revenue diversification strategy for the
government and have the potential to make significant contribution to Nigeria’s
economic development.
The total production in 2019 was 59,820,953.07 trillion with royalty payment of 2.502
billion which represent an increase of 29.41% over 2018 production of 46.7million
tons. Below is a template from 2019 NEITI SMA
S/N Mineral Quantity. Royalty (₦)% Contribution (Ton)
1. Limestone 32,853,221.99 987,008,542.0554.92%
2. Granite Aggregate 11,042,450.61 826,599,858.3318.46%
3. Laterite 6,479,290.26 195,751,061.4010.83%
4. Clay 2,874,504.38 57,506,754.214.81%
5. Sand 2,311,913.33 94,293,098.893.86%
6. Granite Dust 1,827,497.50 68,933,616.423.05%
7. Shale 1,092,124.15 27,303,103.651.83%
8. Coal 1,021,307.92 76,611,275.681.71%
9. Marl Clay 78,750.00 1,575,000.000.13%
10.Tourmaline 48,010.00 960,200.000.08%
11.Lead/zinc Ore 38,750.12 106,405,164.390.06%
12.Gypsum 22,637.09 5,536,115.000.04%
13.Sapphire 2,850.00 427,500.000.0048%
 14.Tin Ore 1,786.76 2,816,519.000.0030%
15.Barites 347.50 139,000.000.0006%
16.Iron ore 160.29 31,257.500.0003%
17.Lithium 66.67 14,500.000.0001%
18.Copper 30.00 36,000.000.0001%
19.ETC

2.0 CLASSIFICATION OF NATURAL RESOURCES IN NIGERIA

There are various classifications of Natural Resources and they Include:
• Stock Resources: These resources exist in fixed quantities and are not
renewable within human timescales. They include:
i. Mineral Resources: Valuable minerals like gold, silver, diamonds, and rare
earth elements are examples of stock resources that are extracted from the
Earth's crust and used for jewelry, electronics, and industrial applications.
ii. Fossil Fuels: Coal, oil, and natural gas are finite resources formed from ancient
organic matter, and their extraction and use have significant environmental
implications.
• Flow Resources: These resources are renewed naturally and can be used
repeatedly without depletion: Water: Rivers, lakes, and oceans provide a
continuous supply of water for various uses such as drinking, agriculture,
industry, and recreation. Wind Energy: Wind is a flow resource that is
harnessed for energy generation through wind turbines.
• Ubiquitous Resources: These resources are found almost everywhere and
play a fundamental role in Earth's systems:
i. Air: Comprising gases like nitrogen, oxygen, and carbon dioxide, the
atmosphere sustains life through respiration and regulates the planet's climate.
ii. Water: Covering around 71% of the Earth's surface, water is essential for all
forms of life and critical for various natural processes.
• Local Resources: These resources are specific to certain regions and may not
be universally available. Certain Minerals: Some minerals are concentrated in
specific geological formations, leading to localized mining operations and
economic activities. Unique Flora and Fauna: Biodiversity varies across
 regions, leading to the presence of specific plant and animal species in certain
areas.
• Global Resources: These resources are widespread and transcend geographical
boundaries e.g. Sunlight: The sun's energy is accessible to the entire planet and
is harnessed for solar power generation. Climate and Weather Patterns: Climate
systems influence weather patterns globally, affecting agricultural productivity,
ecosystems, and human settlements.
• Renewable Energy Resources: This subcategory of renewable resources
includes energy sources like solar, wind, hydro, geothermal, and biomass.
These resources are harnessed to produce clean energy and reduce reliance on
fossil fuels.

2.1 THE VALUE OF NATURAL RESOURCES

The value of natural resources is multifaceted and dynamic, encompassing a
wide array of factors that contribute to their significance. Natural resources are
the raw materials and elements found in the natural environment that are
utilized by humans for various purposes. These resources can be broadly
categorized into renewable and nonrenewable resources, each with its own set
of implications for economic, social, and environmental systems.

One of the primary dimensions of the value of natural resources is their

economic significance. Nonrenewable resources like minerals, fossil fuels, and
metals have often been a driving force behind economic development and
industrialization. These resources have been essential for the production of
goods, energy generation, and construction materials. The economic value of
nonrenewable resources is often determined by factors such as scarcity,
extraction costs, geopolitical considerations, and technological advancements.

On the other hand, renewable resources like water, forests, and agricultural land
provide ongoing benefits to societies. Water resources are critical for
agriculture, industry, and human consumption, playing a crucial role in
economic development and sustaining life. Forests contribute to timber
production, carbon sequestration, and biodiversity conservation, serving as both
economic and ecological assets. Agricultural land is essential for food
production, supporting rural economies and global food security.

The value of natural resources also extends beyond their direct economic
contributions. Ecosystem services, such as pollination, water purification,
climate regulation, and erosion control, are provided by natural resources and
are often not fully captured by traditional economic metrics. These services are
essential for maintaining ecological balance and supporting human well-being.

Furthermore, the intrinsic value of natural resources relates to their role in

cultural, aesthetic, and spiritual aspects of human life. Many indigenous and
local communities have deep cultural connections to specific natural resources,
viewing them as sacred or integral to their identity. The preservation and
sustainable use of these resources are vital for maintaining cultural heritage and
diversity.

Environmental considerations are increasingly shaping discussions around the

value of natural resources. Climate change, habitat loss, and pollution have
highlighted the need to transition toward more sustainable practices in resource
extraction and utilization. The negative externalities associated with resource
exploitation, such as air and water pollution, have societal costs that challenge
traditional economic valuation methods.

In recent years, the concept of ecosystem-based approaches to resource

management has gained traction. This approach recognizes the
interdependencies between different natural resources and ecosystems, aiming
to balance human needs with ecological sustainability. It involves considering
long-term consequences, mitigating environmental impacts, and fostering
resilience in the face of changing environmental conditions.

In summary, the value of natural resources is complex and multifaceted. It

encompasses economic, ecological, cultural, and ethical dimensions that are
interconnected and often challenging to quantify accurately. Recognizing and
properly managing this value is essential for ensuring the well-being of current
and future generations while maintaining the health of our planet’s ecosystems.
2.3 NATURAL RESOURCES UTILIZATION AND DISTRIBUTION
Natural resources are the invaluable raw materials and substances that are
naturally occurring in the environment and hold significant value for various
human purposes and activities. These resources encompass a wide spectrum of
elements, compounds, and materials, ranging from minerals and metals to water
bodies, air quality, forests, agricultural land, and fossil fuels, among others. The
utilization and distribution of these natural resources are of paramount
importance in the realms of economics, society, and environmental
sustainability.

Utilization of natural resources involves the processes through which these

resources are extracted, harnessed, and transformed into products or services
that cater to human needs and wants. For example, minerals and metals are
extracted from mines, refined, and used in manufacturing industries to create
consumer goods and infrastructure. Fossil fuels like coal, oil, and natural gas
are extracted and utilized for energy production and transportation. Timber
from forests is harvested for construction, furniture, and paper production.

The distribution of natural resources, on the other hand, pertains to how these
resources are spread across the globe and how they are allocated to different
regions and industries. This distribution can be influenced by geographical
factors, geological formations, and historical processes. For instance, regions
with abundant water resources might have a comparative advantage in
agricultural activities, while areas rich in mineral deposits might become
centers of mining and manufacturing.

