At a time major oil-producing countries are preparing for life beyond oil, Nigeria is resuming active oil exploration in the Sokoto basin, a move most experts regard as a poor investment decision and lack of understanding of the future of oil.
Having frittered away billions of naira of state funds in the search for crude oil in the north, Nigerian National Petroleum Corporation (NNPC) is returning to an insatiable quest of finding oil in the north, a decision which has generated debate concerning the viability of the search, primarily championed by President Muhammadu Buhari.
On April 9, NNPC’s spokesperson, Kennie Obateru, said the corporation’s Group Managing Director, Mele Kyari, said exploration for crude would resume in the Sokoto Basin.
“In NNPC, we’ve continued to make giant strides in inland rift basin exploration. Our sustained quest is informed by the matured and the practical discoveries of commercial quantities of hydrocarbons in neighbouring Niger and Chad,” Kyari stated while delivering a keynote address at this year’s 56th Nigerian Mining & Geosciences Society (NMGS) Conference.
Some stakeholders in the petroleum sector believe that the country is sitting on a huge natural resource like hydrocarbons which NNPC can explore by law, especially as the future of oil goes bleak and the country seeks to grow reserves and daily production.
Other stakeholders have questioned why the government keeps spending money it does not have instead of creating a favourable investment climate to attract investors who can easily explore or invest in cleaner sources of energy, which will reduce the country’s risk to crude oil.
A geologist who said he was part of the team that explored the Sokoto Basin years ago described the whole exercise as a wild goose chase. According to him, the frontier basins are too shallow and not matured.
Niyi Awodeyi, CEO at Subterra Energy Resources Limited, says by every economic consideration, NNPC’s oil exploration is purely a political exploration as no economic consideration will allow loss-making companies like NNPC to focus on oil.
“Nigeria is not maximising its present oil wells, so why would NNPC spend money on oil exploration when they can simply create an investment environment that will allow International Oil Companies (IOC) to perform such a task?” Awodeyi asks.
Other state-owned oil companies like Saudi Aramco and Norway’s Equinor are looking at life beyond oil, he states.
Wumi Iledare, National Petroleum Professorial Chair in Oil and Gas Economics at the University of Cape Coast’s Institute for Oil and Gas Studies, Ghana, believes at this phase oil business should be reserved for investors with high-risk profile and a large portfolio of assets to absorb failure.
“I hope we are not chasing the wind even with highly expensive modern technology,” he says.
Currently, the nation’s economy is choked as data from the Debt Management Office (DMO) reveal the country has a total debt of N32.9 trillion. The country’s refineries are in shambles, needing a subsidy, which deprived the economy of N10 trillion between 2006 and 2018, according to BudgIT.
These and other developments have pushed the number of extremely poor Nigerians to 91 million, while the unemployment figure settles at 23 million people.
Buhari had kick-started the drilling activities at the Gongola Basin as part of efforts to boost the nation’s oil reserves to 40 billion and daily production of 3 million barrels.
The president, who has been resolute on the possibilities of oil discoveries in the North since he was petroleum commissioner over 40 years ago, gave NNPC a marching order to explore hydrocarbon deposits across the federation immediately after he assumed office on May 29, 2015.
Buhari had insisted that the need to explore oil in the frontier inland basins remained a national priority that must be sustained for the country’s economic benefits, adding that oil and gas were critical to Nigeria’s economy of today and the future.
But analysts believe this is the time for the country to look beyond oil.
“Nigeria needs to ensure sustainable fiscal management that is resilient to global oil price cycles. Improving tax collection and administration have become imperative for achieving national growth objectives,” PricewaterhouseCoopers said in its publication ‘Nigeria: Looking beyond Oil’.
