Setback for Frontier Basin Oil Search
The recent attack on a team of the Nigerian National Petroleum Corporation prospecting for crude oil in the Borno axis of the Chad Basin by Boko Haram, is a major setback in Nigeria’s frontier basin exploration efforts, writes Chineme Okafor
Penultimate week, 48 people comprising 18 military personnel, 15 civilian Joint Task Force operatives, five university workers with the University of Maiduguri, and four drivers of the NNPC involved in corporation’s search for oil in the Chad Basin were ambushed and killed by terrorist group, Boko Haram, on their way back to Maiduguri from their exploration works. The team, which reportedly went back to the basin in November 2016, to conclude its seismic data acquisition task, were following through instructions given to the NNPC by President Muhammadu Buhari, to pick up from where it stopped the oil search in the basin, to grow Nigeria’s oil reserves; diversify her oil sources; and guarantee the country some level of energy security. Unfortunately, the team, which relied greatly on security provided by the Nigerian military - having got adequate clearance, went back to continue its work in the terrorism hotbed, only to be cut-off and decimated by Boko Haram, thus derailing the corporation’s hopes of new oil discoveries for the country.
Indeed, past reports on Nigeria’s oil exploration in the frontier basins had indicated that between 1977 and 1996, the NNPC commenced exploration activities in the Chad Basin.
A total of 23 wells were drilled and only two wells - Wadi-1 and Kinasar-1, recorded noncommercial gas discoveries before exploration was suspended in the Chad Basin in 2000 for lack of commercial finds.
Similarly on the Gongola Basin, the federal government had between 1993 and 2000 reportedly awarded blocks in the basin to Chevron, Total and Shell Nigeria Exploration and Production Company (SNEPCo), and they acquired 3,153km of 2D seismic data, drilled one well each and made a non-commercial gas discovery in one of the wells - Kolmani River-1, before they suspended and abandoned the blocks.
Nevertheless, the government did not give up on the venture, but rather continued in 2010 when the NNPC reportedly acquired 3D Seismic data for processing and interpretation of oil exploration in the Chad Basin.
At that time, a former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, reportedly insisted on an aggressive oil exploration in the Chad Basin even though she acknowledged there were inherent challenges to the venture in the basin.
Alison-Madueke had buttressed government’s commitment to the venture when she stated then at a meeting in Lagos, that the fact that neighbouring countries such as Chad, and Niger, with similar topography and who share the basin with Nigeria, could find and mine oil from there, meant that Nigeria could also explore and mine oil from the basin to augment her reserves. Coming back to the venture, Buhari, in 2016, renewed his government’s desire to grow Nigeria’s oil reserves, and thus asked the NNPC to go back to the Chad Basin, and Benue Trough. As part of the renewed move, the NNPC subsequently announced it was stepping up measures to ensure a successful search for crude oil in the Chad Basin and other parts of the inland sedimentary basins. It explained that Buhari had directed it to explore deeper into the prospectivity of some hitherto neglected finds in some areas in the North Eastern part of Nigeria with a view to taking them up for further development.
“You know that very close home, we have exploration activities on the frontier basin in the Chad and some areas close to the Kolmani River where Shell had made some indicative discovery of hydrocarbons and Mr. President has directed me to go into that area to reprove and further explore the magnitude and prospectivity of those finds.
“We are taking steps to re-strategise and get into those regions. We will re-invigorate the frontier exploration and see how they collaborate with NNDC (Northern Nigeria Development Commission) that is holding oil block 809 where some of the finds have been made and also Department for Petroleum Resources (DPR), for the other blocks that have not been assigned,” the Group Managing Director of NNPC, Dr. Maikanti Baru had told the Governor of Bauchi State, Mohammed Abubakar, when he visited his office in Abuja in 2016.
Baru had made it clear to the governor that the renewed search was for real, and based on this, the NNPC subsequently mandated the Integrated Data Services Limited (IDSL), its subsidiary which undertakes seismic data procession and interpretation, as well as reservoir management services in Nigeria’s oil and gas industry, to lead on the renewed search for oil.
IDSL was reportedly given the job to acquire over 500 square kilometers of 3D seismic data acquisition in the first instance from the basins.