The utilization and distribution of natural resources have profound impacts on

economies, societies, and the environment. Economically, countries with access
to diverse and ample resources often have the potential for greater industrial
development and economic growth. Resource-rich nations may also have
opportunities for export and trade, contributing to their overall economic
stability.

From a societal perspective, natural resources are essential for meeting basic
human needs such as food, shelter, and energy. Access to clean water, fertile
land, and energy sources enhances quality of life and supports population
growth. On the other hand, disparities in resource distribution can lead to social
inequalities, conflicts, and migrations.

Environmental considerations are also crucial in the management of natural

resources. Overexploitation of resources, such as deforestation, overfishing,
and excessive mining, can lead to ecological imbalances, loss of biodiversity,
and habitat destruction. Additionally, the extraction and utilization of fossil
fuels contribute to greenhouse gas emissions and climate change.

Given these complexities, the management of natural resources involves

finding a delicate balance between economic development, social equity, and
environmental protection. Governments, regulatory bodies, and international
agreements play vital roles in shaping policies that govern resource extraction,
utilization, and conservation. Sustainable practices, such as reforestation,
renewable energy adoption, and responsible mining, are being emphasized to
ensure that resources are used efficiently and their benefits are accessible to
both current and future generations.

In conclusion, the utilization and distribution of natural resources are

multifaceted processes that significantly impact economies, societies, and the
environment. Proper management is essential to ensure that these resources are
used sustainably and that their benefits are equitably distributed, promoting a
harmonious coexistence between human activities and the natural world.

2.4 STATES IN NIGERIA AND THEIR NATURAL RESOURCES

ABIA Gold, lead/zinc, limestone, oil/gas and salt

ABUJA Cassiterite, clay, dolomite, gold, lead/zinc,

marble and tantalite
ADAMAWA Kaolin and magnesite, bentonite, gypsium
AKWA IBOM Magnesite
Clay, Lead/Zinc, Lignite, Limestone,
Oil/Gas, Salt &
Uranium
ANAMBRA Clay, glass sand, gypsium fron ore,
lead/zinc lignite, iron-ore and clay
BAUCHI Gold, Cassiterite (tine ore),
Columbite, Gypsium, Wolfram, Coal,
Limestone, Lignite, Iron-ore & Clay

BAYELSA Clay, Gypsium, Lead/Zinc, Lignite,

Limestone, Maganese, Oil/Gas &
Uranium

BENUE Barite, Clay, Coal, Gemstone, Gypsium,

Iron-Ore, Lead/Zinc, Limestone, Marble
& Salt

BORNO Bentonite, Clay, Diatomite, Gypsium,

Hydro-carbon, Kaolin & Limestone

DELTA Clay, Glass-sand, Gypsium, Iron-ore,

Kaolin, Lignite, Marble & Oil/Gas

EBONYI Gold, Lead/Zinc & Salt

EDO Bitumen, Clay Dolomite, Phosphate,
Glass-sand, Gold, Gypsium,Iron-ore,
Lignite, Limestone, Marble &
Oil/Gas

EKITI Feldspar, Granite, Kaolin, Syenite &

Tatium

ENUGU Gold, Lead/Zinc & Salt

GOMBE Gemstone & Gypsium

IMO Gypsium, Lead/Zinc, Lignite, Limestone,

Marcasite, Oil/Gas, Phosphate & Salt

CROSS RIVER Barite, Lead/Zinc, Lignite, Limestone,

Manganese, Oil/Gas, Salt & Uranium

JIGAWA Butyls

KADUNA Amethyst, Aqua Marine, Asbestos, Clay,

Flosper, Gemstone, Gold, Graphite,
Kaolin, Hyanite, Mica, Rock Crystal,
Ruby, Sapphire, Sihnite, Superntinite,
Tentalime, Topaz &
Tourmaline

KANO Gassiterite, Copper, Gemstone, Glass-

sand, Lead/Zinc, Pyrochinre &
Tantalite

KASTINA Kaolin, Marble & Salt

KEBBI Gold

KOGI Cole, Dolomite, Feldspar, Gypsium, Iron-

ore, Kaolin, Marble, Talc & Tantalite

KWARA Cassiterite, Columbite, Feldspar, Gold,

Iron-ore, Marble, Mica & Tantalite

LAGOS Bitumen, clay, and Glass sand

NASARAWA Amethyst (Topaz Garnet), Barytex,

Barite, Cassirite, Chalcopyrite, Clay,
Columbite, Coking Coal,
Dolomite/Marble, Feldspar, Galena, Iron-
ore, Limstone, Mica, Salt, Sapphire, Talc,
Tantalite, Tourmaline Quartz& Zireon

NIGER Gold, lead/zinc and Talc

OSUN Columbite, Gold, Granite, Talc, Tantalite

& Tourmaline

ONDO Bitumen, Clay, Coal, Dimension Stones,

Feldspar, Gemstone, Glass-Sand, Granite,
Gypsium, Kaolin, Limestone & Oil/Gas
OYO Aqua Marine, Cassiterite, Clay, Dolomite,
Gemstone, Gold, Kaolin, Marble,
Sillimanite, Talc & Tantalite

PLATEAU Barite, Bauxite, Bentonite, Bismuth,

Cassiterite, Clay, Coal, Emeril, Fluoride,
Gemstone, Granite, Iron-ore, Kaolin,
Lead/Zinc, Marble, Molybdenite,
Pyrochlore, Salt, Tantalite/Columbite, Tin
& Wolfram

RIVERS Clay, Glass-Sand, Lignite, Marble &

STATE Oil/Gas

SOKOTO Clay, Flakes, Gold, Granite, Gypsum,

Kaolin, Laterite, Limestone, Phosphate,
Potash, Silica Sand & Salt

TARABA Lead/zinc

YOBE Soda Ash & Tintomite

ZAMFARA Coal, Cotton & Gold

 2.5 IMPACT OF NATURAL RESOURCES TO NIGERIANS
Natural resources play a pivotal role in shaping the economic, social, and
environmental landscape of Nigeria. The country is endowed with a variety of
resources, including oil, natural gas, minerals, agricultural products, and water bodies.
While these resources offer numerous benefits, they also pose challenges that require
careful management and planning. Some of this impact includes;
1. Economic Impact:
i.Oil and Gas: Nigeria is one of the largest oil producers in Africa. Oil exports account
for a significant portion of the country’s revenue and foreign exchange earnings. The
revenue generated from oil exports helps fund government budgets, infrastructure
projects, and social programs. However, Nigeria’s heavy reliance on oil exposes the
economy to fluctuations in global oil prices, leading to economic volatility.
ii.Minerals: The mining sector contributes to job creation and revenue generation
through the extraction of solid minerals such as coal, tin, limestone, and gold.
Properly managed, this sector can diversify the economy and provide employment
opportunities, especially in rural areas.
iii.Agriculture: Nigeria’s fertile land supports the cultivation of various crops such as
cocoa, cassava, yam, and palm oil. Agriculture is a major employer and contributor
to the economy, providing livelihoods for millions of Nigerians.

2. Employment Opportunities:
Natural resource extraction, processing, and distribution create employment
opportunities across different sectors, from mining and agriculture to logistics and
support services. These opportunities are crucial for reducing unemployment rates
and promoting economic growth.

