Oil discovery in Northern parts of Nigeria will boost local content

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The recent announcement by the Nigerian National Petroleum Corporation (NNPC) on the prospect for crude oil exploration in Plateau State has added to the growing number of oil exploration sites in the North.

Borno, Bauchi, Gombe and Niger states have all been discovered to have prospects for oil and gas.

Amidst the excitement elicited by the current discovery, experts and host community leaders advance ways of its successful management for positive impact.

The NNPC has said efforts are being intensified at exploring oil and gas in Wase and Kanam Local Government Areas of Plateau State.

It said Wase and Kanam, which are parts of the Upper and Middle Benue Trough, have oil and gas prospects capable of contributing to the economic growth of the country.

During a recent visit by the management of the corporation to Governor Simon Bako Lalong at Government House, Jos, the Group Managing Director of the NNPC, Mele Kyari, through the Group General Manager, Frontiers Exploration Services, Abdullahi Bomai, said the corporation had identified additional oil and gas province known as the Kolmani discovery in addition to those of the Niger-Delta as well as increase the worth of the Benue Trough with a billion barrels of oil reserves among others.

At the sites in Plateau State, Daily Trust on Sunday learned that the NNPC’s seismic crew which began 3D data acquisition in Kanam and Wase identified hydrocarbon in the areas, and has marked the land areas for the project.

About 70 kilometers from Wase to the project site, the NNPC has started building a camp for staff who are expected to advance the work, having commenced survey activities in the area.

Containers which will serve as temporary offices and other purposes have been fixed, even as electricity generators and other valuable equipment have been brought to the area.

The traditional ruler of Yuli, Alhaji Yaro Shu’aibu Yuli, who spoke the project, said the community was happy that the NNPC was able to explore oil in the area. He promised to cooperate with the corporation to ensure its success.

“Everyone in the community is happy; we hope it will be completed in the nearest future. “We thank God that we are going to be among the oil producing communities in the country,” he said.

Also commenting on the project, one of the kingmakers in Kukawa in Kanam, Hassan Salisu Muhammed, said identifying the area for oil and gas exploration is a good development to the entire community.

“It is joyful and we thank God for that. “We are all happy in the community.

“What we have been hearing in some countries and other parts of the country is now in our home. “We hope the government will put hands on deck to ensure the success of the project,” he said.

Daily Trust on Sunday reports that the renewed search for commercial quantity hydrocarbon in the inland basins of northern Nigeria received a boost in 2016 following President Muhammadu Buhari’s directive to the NNPC to resume exploration activities, especially at the Chad Basin and the Kolmani River in the Benue Trough.

In 1993, the federal government awarded blocks in the Gongola Basin to three international oil companies – Shell, Chevron and Total.

The companies acquired data and drilled one well each. One of the wells was the Kolmani River I which recorded about three billion standard cubic feet of gas but was termed non-commercial.

The oil giants, therefore, suspended operations and relinquished the blocks in 2000. Following the president’s directive, the NNPC acquired advanced data and technology to drill deeper for more discoveries.

It acquired 3D seismic data over the Kolmani River area, leading to the identification of six prospects including the Kolmani River II well.

While assuring that it would leave no stone unturned in sustaining the intensity of the ongoing exploration in the inland basins, the NNPC called for patience. “It usually takes time for the oil to be discovered.

In the Niger Delta Basin, it took over 50 years of explorations to discover crude oil.

“Niger Republic drilled over 600 wells and over many years before they discovered crude oil. “Therefore, patience is of the essence here,” the NNPC said.

Experts speak Dr. Pascal Ebhohimen, an Economist/Public policy strategic analyst and former director, Nigerian Deposit Insurance Corporation (NDIC) said the exploration is a welcome development.

“Yes, crude oil accounts for well over 90 percent of the current annual revenue to the government.

“Even if there has been a clarion call for the country to diversify its economy away from the monolithic oil industry to embrace agriculture, solid minerals, etc, crude oil still remains our major current economic activity and there is still a huge market for it in the next forty years,” he said.

He noted that new refineries are being built in the country, thus they would need crude supplies.

He said Dangote Refinery, the largest investment in the sector in Africa, is a key facility to be fed with crude oil.

“These refineries will need crude oil and the more we discover indigenous sources, the better for us as a country.

“At least cheaper products will be available in the country instead of importing from outside to feed the refineries,” he said.

Ebhohimen also noted that new crude oil discoveries also mean new sources of generating employment.

He however cautioned: “Prospecting budget should be carefully monitored and properly focused on significant impact areas to achieve greater returns in such investments.”

How best to maximize oil resources going forward, the former director said: “At the moment, there is too much pressure on the current oil resources. :Over 60 percent is for debt servicing while the remainder is for recurrent expenditure and barely enough for infrastructure development.

“Loans have recently been taken and they have to be serviced.

“It is important therefore that recurrent expenditure by way of cost of governance, staff emoluments and overheads in the running of administration must be cut down.”

He added: “Budgets must be prioritized to focus more on building health infrastructure, education and food availability, while focusing the new loans on diversifying the economic and well integrated road and rail infrastructure to support the new economy.”

“There is need for enhanced labour productivity in both public and private sectors while improving internal efficiencies and eliminating wastages in the overall systems operations.”

He also said the government must strengthen small and medium sized businesses supported by the banking system so there will be less pressure on the government for job creation and dependence on oil proceeds.

Samson Simon Galadima, a Financial Economist based in Abuja, said oil discovery increases the proven oil reserves in Nigeria and it stands Nigeria in good stead.

He said the search would help increase revenue for government but it will surely come with pollution as well as a risk of violence.

“It would most likely be a replay of what has been happening in the Niger Delta unless everyone is carried along.

“The villages and surrounding towns and even the states must see or enjoy this oil,” he warned.

He added that once exploration starts, the money must be used judiciously, stressing that education, health, infrastructure and security of the communities where the oil is being exploited should be provided. “If the needful is not done then that can spell doom.

“If the right framework is not adopted and sustained then the spectre of resource curse would not only remain but loom large on the horizon,” he said.

Mr. Michael Faniran, a top official of the Nigerian Natural Resource Charter (NNRC), said the discovery is good for the country but there are some concerns.

“Mixed feelings because currently, we don’t have all the information, whether it is in commercial quantity or not.

“If it is in commercial quantity then it is good, that means all the money that the country has sunk into that place makes sense otherwise it would have been wasted if it is not in commercial quantity.

“We just ask for sincerity from the NNPC, if what they have seen there is not in commercial quantity they should stop that exploration and stop wasting public resources on exploration activities,” he said.

Faniran added: “I believe there is a threshold for us to know what is commercial or not because at the time you are going to know what you will spend bringing out the quantity that you have, if it doesn’t tally with how much you are going to get then it is not in commercial quantity.”

The National Coordinator, National Coalition on Gas flaring and Oil Spills in the Niger Delta, Rev. Father Edward Obi, said: “Exploration for oil and gas in the northern part of Nigeria has been going on for many years and budget after budget, allocations were made for that exploration to continue.

“It is cheering news at least, other parts of Nigeria will begin to experience what we from the Niger Delta have been experiencing and I expect that it will be a valid contribution to our national profile and to fund the budget to some extent.

“However, let us be careful not to operate dual standards. “Standards that are applied anywhere must also be applied everywhere and I am a strong advocate of local content.”

Obi advised that the people in areas where the resources have been discovered must be brought along the value chain of the exploration and exploitation of the resources because it is supposed to impact on them.

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