This paper presents a critical analysis of the place of Nigeria in global oil production, the history of oil exploration in Nigeria, its correlation with federal government’s revenue and how oil is fuelling crisis in the Niger Delta. A brief profile of the role of Niger Delta in the oil and gas business and the benefits of oil to the inhabitants of the area was also presented with the aim of analysing the local impacts of the petro-economy, the extent of implementation of local content, community participation in management of oil related revenues and the issue of transparency and accountability in this very important sector. Attempts were also made to identify significant areas in the oil and gas business requiring urgent attention. The paper concludes by looking at future prospects of the oil economy for the local communities and recommended crucial ways of ensuring sustainable oil production in Nigeria and attaining sustainable development in the Niger Delta. Keywords: Environment, Local content, Global oil production, Federal government revenue, Managing local impacts of oil and gas production, Oil Transparency and Accountability