3. Environmental Considerations:
i.Oil Spills and Pollution: Oil exploration and production have led to environmental
challenges, including oil spills and water pollution. These issues harm ecosystems,
aquatic life, and the health of communities living near oil-producing areas.
ii.Deforestation: Unsustainable logging practices and land conversion for agriculture
can lead to deforestation, impacting biodiversity, soil quality, and local climate
patterns.
iii.Water Management: Water bodies are essential for agriculture, fishing, and domestic
use. However, pollution and mismanagement can threaten water quality and
availability.

4. Social Dynamics:
i.Resource-Related Conflicts: Competition for control over natural resources can lead
to conflicts among different communities and ethnic groups. Land disputes and
tensions related to resource access are not uncommon.
ii.Wealth Disparities: Unequal distribution of resource wealth can exacerbate existing
economic inequalities between regions and social groups, potentially leading to
social unrest.
5. Diversification and Sustainability:
Heavy dependence on oil revenue can make the economy vulnerable to global oil
price fluctuations. Diversifying the economy by developing other sectors like
manufacturing, technology, and services is essential for long-term stability.
Promoting sustainable resource management involves adopting environmentally
friendly practices, responsible extraction methods, and investing in renewable
energy sources.

However, natural resources have both positive and negative impacts on Nigerians’
lives. While they contribute significantly to the economy and provide essential
employment opportunities, challenges related to environmental degradation,
economic volatility, and social inequalities must be addressed through effective
policies, responsible resource management, and diversification effort.

3.0 CONTROL AND DISTRIBUTION OF MINERAL AND NATURAL

RESOURCES IN NIGERIA.
The controversy and agitation surrounding the concept of ownership, control and
distribution of mineral and natural resources in Nigeria could be traced to the
discovery of oil in commercial quantity in Oloibiri in January 1956. In dealing with
this subject, attention would be given to the theories of ownership of mineral
resources, views on jurisdiction, control and distribution, derivative principle as well
as the schools of thought.
3.1 Theories of Ownership of Mineral Resources.
The concept of ownership in land law is very sacrosanct as it is the crux of any
discourse on the subject as well as the issue almost always in contention between
parties. According to Blackstone,11 ownership could be considered as “the sole and
despotic dominium of an individual over a thing.” This dominium theory was
emphasized by Justice Niki Tobi in Abraham V Olorunfunmi,12 where he held
inter alia that ownership connotes the totality of or the bundle of the rights of the
owner over and above every other person on a thing.” In this context, therefore, a
working definition of ownership is “the legal right that a legal system grants to an
individual or a body to allow him or it to exercise the maximum degree of formalized
control over a scarce resource.” 13The control of mineral and natural resources in
Nigeria is thus contingent upon ownership.
Against this background, there are theories of ownership of mineral and natural
resources which have been propounded as a result of the varying political, social and
economic systems across the jurisdictions of the world. Such theories include;

• Absolute Ownership Theory

This theory declares that whoever owns a piece of land owns the natural resources
lying underneath it. It is aptly described in the Latin maxim quic quid plantatur,
solo solo cedit (whatever is affixed to the soil belongs to the soil).
It was referred to as the “heaven to hell” doctrine following from another Latin
maxim that underlines this theory; cojus est solum, ejus est usque ad coelom ad
inferos, which means “to whomever the soil belongs he owns also the sky and to the
depth”.
This, however, has been argued to be only a general statement of the law because in
some jurisdictions like Nigeria, though title to land vests in the Governor of each
state14 the natural resources which by definition is part of the land does not belong
to the state but vests in the federal government. The federal government absolutely
owns the minerals.15 It therefore does not truly represent the current position of the
law in Nigeria as it’s applicability

11
W. Blackstone commentaries on the laws of England volume 2(1766)
12
(1990) 1NWLR (pt.165)53 @ 74-75
13
U. Maetto, Basic principles on property law; A comparative legal and economic introduction
14
Section 1 Land use Act
15
Section 44(3) and item 39 0f the constitution of federal republic of Nigeria 1999 as amended
 This theory of absolute ownership was first adopted in the U.S. state of Texas in
respect of ownership of oil and gas, “that a land owner owns a corporeal possessory
interest
(similar to a fee simple) in the substances beneath his land, but his ownership is a
determinable fee subject to the rule of capture.”16 In Texas is Brown v. Humble Oil
& Refining Co.17 the Court stated thus:
“Owing to the peculiar characteristics of oil and gas, the foregoing rule of
ownership of oil and
Gas in place should be considered in connection with the law of capture. This rule
gives the
Right to produce all of the oil and gas that will flow out of the well of one’s land and
this is a
Property right. And it is limited only by the physical possibility of the adjoining
landowner’s
Diminishing the oil and gas under one’s land by the exercise of the same right of
capture.”

• The Qualified Ownership Theory.

This theory states that minerals, that is, oil and gas are incapable of being owned,
until they are captured and reduced into possession. This is because the landowner
is not considered to automatically be the owner of the oil on his land since he can be
divested without his knowledge or consent.18 In Kelley V Ohio Oil Co.19 The court
said: The right to drill and produce oil on one’s land is absolute and cannot be
supervised or controlled by a court or by an adjoining land owner.20
Petroleum oil is a mineral and while in the earth it is part of the realty, and should it
move from place to place by percolation or otherwise, it forms part of that tract of
land which it tarries for the time being, and if it moves to the next adjoining tract, it
becomes part and parcel of that tract, and it forms part of some tract until it reaches
a well and is raised to the surface, and then for the first time it becomes a subject of

16
Other states like Oklahoma have adopted the exclusive right to take theory that a landowner does not own the
substance that underlie his hand but merely retains the exclusive right to capture the substances, a non-corporeal
interest.
17
15(1935)Tex S.C. 83 S.W (2d) 935 @940
18
Dr. Emmanuel kachikwu, legal issues in the Nigeria petroleum industry pg. 5
19
(1897) 57 ohio 317,
20
Supra pg. 8
 distinct ownership desperate from the realty, and becomes personal property, the
property of the person into whose well it came.
The theory likened petroleum to “animal ferae naturae” (wild animals) and based on
the law that wild animals are not capable of being owned and as such, cannot be
stolen.21 Thus, owing to the unrestricted mobility of petroleum, like wild animals, it
cannot be owned until it is captured and possessed. Thus, in Westmoreland etc. Gas
Co. V DeWitt,22 the court said: Water and oil and still more strongly gas, may be
classed by themselves, if the analogy be not fanciful, as minerals ferae naturae. In
common with animals, and unlike other minerals, they have the power and the
tendency to escape without the volition of the owner.

• Ownership of Strata theory

This theory states that “the landowner owns the sedimentary layer containing
the oil and gas within the limits of the vertical planes representing the
boundaries of his tract”. This theory creates limited ownership of oil and gas.

• The Domanial or State Ownership Theory.

