Stakeholders allege hidden agenda, NNPC, others disagree
The oil search in Northern part of Nigeria has been a hit point of President Mohammedu Buhari second year in office. Despite throwing weight to diversifying Nigeria economy during his campaign, APC government are presently focused to getting oil within Northern region at all cost. Guardian Nigeria took swift analysis to result so far.
Stakeholders remain divided about the wisdom in the continued search for hydrocarbon resources in the north, especially as $3 billion has already been sunk without making a commercial find.
While those in favour of the search disregard the economic waste, but are encouraged by the success of oil finds in neighbouring countries like Niger, Chad and others, geologists who are mindful of the soil composition of hydrocarbon reserves, think it’s an effort in futility.
The experts noted that nature has blessed each region of Nigeria with peculiar resources, and while the south is enriched with hydrocarbons, the north is blessed with solid minerals, thus, solid minerals and hydrocarbons cannot coexist.
Industry experts, who spoke with The Guardian, said the persistent push by some northern leaders, including President Muhammadu Buhari, points to an underlining reason far beyond the quest, which is far from being of economic benefit to the country.
Already, there have been visits by some northern governors to the Nigerian National Petroleum Corporation (NNPC) on the issue. The President, Governors Ibrahim Gaidam of Yobe; Aminu Waziri Tambuwal of Sokoto; and Abubakar Badaru of Jigawa states were recently in separate closed-door meetings to discuss oil exploration in the region.
The Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), and Head of Transparency International Nigeria, Auwal Musa, described the move as unnecessary and not in the best interest of the country.
Musa said: “We should not bring regional politics to everything that can benefit the entire country. The project has not been seen as a national effort to diversify revenue. If it is seen as something meant for national interest, I don’t think there is the need for the Sokoto State governor or anyone to lobby. There are signals that it is going to favour one particular region.”
Senator Shehu Sani, during a visit of members of the Kaduna State Students Union to his office in Kaduna, noted that “past leaders have amassed wealth through this venture,” and instead called Buhari to investigate the over $3billion already spent on the project.
This also raises the issue over lack of transparency and accountability in the NNPC, as only Prof. Jerry Gana, in 2013, while serving as chairman of the Northern Nigeria Economic Summit, disclosed that N27billion was spent on oil and gas exploration in the Lake Chad Basin at that time with additional $340million budgeted.
About 40 years after the Federal Government started the search for oil in the north, many Nigerians are convinced that its intensification by the President Buhari administration may be more politically motivated, and will end up enriching a few individuals from the region.
Described as a mere geopolitics of oil, some experts insisted that the drive, if not dropped, especially now that the country’s economy is in turbulence, would remain a waste of the nation’s scare resource.
But a new directive from the Buhari-led administration has compelled the NNPC to aggressively pursue oil search in the frontier basins, its Group Managing Director, Maikanti Baru, has said. Regardless of the criticisms, Baru said the corporation would not give up on the mandate given to it by President Buhari to aggressively explore the inland basins, including Anambra, Bida, Benue, Chad, Gongola, and Sokoto.
Baru said based on preliminary results from the exploration in the inland basins so far, especially the Benue Trough, there was a strong indication that commercial quantity oil and gas find would soon be a reality.
This came amid a backlog of over $6billion Joint Venture cash call arrears, lack of support from the International Oil Companies (IOCs), global shift from fossil fuel to renewable energy, loss of interest in encouraging production of already discovered reserves and poor economic outlook.
Rather than continuing with the search, some experts argued that Nigeria should take opportunity of the rise in oil prices at the international market to produce already discovered reserves, and maximise the benefits thereof in view of the global shift to renewables.
Some, like the Managing Director, Xenergy Gas Limited, Emeka Ene, in response to The Guardian’s enquiry, drew attention to global developments, saying: “OPEC’s World Oil Outlook published in 2016 clearly indicated that global oil demand would start declining from 2030. Natural gas will still be relevant; however, it is imperative that policymakers and oil industry players factor in this shift by incorporating alternative energy in long-term economic and investment decisions moving forward.”
After halting exploration in the Chad Basin, where some experts lost their lives to Boko Haram insurgents, the NNPC has started operations in Nasarawa State, as it is ready to return to the Chad Basin, Sokoto, and Benue among other states in the north.
The IOCs, including, Chevron, Total, and Shell, which had oil blocks in the upper Benue trough, also drilled one well each, bringing the number of wells drilled in the region to 26. Out of the three that were drilled by the IOCs, only the block belonging to Shell had some gas reserves, but the discovery is untested.
According to the co-founder, Sustainability School, Lagos, and Associate Lecturer, Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, Dr. Olufemi Olarewaju, while the chances of oil discovery in the inland basins, especially in the north cannot be ruled out, the bigger question is whether the timing is in the best interest of the country.
Wondering whether the current drive is more political than economic, in view of current realities, amid a backlog of debts, including outstanding JV cash calls, Olarewaju who worked in the Chad Basin in the 80s, said: “The project appears to be politically motivated and the questions Nigerians should be asking is on the geopolitics of oil. Should we not focus on achieving higher process efficiency in the value chain of proven reserves?”
Analysts insist that now is the time for government to use the already discovered oil reserves to exit from the current mono-product petroleum economy.
The Managing Director, Frontier Oil limited, Dada Thomas, noted: “The world is accelerating the shift from internal combustion engines as power units for transportation to electric-powered vehicles. This means the demand for hydrocarbons as a fuel source will decrease and supply could exceed demand and oil price especially could remain low for a very long time.
“However, the electricity to power electric vehicles will have to be generated by oil, gas, coal and renewables with oil and coal contribution reducing over time. The world is also adopting gas as a more environmentally friendly fuel source. This is good news for countries with substantial gas resources, including Nigeria.”
Stressing the need to diversify energy sources, Thomas argued that countries like Nigeria “with vast oil reserves need to monetise these reserves as quickly as possible, and use the funds to diversify and position their economies for an oil-independent future.
Similarly, a partner at PwC, Cyril Azeobu, argued that renewed exploration in the north may not be in the best interest of Nigeria. “Exploration is not an easy business; it consumes time and money, and the question is: do we want to do that now when you don’t even know what the outcome will be?”
On why it is taking the country such a long time to make any discovery in the region, Azeobu simply said: “The issue is not about the number of years, but whether it should be a priority.”
Also, Prof. Eguakhide Oaikhinan, of Epina Technology, who specialises in mineral resources, insisted that politics must be expunged from the exploration of solid mineral resources, “and come out with an appropriate roadmap for their development.”
But NNPC, and the new leadership of the Nigerian Association of Petroleum Explorationists (NAPE), are convinced that the data gathered so far from the inland basins showed possible signs of commercial hydrocarbon in the region.
NAPE President, Abiodun Adesanya, called for the diversification of the country’s hydrocarbon resource base, saying previous exploration in the inland basins was not good enough.
He said: “There is justification because we all know from the Chadian and Niger side, there’s been commercial discovery. It is the same sedimentary basin that straddles across these international boundaries, so we will be under-performing if we decide not to go and search on our side of the basin and other basins.
“When you look at the experience of Ghana, you may be forced to say they won’t discover oil, but they did. We have seen a similar situation in Senegal, Kenya, Uganda, and Mozambique. No one can say we won’t discover oil in the north. Let’s allow science to determine that,” Adesanya argued.
A geologist and Publisher, Africa Oil and Gas Magazine, Toyin Akinosho, who hinted that no geologist would naturally say no to any exploration, also backed Adesanya. But since private companies are unwilling to invest in the inland basins, Akinoso urged the government to open them up in order to attract international investors.