CRUDE IN THE NORTH: OIL MAY THREATEN NATION’S ‘FOOD BASKET’

…CAUTIONS OPTIMISM AS EXPERTS SPEAK

THE NIGERIAN NATIONAL PETROLEUM CORPORATION, NNPC, ANNOUNCED, LAST WEEKEND, THAT IT HAS DISCOVERED CRUDE OIL, GAS AND CONDENSATES IN THE KOLMANI RIVER II WELL IN NORTHERN NIGERIA.

THE ROAD TO THE DISCOVERY WAS PAVED WITH BILLIONS OF NAIRA SPENT ON EXPLORATION.

THOUGH THE FEDERAL GOVERNMENT HAS NOT DISCLOSED THE ACTUAL AMOUNT SPENT IN SEARCHING FOR HYDROCARBONS IN NORTHERN NIGERIA, PROFESSOR JERRY GANA, WHO WAS THEN-CHAIRMAN OF THE NORTHERN NIGERIA ECONOMIC SUMMIT, HAD, IN 2013, STATED THAT UP UNTIL THEN, N27 BILLION HAD BEEN SPENT ON OIL AND GAS EXPLORATION IN THE LAKE CHAD BASIN.

THIS WAS FOLLOWED BY BUDGETARY ALLOCATIONS IN MILLIONS OF DOLLARS IN PURSUIT OF OIL SEARCH IN THE NORTH.

THE OPPORTUNITY COST OF THE FEDERAL GOVERNMENT’S DECISION TO SPEND BILLIONS IN SEARCHING OF CRUDE OIL IN THE NORTH INCLUDED THE ABANDONED BRASS AND OLOKOLA LIQUEFIED NATURAL GAS, LNG, PROJECTS, THE REVAMP OF THE COUNTRY’S REFINERIES, THE POSSIBILITY OF COMMERCIAL CRUDE OIL AND GAS FINDS IN THE OIL-RICH SOUTHERN PART OF THE COUNTRY AND THE NUMEROUS INFRASTRUCTURAL AND DEVELOPMENTAL PROJECTS BEGGING TO BE UNDERTAKEN.

SOME OF THESE PROJECTS, ACCORDING TO ANALYSTS, COULD HAVE BEEN UNDERTAKEN WITH A FRACTION OF THE AMOUNT EXPENDED IN SEARCHING FOR CRUDE OIL IN THE NORTH.

IT WAS ALSO ESTIMATED THAT OVER THE EIGHT MONTHS THE NNPC HAD PROSPECTED FOR HYDROCARBON IN THE KOLMANI RIVER BASIN, THE CORPORATION WOULD HAVE SPENT OVER N2.6 BILLION ON DRILLING, GOING BY THE FACT THAT ENERGY EXPERTS TOLD NEWSMEN THAT RIG OWNERS CHARGE AN AVERAGE OF $30,000 PER DAY ON OPERATIONS IN ONSHORE, LAND AND SWAMPY AREAS.

THIS DOES NOT INCLUDE THE BILLIONS EXPENDED ON PRE-EXPLORATION ACTIVITIES, SUCH AS DATA ACQUISITION, HOST COMMUNITY ENGAGEMENT AND MOBILISATION OF PERSONNEL TO SITE, AMONG OTHERS.

                          

LIVES LOST

FURTHERMORE, IN THE CAUSE OF THE SEARCH, NUMEROUS STAFF MEMBERS OF THE NNPC AND ITS CONSULTANTS WERE THROWN ON THE PATH OF DANGER, WITH SOME OF THEM LOSING THEIR LIVES.

SPECIFICALLY, AID AGENCIES AND EXECUTIVE MEMBERS OF THE ACADEMIC STAFF UNION OF UNIVERSITIES, ASUU, OF THE UNIVERSITY OF MAIDUGURI (UNIMAID), IN JULY 2017, REPORTED THAT ABOUT 50 PERSONS WERE KILLED BY MEMBERS OF THE BOKO HARAM TERRORIST GROUP WHO AMBUSHED THE CONVOY OF AN OIL EXPLORATION TEAM OF THE NNPC.

DESPITE THE FACT THAT ENERGY AND ECONOMIC EXPERTS THAT SPOKE WITH SUNDAY VANGUARD STATED THAT THE DISCOVERY WAS A POSITIVE DEVELOPMENT, CERTAIN QUESTIONS HAVE BEEN THROWN UP BY THE OIL FIND.

KEY ELEMENTS

FOR INSTANCE, A FORMER PRESIDENT OF THE NIGERIAN ASSOCIATION FOR ENERGY ECONOMICS, NAEE, PROFESSOR WUMI ILEDARE, CAUTIONED AGAINST POLITICIZING THE DISCOVERY, NOTING THAT A NUMBER OF THINGS SHOULD HAVE BEEN CONSIDERED AND DECLARED BY THE NNPC ALONG WITH THE ANNOUNCEMENT.