This theory which originated from the Roman law asserts that petroleum as well
as other natural or mineral resources completely belongs to the country where
the resource is found. Considering the significance of natural and mineral
resources to a nation’s economy particularly oil to the economies of oil
producing countries and the danger of the substance when not properly handled,
it’s ownership by the government is arguably more efficient than private
ownership. This theory completely vest ownership in the government and is
operative in Nigeria.23

• Servitude Theory (Profit a’ Prendre)

The servitude theory is to the effect that the owner of a mineral right has
exclusive right to exploit the mineral underground. The maxim “Profit a’
prendre,” which is also called “right of common,” on the other hand, is a right
exercised by one person in the soil of another, accomplished with participation
in the profits of the soil thereof. It is a right to take a part of the soil or produce
21
Section 383 criminal code act
22
(1889) 130 pa. st 235. 249. 18 Atl. 724. 725
23
Section 44 CFRN 1999 as amended
 of the land. It is a right to take from the soil such as logging, mining, drilling
etc. The taking (profit) is the distinguishing characteristic from an easement.24
This theory is mostly applied to solid minerals than oil and gas resources mainly
because solid minerals are non-migratory. Under the servitude theory, minerals are
not capable of possession by the surface owner prior to removal from under the
ground. Here, ownership is prelude to possession for once a person has full mineral
right, he can then proceed to reduce the mineral to possession. However, once there is
a severance between the ownership of the surface soil and the ownership of the mineral
underground, the owner of the mineral has a Profit a’ prendre which is only recognized
as an easement for exploitation of the resources and has no bearing on the ownership
of the surface soil.25

3.2 Jurisdictional Views on the Ownership of Mineral Resources.

• United States of America

In the United States of America, private ownership is said to be the norm as the
Common law principal of absolute ownership is operational there. Therefore, since
private individuals and corporations as well as the federal, state, and local
governments can own the land, they also can own the resources beneath it. This makes
the United States different from other countries. Thus, it was decided in Del Monte
Min. & Min. Co. v. Last Chance Min. & Mill. Co.26 that a private owner has absolute
ownership even against the government who cannot disturb such title. In Texas for
instance, The Supreme Court of Texas in Ellif v. Texon Drilling Co,27 recognized the
right of an owner of a tract of land to acquire title to oil and gas produced on his land
even though some of the oils may have migrated from adjoining lands. This is the rule
of capture. The action of the defendant in such situation is free from liability for
drainage. This principle, as posited by some authors may have arisen from the

24
Micheal B. Ogwezzy, Laws on Oil and gas exploration and production in Nigeria pg. 82
25
ibid
26
171 U.S 18
27
210 S.W.2D 558, 581 (Tex. 1948)
common-law maxim; Cujus est coelum, ejus usque ad coelum et ad inferos (to
whomever the soil belongs, he owns also to the sky and to the depths).28
In Texas, where there is an abundance of natural and mineral resources, a plethora of
laws have been enacted to regulate and affect properties on which these resources are
found. In Texas those rights can be transferred through sale or lease to a second party.
Property can be purchased with rights to both surface land the resources underneath
it. However, ownership of the surface estate does not guarantee rights to the mineral
estate below the surface. It is also possible for landowners to sell the surface estate
while retaining their rights of ownership in the mineral estate which is why due
diligence is necessary for anyone who desires to have an interest in the land to be
certain that the mineral rights being sold with the property are actually owned by the
person selling the surface estate.
• Australia
Australia is the world’s largest producer of opal and the world’s largest exporter of
coal. The country is also one of the top producers of iron ore, nickel, gold, uranium,
diamonds, and zinc which makes it necessary to know about ownership of these
abundant resources.
In Australia, the Federal, state and territory governments own Australia’s mineral and
petroleum resources on behalf of the community. Taxes and royalties are paid to
ensure that the community receives an adequate return on the use of Australia’s non-
renewable resources. However, the ownership of sub-surface non-renewable minerals
has either been reserved or vested in the state pursuant to specific statutory vesting
provisions or reservations on title provisions enacted under mineral and petroleum
state legislation.29
• Canada
In Canada, property owners generally hold the surface rights, while mineral rights are
usually owned by the provincial government. The government may award a time-
limited (3-10 year) lease for the mineral rights to a company that wants to develop

28
John S. Lowe et al, cases and materials on oil and gas contracts law (6 th edition, 2015)
29
Petroleum and Gas (production and safety) Act 2004 (old), s.26 Petroleum (onshore) Act 1991 (NSW), section 6
Petroleum and Geothermal energy resources Act 1967 (WA), s. 10 Mineral Resources (substantial Development) Act
1990 (vic).
natural gas or oil. While the government grants mineral rights to a company to explore
for and produce oil and natural gas, mineral rights do not include access to the surface
land – surface access is granted by the landowner. Once a company has secured
mineral rights, they will negotiate a surface lease with the landowner.
In the petroleum-rich Alberta province of Canada, where the resources are
concentrated, the Surface Rights Act of 1977 vests with the state the right to “explore
for and produce oil, gas and other minerals” while individual landowners’ control only
the “land surface and the right to work on it”.30

3.3 CONTROL OF MINERAL AND NATURAL RESOURCES IN NIGERIA

The argument on this issue has been endless for many reasons salient among them is
the hurting reality that the economy of the Nigerian state is completely dependent on
these resources without which a complete failure of the nation’s economy will not be
a mirage.
The Constitution of the Federal Republic of Nigeria (1999) as amended vests the
ownership and control of all mineral and natural resources on the Federal Government.
Section 44(3) provides thus:
Notwithstanding the foregoing provisions of this section, the entire property in and
control of all minerals, mineral oils and natural gas in under or upon any land in
Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone
of Nigeria shall vest in the Government of the Federation and shall be managed in
such manner as may be prescribed by the National Assembly.
This extant law clearly settles the issue of ownership and control of mineral and
natural resources from a statutory standpoint. The Constitution also provides that
Mines and minerals, including oil fields, oil mining, geological surveys and natural
gas are in the exclusive reserve of the Federal Government of Nigeria.31
Also, S. 1(1) of the Mineral and Mining Act provides;

30
Alberto department of energy 2004 “Resources and Land access – Frequently asked questions” http//www.energy
gov.ab ca/1533.asp
31
Schedule II legislative powers part 1, exclusive legislative list, item 39 CFRN 1999 as amended
The entire property in and control of all mineral resources in, under or upon any
Land in Nigeria, its contiguous continental shelf and all rivers, streams and
watercourses
Throughout Nigeria, any area covered by its territorial waters or constituency and
the Exclusive
Economic Zone is and shall be vested in the Government of the Federation for
And on behalf of the people of Nigeria.
The above provision in some ways , limits the power vested in the governor of a state
as a trustee of the land in the state to hold in trust for the benefit of the people.32 Thus,
though such power is vested on the governor, he cannot lay claim to lands which
belong to the Federal Government and its agencies nor can he lay claim to land which
has mineral resources.33 In view of the possible or should I say inevitable dispute that
may arise on this subject, the Constitution has vested the Federal High Court the
power to adjudicate on issues bordering on mines and minerals (including oil fields,
oil mining, geological surveys and natural gas) as provided in Section 251(1)(n)
CFRN 1999 (as amended). Thus, the High Court lacks jurisdiction to adjudicate on
matters pertaining to resources that fall within the provisions of this section as so held
in S.P.D.C Nig. LTD v Abel Isaiah.34 Though the provisions of the Constitution as
well as other legislations make it clear the control of mineral and natural resources is
exclusive the business of the Federal Government, there has not be a little argument
on this subject which would be examined later. In AG Federal v AG of Abia,
35
according to the Supreme Court, the ownership, control and management rights over
the natural resources located in the offshore areas of Nigeria is the exclusive preserve
of the Federal Government of Nigeria to the exclusion of the federating units and the
mere fact that oil rigs bear the names of indigenous communities on the coastline
adjacent to such off-shore area does not prove ownership of such off-shore areas.

