Oil production

Oil exploration in Nigeria was pioneered by Shell-BP Petroleum Development Company in 1937. In a bid to control the oil in the eastern region, the Federal government placed a shipping embargo on the territory. This embargo did not involve oil tankers. The leadership of Biafra went ahead to write to Shell-BP demanding royalties for the oil that was being explored in their region. After much deliberation Shell-BP decided to pay Biafra the sum of 250,000 pounds. The news of this payment reached the Federal government who immediately extended the shipping embargo to oil tankers The Nigerian government also made it clear to Shell-BP that it expected the company to pay all outstanding oil royalty immediately. With the stalling on the payment for Biafra government ask Shell-Bp to stop operations in Biafra and took over from the company.[28]

Towards the end of July 1967, Nigerian federal troops and marines captured Bonny Island in the Niger Delta, thereby taking control of vital Shell-BP facilities.[84] Operations began again in May 1968, when Nigeria captured Port Harcourt. Its facilities had been damaged and needed repair.[85] Oil production and export continued, but at a lower level. The completion in 1969 of a new terminal at Forçados brought production up from 142,000 barrels/day in 1958 to 540,000 barrels/day in 1969. In 1970, this figure doubled to 1,080,000 barrels/day. The royalties enabled Nigeria to buy more weapons, hire mercenaries, etc. Biafra proved unable to compete on this economic level.