ILEDARE, WHO IS CURRENTLY PROFESSOR OF THE GHANA NATIONAL PETROLEUM CORPORATION’S CHAIR OF PETROLEUM ECONOMICS AT THE INSTITUTE OF OIL AND GAS STUDIES, IOGS, IN GHANA’S UNIVERSITY OF CAPE COAST, NOTED THAT SUCH ANNOUNCEMENTS SHOULD HAVE COME WITH THE ESTIMATED SIZE OF DISCOVERY.

HE EXPLAINED THAT THE WAY THE ANNOUNCEMENT WAS MADE WOULD GIVE THE HOST COMMUNITIES FALSE HOPE, WHILE THE DISCOVERY, IF IN COMMERCIAL QUANTITY, WAS WELCOME NEWS, CONFIRMING THERE ARE PETROLEUM RESOURCES IN OTHER BASINS IN NIGERIA, AND, IF THE BUSINESS ENVIRONMENT IS RIGHT, INVESTORS CAN BE ASSURED OF GOVERNMENT STRATEGY TO OFFER BLOCKS FOR FURTHER PROSPECTING.

THE PROFESSOR SAID, “HONESTLY, THE END DOES NOT JUSTIFY THE MEANS. ECONOMIC DECISIONS MUST BE DEVOID OF POLITICAL SENTIMENT. IT IS MY HOPE THAT THE ANNOUNCEMENT IS NOT PREMATURE.

“NOW, YOU NEED TO THINK OF PROPER APPRAISAL AND EVALUATION. NORMALLY SUCH ANNOUNCEMENT SHOULD HAVE COME WITH THE ESTIMATED SIZE OF DISCOVERY. IT GIVES FALSE HOPE TO THE COMMUNITY.

“EVEN IF THE DISCOVERY IS COMMERCIAL, YOU ARE LOOKING AT PROBABLY BETWEEN EIGHT TO TEN YEARS BEFORE THE FIRST FISCAL OIL ASSUMING COMMERCIALLY AND FUNDING FOR APPRAISAL, FIELD DEVELOPMENT AND OTHER INFRASTRUCTURES

“OF COURSE, ITS INDIRECT IMPACT ON THE AGGREGATE ECONOMY IS ASSURED IF THE DISCOVERY IS COMMERCIAL. AS FOR THE DIRECT IMPACT ON RESERVES, IT DEPENDS ON THE OUTCOME OF APPRAISAL WELLS.

“FOR IMPACT ON THE ECONOMY, THE COMMUNITY WILL BE POSITIVELY AFFECTED IN THE SHORT RUN AS SPENDING TO DEVELOP THE ASSETS MATERIALIZED.

“IT IS MY HOPE THAT THE DISCOVERED HYDROCARBONS ARE DEDICATED AS FUELS TO POWER THE DOMESTIC ECONOMY.”

ALSO, A PROFESSOR OF GEOLOGY, MR. AHMAD HARUNA, QUERIED THE FIND, WHILE HE CALLED ON THE NNPC TO PROVIDE REQUISITE INFORMATION TO BACK UP ITS CLAIM OF HYDROCARBON FIND.

HE NOTED THAT THE ANNOUNCEMENT WAS RATHER PREMATURE, ADDING THAT THE NNPC NEEDED TO GIVE THE GEOLOGIC SPECIFICITY OF GONGOLA BASIN WHICH THEY USED TO JUSTIFY THEIR ANNOUNCEMENT, AS CLAIMING THAT OIL EMANATED FROM BIMA 1, 2, 3, YOLDE FORMATION OR PRE BIMA, SERVED AS A PUZZLE.

FIRE BRIGADE APPROACH

ACCORDING TO HIM, FIRE BRIGADE APPROACH WILL NEVER AUGUR WELL, AS THEY OUGHT TO WAIT UNTIL THEY FIND AND QUANTIFY THE OIL ACCUMULATION BEYOND THE MARGINAL FIELD, WHICH IS ABOVE 500 MILLION BARRELS, BEFORE MAKING THIS ANNOUNCEMENT.

HE SAID, “ACTUALLY I COULD NOT SEE THE DIFFERENCE BETWEEN THIS ANNOUNCEMENT, RELATED TO KOLMANI RIVER II (BY NNPC), AND THE DISCOVERY OF 33 BILLION CUBIC FEET OF GAS AND ASSOCIATED OIL BY SNEPCO (SHELL) IN 1999 FROM KOLMANI RIVER I (WHICH WAS NEVER ANNOUNCED BY NNPC).

“IF NNPC HAD EARLIER COME OUT TO SAY KOLMANI RIVER II IS AN APPRAISAL WELL FOR KOLMANI RIVER I WELL FINDINGS BY SNEPCO IN 1999, IT WOULD HAVE BEEN MORE HONEST AND LOGICAL.

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