32
Section 1 and 2 Land Use Act 1978
33
S. 49 Land Use Act 1978
34
2001 LLJR-SC
35
(2002)6 NWLR (pt.764) 542
3.4 DERIVATIVE PRINCIPLE
The principle of derivation as one of the constitutionally prescribed criteria for
distributing federally collected revenue between the federal and state governments
prescribes that a pre-determined percentage of federally collected revenue derived
from a state of the federation shall be returned to the state as a form of compensation
for its contribution to federal finance. 36 The derivation principle seeks to strike a
balance between the contributions made by the respective states of the federation to
federally collected revenue and their share of revenue from the total federal receipts.
The Constitution of the Federal Republic of Nigeria, section 162(2) provides: The
President, upon the receipt of advice from the Revenue Mobilization Allocation and
Fiscal Commission, shall table before the National Assembly proposals for revenue
allocation from the Federation Account, and in determining the formula, the National
Assembly shall take into account, the allocation principles especially those of
population, equality of States, internal revenue generation, land mass, terrain as well
as population density; Provided that the principle of derivation shall be constantly
reflected in any approved formula as being not less than thirteen per cent of the
revenue accruing to the Federation Account directly from any natural resources. It is
therefore a constitutional right for oil producing States to benefit from oil extracted
from their regions.
In the landmark case of Attorney General of the Federal v Attorney General of Abia
State &35 ors, 37 the court defined the Derivation Principle as "the constitutional
provision that gives the states and local governments a right to share in the revenue
derived from mineral resources found in their territory." It has also been stated that;
“Derivation is a factor of fiscal federalism which ensures that each unit of government
contributes to the national coffers and receives equitably in return through revenue
allocation. Each unit is, therefore, encouraged to work hard in baking a larger
national cake from which it receives in proportion to its contribution. Derivation is,
therefore, basically a reward for noble efforts of revenue generation. However, that
is not all; derivation can also be seen as compensation for the loss in revenue or other

36
Zacchaeus Adangor, the principle of derivation and search for distributive justice in the Niger delta region of
Nigeria: The journey so far (pg. 125)
37
supra
economic activities through the utilization of the land of any unit of governments [or
communities] for national resource generation. Still derivation can be utilized for
upgrading and reclaiming land degraded in the process of mineral exploitation and
exploration. Derivation can also be put in place as payment usually in rent for the
use of land and/or payment for exploring mineral from the land…”38
It has been argued by the learned professor, Zacchaeus Adangor , that although the
application of the derivation principle dates back to the recommendation of the Sydney
Phillipson Commission of 1946, its use as a specific fiscal tool for redistributing
revenue derived from natural resources to the mineral-producing regions can be traced
to the recommendations made by Sir Louis Chick who was appointed Fiscal
Commissioner by the London Constitutional Conference to advise the government on
the financial implications of the proposed new constitutional arrangements for
Nigeria. Sir Louis Chick recommended that the whole of the net proceeds of mining
royalties derived from minerals (extracted from the Northern region) should be
allocated to the region from which the taxed minerals were extracted in accordance
with the principle of derivation, that is allocating revenue to a region in proportion to
the region’s contribution to central revenue.
During the Lagos Constitutional Conference, it was agreed that the derivation
principle which then applied only to solid minerals exploited in Northern Nigeria,
should be extended to royalties and rents derived from petroleum resources.39
He further asserts that the above decision makes it clear that the principle of
derivation as originally conceived, was not intended for the benefit of the oil-
producing states or communities of the Niger delta, but rather the Northern region of
Nigeria which was the mineral producing region. Thus, Northern Nigeria had enjoyed
enhanced revenue allocation from the Centre based on the principle of derivation long
before oil and gas exploitation commenced in the Niger delta. However, it all of a
sudden began to retrogress when oil became the main source of revenue for the nation.
A former governor of Rivers State, Milford Okilo, once asserted thus “Derivation
as a revenue allocation criterion is not new in this country. It featured prominently

38
Federal Republic of Nigeria (n77) 123, paras 2781-2782, Adedotun Philips, Nigeria’s federal principle experience
(1971)9 journal of modern African Studies 389, 390
39
Secretary of State for the colonies, Report by the resumed conference on the Nigerian constitution held in Lagos in
January and February 1954 (cmd. 9059. London 1954) para. 12 (ix)
when cocoa, groundnuts, etc., were the main sources of revenue for Nigeria. But it
has continued to be deliberately suppressed since crude oil became the mainstay of
the country’s wealth . . . simply because the main contributors of the oil wealth are
the minorities.”40
The principle of derivation as currently incorporated in the proviso to S.162(2) of the
Constitution of the Federal Republic of Nigeria, 1999 (as amended) prescribes that
in the application of any approved revenue sharing formula for distributing the fund
standing to the credit of the Federation Account among the federal and state
governments and the local governments in each state, not less than thirteen per cent
of the revenue accruing to the Federation Account from any natural resources shall be
distributed to the states from which such natural resources were extracted. By
operation of this principle, oil-producing states under the current federal system
receive thirteen per cent (13%) from the Federation Account in respect of revenue
derived by the federation from oil and gas produced within their respective land and
off-shore boundaries. This was noted by the court in AG Adamawa State v. AG
Federation41

3.5 SCHOOLS OF THOUGHT/ARGUMENTS ON THE CONTROL OF

MINERAL RESOURCES IN NIGERIA
There has been divergent opinions, ideologies and assertions on the issue of control
of mineral resources in Nigeria. The concept of absolute ownership, though criticized
by many is not without proponents, one of whom is Professor Michael Ajomo. 42
Professor Ajomo supported his position by arguing that ownership and control of
petroleum is an important political symbol in most developing countries, and as such
should not be left in the hands of private individuals or community. He observed that
private ownership of oil will create enormous wealth for a few private individuals,
who might not apply such fortunes towards productive ends in consonance with
national priorities, but rather that such wealth may only intensify the class division in
the country. He averred that vesting of ownership and control of minerals and mineral

40
M. Okilo, The derivative principle and National Unity Daily times (Lagos, 19 July 1980)3.
41
(2005) 18 NWLR (pt. 958) 581. 673-4

42
Ajomo. M.A: “the 1969 petroleum Decree; A consolidation Legislation Resolution in Nigeria’s oil industry”, in
Nigeria Annual Journal of law 57 (1979)
resources in the Nigerian state is historical and dates back to the colonial era. This has
had a great impact on the country’s legal system and conception of property rights. As
a British colony, most laws in Nigeria were fashioned after those of Britain. Nigeria,
therefore, inherited a colonial legacy in which ownership of mineral resources was
vested in the crown of England. This was due to the fact that the country, as a corporate
entity, was regarded as the property of Great Britain. Thus, the then suzerain authority
and, naturally, the minerals in Nigeria whether oil and gas or solid minerals also
belonged to Britain.43
The professor further posits that state ownership would help to foster national unity,
will enable the Federal Government to successfully pursue, in collaboration with oil
companies, a policy that will not adversely affect Nigeria’s foreign exchange position,
and that it will enable the Federal Government to compel the oil companies to share
necessary technical knowledge with Nigerians.
On the other hand, Professor Isejuwa Sagay, in rebutting Prof. Ajomo’s assertions ,
asked whether central ownership and control have prevented the emergence of a class
of enormously wealthy individuals, and whether the proceed of oil has been prudently
and patriotically put to the use for the country. Professor Sagay posited that, instead
of promoting unity, the federal government’s exclusive ownership and control of our
oil resources has caused deep bitterness, resentment, and a sense of majority
oppression of the minority producers of oil.
On the issue of the Nigerian state following after its colonizers, Prof. Sagay said,
“The imperial masters claimed all the minerals in Nigeria for themselves, as was to be
expected; Colonial rulers operated in their own interest, not in the interest of the
colonized people.44
Other prominent authors have also lent credence against state ownership one of whom
is Professor Duruigbo.45 In his words,