Cost implications
While on the venture, the corporation had in November 2016, however, reported that Nigeria’s renewed search for crude oil in the frontier inland basins had impacted on its monthly trading financials. It reported in one of its monthly financial report for November 2016, that the IDSL had witnessed an increase in its operating costs following its oil search activities in the frontier basins.
The NNPC report stated then that despite an improved revenue generation profile which the corporation had for that period, upholding its oil finds in the frontier basins had contributed to the deficits it recorded in November 2016.
Despite the financial costs to the NNPC, there were also reservations shared by industry experts about the security challenges in the North East, - yet, the corporation stated that it was in constant conversation with the military on when it was safe to move in.
During one of his meetings in Borno, Baru reiterated that exploration activities in the Chad Basin would commence whenever the military gave it clearance. He added however that there were signs of improvement in the security situation of the North East. According to him, increasing Nigeria’s oil production to 3 million barrels per day (mbpd) by 2020, as well as its reserves were chiefly responsible for the continued search in the Chad Basin.
“We have been discussing with military authorities in the area and they have assured us of improved security. Once they give us the green light, we would resume operations in the area within six weeks,” Baru had stated.
But, notwithstanding NNPC’s commitment to commercial oil finds in the Chad Basin, which ordinarily should be good for Nigeria’s economy, and its energy security going by the constant disruptions in oil production in the Niger Delta region by militants, experts in the industry still felt it was an expensive and risky venture.
Arguing on the basis of production costs, these experts stated that finding and producing oil from new oil fields in the Chad Basin was slightly uneconomical with the current conditions in the global oil market, and security pressures from Boko Haram, which has brutally held sway in the North East since 2011.
These experts equally added that Niger Republic, which has made some discoveries in the basin, currently has an estimated reserve of about one billion barrels, and a daily production of 20,000 barrels, indicating that it may not be strategically viable in the long-term for Nigeria to spend so much in search of oil there than it could have spent in the search in other more promising frontier basins.
Boko Haram’s huge blow
As the debate on the economic advantage of NNPC’s resumed search for oil in the Chad Basin went on, the corporation quietly moved into the basin in November 2016 to continue its exploration works activities in Gubio, Magumeri, Monguno, Kukawa, Abadam, Guzamala, and Mobar, after getting security advice from the military. However, on July 25, 2017, its Frontier Exploration Services (FES) and Surface Geochemistry Sampling crew comprising of three consultants attached to FES and the Integrated Data Services Limited (IDSL); nine external consultants from the University of Maiduguri; military personnel and members of the Civilian Joint Task Force (JTF) were ambushed by Boko Haram, as they returned to Maiduguri town after conducting survey mapping and geological study.
The incident was, perhaps, the first real challenge to oil search in the Chad Basin.
Addressing journalists on this, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said in Abuja, that NNPC was sufficiently cleared by the military to resume oil search in the Chad Basin. He also stated that the NNPC recognised the risks of going to search for oil in the region as directed by Buhari, to grow Nigeria’s reserves, and then sought the military to clear it in 2016 to undertake the tasks.
According to him, unless sufficient clearance was again obtained from the military, the corporation will suspend the oil search, and would while waiting on the military to determine its next move, take care of the families of the people it lost in the Boko Haram ambush.
“I would ordinarily have opted against answering that for the simple reason that it is not respectful to the souls of those who died to be discussing going back or not, but for specifics, the reality is that anytime NNPC decides to go into a terrain, they first get the privilege of security advise and that security advise I can say was sufficiently cleared,” said Kachikwu in his response to a question on what next.
He further explained: “They’ve (NNPC) been on this work for almost six months and that goes to show that at least there was some level of stability in security in that area. It wasn’t a misguided entry into this area.
“Whether we will resume obviously will depend again on what security clearance is given. If we take a position that we are not going to do things because of criminality in certain areas, literally every part of Nigeria will stop answering to our economy; we will stop producing oil in the Niger Delta, and I think my simple answer will be that provided there is sufficient security clearance, I don’t see why we will not continue to push that experience,” he added
Useful lessons learnt.
Admitting that it was a blow on the corporation, the minister, however, stated that the incidence would provide the NNPC and the military very useful lessons in future entry into the region for oil search.
“I would imagine that the security operatives will take a second look at what has happened and like the lessons they take from every area where Boko Haram has operated, they will look to see more protection they can put in place, but certainly, we will not go back unless they give us a clearance just like we didn’t go in before they gave us a clearance,” he noted.