THE QUEST FOR OIL IN THE NORTH

Oil exploration in the Chad and Sokoto basins is ill-advised

THE DECISION TO INVEST SCARCE RESOURCES IN LOOKING FOR OIL IN THESE BASINS IS POLITICAL AND IT FLIES IN THE FACE OF COMMON SENSE AND SOUND ECONOMIC JUDGMENT

The revelation that the Nigerian National Petroleum Corporation (NNPC) has resumed oil exploration in both the Lake Chad and Sokoto Basins a few months after Boko Haram ambushed and killed some lecturers from the University of Maiduguri came as a rude shock to many Nigerians. At a period when political leaders in other countries are coming to terms with the fact that the future of oil is bleak and have started preparing for alternatives to replace hydrocarbon, many are worrying that Nigeria is still making such difficult choices.

The NNPC, according to the Group Managing Director, Mr. Maikanti Baru, has been on the issue of exploration in the frontier basins. “We have already purchased aeromagnetic data and it’s being interpreted to determine the sedimentary thickness and the basin configuration,” said Mr. Baru who added: “We have also awarded a contract for the geological mapping of the basin. I am happy to state here that samples have been collected, mapped, analysed, and geological modelling executed to ensure data integration.”

There are several pertinent questions. Who bears the cost of geological surveys and the dry hole drill? Is it the job of NNPC to fund explorations? Can NNPC point to one oil block elsewhere in Nigeria where it funded exploration activities? Whose risk is this activity? Are we following the latest developments in technology elsewhere? Are we aware that most of these technologies are developed in the universities and commercialised by businesses? Why can’t Uthman Dan Fodio University be funded to start serious research in the area of mechanised farming and processing and storage of agricultural products that are abundant in Sokoto?

Crude oil is becoming outdated. So, when Europe and China are talking of phasing out hydrocarbon vehicles, it is not a threat. It is real. While some countries like Nigeria may never phase out fossil fuel-powered vehicles as we have not sorted out our electricity requirements, questions still remain: How much of our crude is locally consumed and how much is exported? Who are the major importers? What percentage of our foreign exchange earnings comes from oil exports? Why are we still spending millions of dollars exploring oil in the desert and building pipelines and other installations?

Without any doubt, the decision to invest scarce resources in looking for oil in these basins is political and it flies in the face of common sense and sound economic judgment. However, it is essentially because the NNPC does not subject its expenses to transparent process. Otherwise, there is no way that such exploration projects would have been approved, considering the humongous cost, especially as it is a risk that may yield no dividend at the end.

Unfortunately, the wrong choices being made in the oil and gas sector by this administration are not restricted to exploration. While the three refineries operated by the NNPC in Kaduna, Warri and Port Harcourt have remained a drain, government is holding on firmly to them. Last year, Minister of State for Petroleum, Dr. Ibe Kachikwu revealed that the refineries were working at a 30 per cent capacity, but President Muhammadu Buhari would not permit that they be sold or privatised. “Personally, I would have chosen to sell the refineries but President Buhari has instructed that they should be fixed,” said Kachikwu. “After they are fixed, if they still operate below 60 per cent, then we will know what to do.”

It is clear that we are in serious trouble with policy options now a matter of gamble.