43
Ajomo. M.A, “The Legal framework of the petroleum Industry 4” (Lagos Oct 17-18, 2001) paper presented at the
Centre for petroleum Environment and development studies workshop University of Lagos on essentials of oil and
gas law).
44
Sagay I. Ownership and control of Nigerian Petroleum Resources: A legal Angle, Nigerian Petroleum Business, A
handbook (Victor Eremosele ed), 1997 p.178
45
Duruigbo E. “The Global Energy Challenges and Nigeria’s Emergence as a major Gas Power; promise, peril or
paradox of plenty”, 21 Geo intl envtl. Rev 395 442 (2009)
In private ownership, oil and gas are essentially treated as any other commodity found
on land. The landowner decides what to do with the resource and reaps any attendant
benefits, subject to compliance with applicable public regulations on such issues as
environmental protection and taxation.
He was however quick to identify and emphasize a significant downside of private
ownership, which more or less does not take into account the externalities of resource
development, such as environmental degradation and its attendant implication on the
society as a whole. He posited that, “if a government can internalize the externalities
through adequate environmental regulation and taxation of profits, society could
benefit from the resources found on, and developed from, private land.
Apart from the two extreme positions examined above, there are also those who
believe, and so argue for a middle position which they called state and individual
ownership arrangement.
One of such is I. Omuli.46 According to him;
The doctrine of national ownership is not the single answer to proper utilization and
control of resources, as countries like the United States of America, who recognize
both the national and individual ownership of resources, are still able to achieve this
unified goal, without conflict of both forms of ownership. Since the national
ownership deprives individuals of their lands upon which these mineral resources are
found, there will be adverse effects and reactions from these individuals. This position
brings to mind what obtains in Texas State, in United States of America where both
forms of ownership and control co-exist.

46
Omuli. I. “What effect does ownership of resources by the government have on its people. A case Study of
Nigeria?”
4.0. LEGAL, REGULATORY/INSTITUTIONAL FRAMEWORK; provisions
and significance;
4.1. Legal framework; these are the laws that governs the production, control and
distribution of mineral natural resources. Laws have been made right from the colonial
period to regulate and give lawful backing to the activities of the colonialist. Till date,
laws have still been enacted. This is to ensure orderly administration of these resources
and certainty of persons or offices handling them.
➢ Mineral Ordinance 1907: This ordinance was enacted in line with the general
British government oil policy that oil exploration concession in the British
empire should preferably only be granted by the companies registered in Britain
and its Colonies.47 It made the search for oil in Nigeria a British monopoly by
providing that only British subjects or companies controlled by British subjects
would be eligible to explore these resources in Nigeria. Section 15 states that
all members of the directorate of these companies must be British subjects.48
Section 5 – granted the governor the rights to agree with the traditional rulers
in the sale of both the surface and subsurface mineral without the payment of
rent on oil. This ordinance also empowered the governor to grant licenses to
perspective oil multinational companies registered in Britain and the British
citizens.49
➢ Mineral oil ordinance 1914: This replace the 1904 ordinance, making
administration over mining and oil rights wholly British concern. This was
described as the First Principal Legislation on oil that was enacted to regulate
the right to search for, win and work on mineral oil. 50 Section 3(1) of this
ordinance vest ownership in the British Crown & empowers the minister under
this ordinance to have Exclusive right to issue license or lease. Section 6(1)
further states that no lease/ license shall be granted except to a British subject
or British company registered in Great Britain or in British colony and having
its principal place of business within her majesty’s dominion, the chairman and
managing director of any and majority of the directors of which are British
subjects. 51 This ordinance was enacted to regulate the exploration and
47
M.C Ogwezzy, “Laws on oil and gas exploration and production in Nigeria’ pg. 35
48
Ikpeze and Ikpeze (n. 93)3
49
M.C Ogwezzy; “ Laws on oil and gas exploration and production in Nigeria”. Pg. 36
50
Ibid. pg 37
51
National Archives Ibadan (NAI), war prof , 29/1914
 production of crude oil and like its predecessor, it did not define in whom
ownership of oil resources is vested in. It confers exclusive powers on the
colonial administration to grant oil prospecting rights in Nigeria.
➢ Constitution 1999 as amended: section 44(3) states that the constitution
places the control of all minerals, mineral oil and natural gas in, under or upon
any land in Nigeria or under or upon the territorial waters and the exclusive
economic zone of Nigeria under the authority of the Federal government,
having exclusive powers and jurisdiction over all mineral resources in Nigeria.
Item 39, schedule ll.
➢ Petroleum industry Act 2021: section 1 of this act provides thus; ‘the property
and ownership of petroleum within Nigeria and its territorial waters,
continental shelf and exclusive economy zone is vested in the government of the
federation of Nigeria. From this section, it is crystal clear that the federal
government is in absolute control of natural resources in Nigeria- Braid v
Adoki52
➢ Nigeria Mineral and Mining Act 2007: repealed the Mineral and Mining
Act 1999. The Act vest control of all properties and Mineral in the state and
prohibits unauthorized exploration or exploitation.53 It further provides that the
use of land for mining operations shall have a priority over other uses of land
and be considered as constituting an overriding public interest within the Land
Use Act provides a Framework for the exploration and exploitation of minerals
in Nigeria- section 2.
➢ Land Use Act 1978: The first point of nexus between land law and Mineral
law (gas law) is via the petroleum Act,54 which provides in section 1, “that
entire ownership and control of all petroleum in under or upon any land to
which this section applies shall be vested in the state in which all the land is
administered by the governor.” Specially section (1)2 provides that “all lands
in which minerals have been found in commercial quantities shall from the
commencement of the Act bee acquired by government of the federation by the
provision of the Land Use Act.”

52
(1930)10 NWLR (pt.15)
53
2019 solid Mineral Audit (SMA) industry report. Pg.22
54
M.C Ogwezzy: “ laws on oil and gas exploration and production in Nigeria. Pg.27
The Land Use Act also provides that the use of land for mining operations shall have
priority over other uses of land and be considered as an overriding public interest
within the meaning of the Land Use Act.55 Section 51 Land Use Act. So, the essence
of the Act gives authority over all land in the territory of each state to the governor of
the State, except lands vested to the federal government or it’s agencies.
➢ Environment Impact Assessment Act 1992: mandates that an Impact
assessment be done in respect of any proposed project or activity (including
mining to evaluate likely environmental effects before the commencement of
the activity to propose appropriate remedial action.56

55
Ibid pg.28
56
2019 solid Mineral Audit (SMA) industry report. Pg.22-23
4.2 Regulatory/Institutional framework
These are organizational structures designed to promote and organize the orderly
conduct of mineral and mining operations in the solid mineral sector in Nigeria. The
structure below shows the organizational/institutional agencies responsible for the
control, and handling of mineral natural resources in Nigeria.

STRUCTURE OF GOVERNMENT AGENCIES- 2019 SM REPORT, JUNE 7

Among others; The Ministry of Mines and Steel Development has overall
responsibility for the sector and oversees departments with specific responsibilities. It
also supervises agencies such as mining cadaster office, national raw materials
exploration agency ( NSRMEA), Nigerian Geology Survey (NGSA), Solid Mineral
Development Fund and the National Metallurgical development center (NMDC). It
was set up to unlock the economic potential of the solid minerals sub sector in Nigeria.
The Mining Cadastral office is an autonomous agency under supervisory
responsibility of the Federal ministry of Solid Minerals and steel development
(MMSD) as provided by section 5(1) of the Nigerian Minerals and Mining
Act,2007. It is responsible for the management and administration of mineral titles
which is considered a cornerstone to a secure mineral right system.
The National Raw Materials Exploration Agency is a geo-scientific information
Centre for investors and researchers in the solid minerals sectors with a mandate
amongst others to carry out exploration of steel raw materials in all parts of Nigeria
and elsewhere for iron and steel industry.
The Mines Inspectorate Department has the overall responsibility for operations in
exploration, evaluation, mine development and production.57
The Mines Environmental and compliance Department has the responsibility to ensure
that companies adopt and maintain procedures that are environmentally friendly in
their operations.
The Artisanal and Small-scale Mining Department organize and assist small scale
mining operations and improve those small-scale mining communities. Also NNPC,
Nigerian midstream and downstream regulatory authority, Nigeria upstream
regulatory commission etc.

5.1 IMPLICATIONS OF GOVERNMENTAL CONTROL AND

DISTRIBUTION OF MINERAL NATURAL RESOURCES IN NIGERIA
Governmental control and distribution of mineral and natural resources in Nigeria
can have significant implications. It can impact the economy, social dynamics, and
environmental sustainability. When the government controls these resources, it can
lead to better regulation, revenue generation, and infrastructure development.
However, mismanagement, corruption, and lack of transparency can hinder equitable
distribution and economic growth. Careful management is crucial to ensure benefits
reach all citizens and the environment is protected.

The implications of governmental control and distribution of mineral and natural

resources in Nigeria are multifaceted and far-reaching, and would be discussed
under the following headings:

57
Nigerian Mining Sector brief 3rd edition, February 2017 KPMG in Nigeria. pg 12
1. Economic Impact: Government control allows for regulation, taxation, and
revenue generation from the extraction and sale of resources. Proper management
can contribute to economic growth, infrastructure development, and diversification
of revenue sources. However, mismanagement, corruption, and lack of transparency
can lead to resource depletion, economic inequality, and reduced foreign investment.

2. Social Dynamics:
Resource control can influence social dynamics by shaping regional and ethnic
relationships. If resource distribution is perceived as unfair, it can exacerbate
existing tensions and conflicts. Conversely, equitable distribution can foster social
cohesion and stability among different groups.

3. Environmental Sustainability:
Government control enables the implementation of environmental regulations and
standards for resource extraction. Effective management can mitigate ecological
damage and ensure sustainable use. Inadequate oversight, however, can result in
environmental degradation, loss of biodiversity, and negative impacts on local
communities.

4. Infrastructure Development: Revenue from resource extraction can be used to

invest in critical infrastructure projects such as roads, schools, and healthcare
facilities. However, without proper planning and transparent allocation, funds may
be diverted or misused, limiting the intended benefits.

5. Foreign Relations and Investment:

Government control over resources influences international relations and foreign
investment. Transparent management can attract reputable companies and foreign
investment, while opacity and corruption may discourage potential partners.

6. Local Communities:
Effective resource distribution can directly benefit local communities through job
creation, improved infrastructure, and social services. Inadequate distribution can
lead to resentment, unrest, and an increased likelihood of illegal mining and
activities.
7. National Revenue:
Control over resources offers the government a source of revenue that can be used
for public services, development projects, and poverty reduction programs.
However, overreliance on resource revenues can make the economy vulnerable to
commodity price fluctuations.

8. Legal Framework and Governance:

Proper legal frameworks and governance structures are necessary for fair and
transparent resource control. Weak institutions can lead to disputes, conflicts, and
challenges in enforcing regulations.

9. Transparency and Accountability:

Governmental control requires transparency in revenue collection, allocation, and
utilization. Lack of transparency can lead to corruption, embezzlement, and a loss of
public trust.

10. Long-Term Planning:

Effective control necessitates long-term planning for resource depletion and
economic diversification. Failure to plan can result in a "resource curse," where the
economy becomes overly dependent on a single resource, leading to instability when
prices fall.

5.2 CHALLENGES/CONFLICT IN THE INDUSTRY/SECTOR

Resource control challenges in industries and sectors often stem from competition
for limited resources, regulatory complexities, and environmental concerns.
Industries like mining and energy face issues of over-extraction, leading to resource
depletion and environmental damage. Agriculture grapples with water scarcity and
soil degradation. Geopolitical tensions can arise due to the control of strategic
resources. Balancing economic development, environmental sustainability, and
social needs requires careful planning and collaboration among stakeholders.

This various challenges in industries and sectors can be discussed under the
following headings:
1. Energy Sector:
Fossil Fuel Dependency: The reliance on non-renewable resources like oil, coal,
and natural gas can lead to geopolitical conflicts and price volatility.
Transition to Renewables: Shifting towards renewable energy sources poses
challenges in terms of infrastructure development, intermittency, and technological
adoption.

2. Mining Industry:
Resource Depletion: Overexploitation of minerals and metals can lead to scarcity,
driving up costs and potentially causing conflicts over remaining reserves.
Environmental Impact: Mining activities can lead to habitat destruction, water
pollution, and air pollution, triggering opposition from local communities and
environmental groups.

3. Agricultural Sector:
Water Scarcity: Increasing competition for limited water resources among
agriculture, industry, and urban areas can lead to conflicts and hinder food
production.
Land Degradation: Unsustainable agricultural practices can lead to soil erosion,
loss of fertility, and reduced agricultural productivity.

4. Water Management:
Water Allocation: Disputes can arise over the distribution of water resources
among various users, including agriculture, industry, municipalities, and ecosystems.
Pollution and Quality: Contamination of water bodies by industrial discharge,
agriculture runoff, and improper waste disposal poses health and environmental
risks.

5. Forestry Industry:
Deforestation: Unsustainable logging practices and expansion of agriculture can
lead to deforestation, threatening biodiversity, and contributing to climate change.
Indigenous Rights: Conflicts can arise when forest-dwelling communities are
displaced or deprived of their traditional rights due to logging or conservation
efforts.
6. Fisheries and Marine Resources:
- Overfishing: Excessive fishing can deplete fish stocks, disrupt marine
ecosystems, and affect the livelihoods of communities dependent on fishing.
- Exclusive Economic Zones (EEZs): Disputes over maritime boundaries and
access to fishing grounds can lead to geopolitical tensions among coastal nations.

7. Geopolitical and Strategic Resources:

- Rare Earth Elements: Control over these minerals, essential for electronics and
green technologies, can lead to geopolitical rivalries and supply chain
vulnerabilities.
Oil and Gas Reserves: The competition for control over oil and gas reserves can
result in conflicts, as seen in some regions with significant reserves.

8. Indigenous and Local Community Rights:

Land and Resource Ownership: Indigenous communities often face challenges to
their rights and traditional territories due to resource extraction and development
projects.
- Cultural Preservation: The loss of land and resources can impact indigenous
cultures, languages, and traditional ways of life.

Addressing these challenges requires a combination of responsible resource

management, sustainable development practices, collaboration among stakeholders,
effective regulations, and international cooperation

5.3 GOVERNMENT RESPONSES

It is a sad reality that the Nigerian government has not done enough or if it has, has
not implemented enough strategies to combat the challenges lurking the mineral and
natural resources industries in Nigeria. However, multi-dimensional issues that have
confronted the Nigerian state particularly in the Niger Delta have not gone without
steps by the government to remedy such challenges. Government has taken steps
such as the enactment of laws, establishment of institutions, organization of
conferences among others. Some of the responses are;
 • ESTABLISHMENT OF NDDC: The NDDC was established by the Nigerian
government in 2000 as a special interventionist agency for the Niger Delta
region. The goal of the NDDC is to promote sustainable development of the
region, with a focus on improving the living conditions of the people. Over
the years of its establishment, the Nigerian government has funded then
commission with the view that its objectives of offering a lasting solution to
the socio-economic difficulties of the Niger Delta Region and to facilitate the
rapid and sustainable development of the Niger Delta into a region that is
economically prosperous, socially stable, ecologically regenerative and
politically peaceful are actualized.

• ESTABLISHMENT OF THE PETROLEUM HOST COMMUNITIES FUND

i. For petroleum resources, the Petroleum Industry Act 2021 introduces the
Petroleum Host Community Development (PHCD) under Section 234 of the
Act. The Host Community Development Trust was introduced by the Act to
aid in the development of the economic and social infrastructure of
communities in the petroleum-producing area. It was established as a way to
ensure that communities impacted by oil and gas production receive a fair
share of the revenue generated by the industry. The funds are then distributed
to the states and local governments in the host communities through a
transparent and accountable process. Some of the objectives of this fund are;
To finance and execute projects for the benefit and sustainable development
of the host communities;
ii. Undertake infrastructural development of the host communities within the
scope of funds available to the Board of Trustees for such purposes;
iii. Facilitate economic empowerment opportunities in the host communities;
iv. Advance and propagate educational development for the benefit of members
of the host communities;
v. Support healthcare development for the host communities;
vi. Support local initiatives within the host communities, which seek to enhance
the protection of the environment;
vii. Support local initiatives within the host communities which seek to enhance
security;
viii. Invest part of the available fund for and on behalf of the host communities;
and
ix. Assist in any other developmental purpose deemed beneficial to the host
communities as may be determined by the Board of Trustees.

• ESTABLISHMENT OF NESREA; The National Environmental Standards

and Regulations Enforcement Agency (NESREA) is another important
institution established by the government to enforce environmental laws and
regulations in Nigeria. The agency is responsible for ensuring that companies
in the oil and gas industry comply with environmental regulations and protect
the environment. The agency has the authority to conduct inspections, issue
fines and sanctions, and take other actions to ensure compliance. This way,
the harmful effects of the activities of the industries are minimized and
environment is protected.

5.4 RECOMMENDATIONS
The following recommendations are offered with the hope that if acknowledged and
implemented, greater achievement would be recorded.
• Intentional fight against corruption:
Apart from the fact that what the littoral states are getting by way of derivation is
quite infinitesimal compared to the discomfort they suffer; one sad thing is that even
what is paid to the states does not positively impact the lives of the people because
of corruption. Political leaders keep sharing the money between themselves until
there would be nothing left for the common masses or for development in the host
communities. There should be more commitment on the part of the government and
the industries to the fight against corruption across board. There should be fairness
in the laws and policies. Thus, gold in Zamfara state should belong to the Federal
Government as much as oil in Niger Delta belongs to the government.
• Adoption of the principle of Inclusiveness in the management of
petroleum and other resources:
The Nigerian government should put in place a multi stakeholder approach to oil
exploration and exploitation involving the trio of government (both federal and
states), oil companies and host communities. The multi stakeholder mechanism
should address issues of
pollution as it relates to biodiversity conservation and regeneration. This way the
host communities will help in the monitoring of oil companies in their communities.
This will in turn help reduce the incidence of pollution to the barest minimum. Once
the people of the oil rich region are fully and properly involved in the administration
of oil and its revenue, the agitation will stop.
• Increase investment in infrastructure:
The poor state of infrastructure in Nigeria has also played a significant role in the
impediment faced in the mineral industry. Government should increase investment
in infrastructure, such as roads, power supply, and ports. This would make it easier
to get resources out of the ground and to market, and it would also make it easier to
attract investment.
• Enforcement of extant laws on the protection of the environment:
The government and all its agencies concerned with the enforcement of the extant
laws for the protection of the environment and its inhabitants from pollution should
develop more willingness to enforce these laws as the current unwillingness to
enforce these laws has brought untold hardship on the people of the Niger Delta
region of Nigeria.
• Creation incentives
The government should create incentives for exploration and development, such as
tax breaks or other financial incentives. Grant should also be provided for
individuals as well as institutions that intend or are involved in mining, refining or
transportation of resources provided such institution operates within the ambit of the
law.
• Adoption of the theory operable in the United States of America.
We strongly recommend that Nigeria will adopt the private theory operable in the
United States where there is both private and public ownership of mineral resources.
This could be organized such that the host communities will have authority over
some resources while the government controls so. This way, the multi nefarious
activities that is experienced every, such as violence, militancy, kidnapping and
terrorism etc. will be addressed completely or at least minimized to the barest
minimum.
6.0 THE AGRARIAN REFORM
This is the ratification, reparation and rehabilitation of agricultural system through the
change or enactment of laws and regulations or customs relating to land ownership. It
is broader term of land reform. The objective of this reform is to adjust land tenure
agreements and improve a maximize land utilization, facilitate the application of
efficient farming method to increase agricultural production. The Agrarian reform
relates to the control and distribution of Mineral resources. Having established earlier
that minerals are either found on or under land, and since this is so, who then can exert
control over these resources, because it has already been provided for in section 1
land use act 1978 that all land in a state belongs to the governor. However, this has
been cleared by section 44 CFRN 1999 as amended and section 1 petroleum
Industry Act that these resources shall be managed by the federal government in a
manner prescribed by the National assembly. The issue of compensation when such
land has been revoked as a result of the minerals therein was not covered by this
reform. However, it will suffice to say that such situation comes under public purpose
as seen in section 51(f)(h) Land Use Act. Therefore, where ownership of land has
been revoked as a result of the minerals therein, it will be deemed for public purpose,
thus compensation will be paid according to section 29(2) Land Use Act. Also,
another issue is that the land use act did not clearly define the quantum of
compensation to be paid but just referred us to any subsisting legislation on minerals.
Section 107 and 108 Mineral and Mining Act 2007 provides that reasonable
compensation shall be paid for any disturbance of the right of the owner or occupier
and any damage done to the land, crops, economic trees and building destroyed by the
holder of the mining title or by any of its agent. The amount of compensation payable
is determined by the Mining Cadastre office after consultation with the State Mineral
resource and Environmental Management Committee and a Government license
valuer.
7.0 CONCLUSION
The importance of mineral and natural resources in the Nigerian cannot be
overemphasized as it accounts for almost 100 percent of the national economy.
Consequently, there is a need for proper and effective management as the
sustainability of the nature is contingent upon.
For a country like Nigeria, it is no longer news to us that we are well endowed with
an abundance of these resources but the economy never reflects this reality due to
many factors so of which have been corruption and incompetence among. Sadly,
many Nigerian are not aware of the economic potentials of the nation which has
orchestrated occasioned another degree of nonchalance among Nigerians. Having
critically examined the different theories of ownership wherein we uncovered the
that most countries operate the state ownership theory with due recognition to the
United States of America.