Reuben Buhari
4 September 2008
analysis
Lagos — Whether the north has oil deposits or not has always been a speculative subject to many with just some few individuals and groups firmly convinced that, like the Niger Delta, the north also has oil in commercial quantity. However, all that is about to change courtesy of the New Nigeria Development Company (NNDC), which is convinced of the presence of oil in the Benue and Chad basins. The firm recently committed millions of dollars in proving that commercial oil deposits exist in the north.
If all goes according to plan, the northern part of Nigeria should start bringing to the surface the oil and gas reserves that lies under the ground around the Benue and Chad basin before the end of next year. To make this a reality, a Memorandum of Understanding (MoU) involving about 100 million dollars that was recently signed in Kaduna between the African Finance Corporation (AFC) and the New Nigeria Development Company (NNDC) owned by the 19 northern states governors.
NNDC, based on recent discoveries is convinced that over 100 billion cubic liters of oil and gas reserves lie within the region and hence, after years of consultation and analysis of available data, has firmly committed its funds to the project. The expected benefit of the project has already been calculated in physical terms.
The crude oil will be refined and sold to the local market and then, when proven to be adequate, would be sold to the international consumers. The generation of 20 megawatts of electricity by August 2010 from the gas in the region is also one of the projected plans, while another is a fertilizer plant with plans for other projects depending upon further discoveries of gas and oil. The Group Managing Director of NNDC, Alhaji Aliyu Alkali said the discoveries would contribute to the growth of the oil industry in the north as well as to the development of Nigeria in general.
Apart from the MoU signed recently with AFC, NNDC had earlier on signed an oil exploration Sharing Contract Agreement with the Nigeria National Petroleum Company (NNPC) during the tenure of Chief Funsho Kupolokun. Out of the whole financial portfolio of 160 million dollars in the agreement, Alkali promised to provide 40 million. He further explained that the north is propelled by its yearning to contribute its quota to the Gross Domestic Product (GDP) and to broaden the economy through oil exploration in the region. He added that it would create both employment opportunities and wealth for the region and the country.
Also, NNDC which was established in 1949 under the name Northern Regional Production and Development Board before transforming in 1960 to NNDC, has been holding talks with Gasprom, a Russian company which is one of the largest gas development company in the world, with a view to further ensure that every drop of gas and oil in the region is commercially utilised.
The NDDC's ambitious project which could put paid to allegations of the north's sole dependence on the proceeds of oil from the Niger Delta region, centres around the hydrocarbon potentials of four oil blocks; OPLs 809 and 810 located in the Benue Trough, and OPL s 722 and 733 located in the Chad Basin which NNDC paid for. The proven reserves in these oil blocks was what convinced the NNDC to start shopping for a technical partner which, in addition to others, culminated in the MoU signed with AFC. The financial institution was represented at the signing by its vice president, Mr. Solomon Asamoah.
But why is the north suddenly concentrating on oil exploration. Is it because of the profit or simply because of sentiment? This is because the accusation that the north has always been depending on the proceeds of the south-south's oil and gas deposit has been re-echoing for a long time. It is alleged that the region, rather than being a fellow contributor to the economic development of the country has, rather, been a "parasite."
The accusation was recently re-stated by a prominent Niger Delta militant who necessitated the Northern Governor's Forum through its chairman, and governor of Niger State Dr. Muazu Babangida to respond that the north has the potentials to survive on its agricultural potential. "The future of the north lies in our hand, and we should today begin to shape our destiny. As a Nigeria of northern extraction, I feel very unhappy when someone call me a parasite because of oil, when I know I have the capacity to solve my problem and probably do even better through agriculture and education," he stated.
Despite the governors' displeasure with the parasitic description of northerners by the Niger Delta militants, the Arewa Consultative Forum (ACF), through its Publicity Secretary, Mr. Anthony Sani agrees with the accusation, saying that "northerners are lazy and parasites who rely on other regions for survival. There is no reason to run away from the truth," he said, perhaps annoyed with the level of poverty in the region which the ACF has always accused northern elites of complacency by not doing enough to reduced it.
While speaking on the economic benefits of the oil discovery, NNDC's GDM, also took time to respond to what he said was the wrong notion that northerners are simply parasites because of oil. "The significant of the discovery is not only to the north, but also to Nigeria as a whole. Some people, who do not understand the issue regarding Nigeria's settings, have been abusing the north by saying that we do not contribute anything to the coffers of Nigeria.
"They however fail to remember the contribution by the north prior to the discovery of oil. They also fail to remember the contribution of the north in terms of food production. They said the north is parasitic and reaping from where it did not sow. This is wrong because today the oil gotten from the region was not tilled by anybody, but God-given.
"Now that we have established that we have gas in commercial quantities in the north, we are happy and it is a good development for Nigeria, because other than the Niger Deltans, the north too would produce gas and oil in commercial quantity," he added. He further explained that "if the north is making financial contribution to the national coffers through oil and gas it would silence the mischief makers who view the north as not doing anything to the growth of the country. It would provide more income to the people living within the area where it is found, allowing them to be engaged in various commercial activities."
Giving a history of NNDC's effort toward the exploration of oil and gas in the north, Alkali said, "in the Benue Trough which is between Bauchi and Gombe States, a few wells had been drilled by multinationals from 1999 to date. On OPL 809, Shell had conducted a work programme on the block and drilled one well named Kolmani River-1 in 1999. The hydrocarbon phase encountered in the well was essentially gas and condensates phase estimated to have minimum gas reserves of between 33 billion to 100 billion cubic feet.
Also on OPL 810, Chevron had acquired regional 2D Seismic data and drilled a well name Nasara-1. The result of that campaign was inconclusive, though some gas was encountered," he explains, however, adding that in the absence of policies on gas at the time of the campaign, both wells were shut down by Shell and Chevron respectively.
He further adds that NNDC paid for and obtained available data on OPLs 809 and 810 which have been evaluated by consultants whose interpretations cover the evaluation of the current wells, generation of prospects as well as the appraisals of drilling locations to eventually produce the proven hydrocarbons. On the current status of the availability of gas and condensates on OPLs 809 and 810, which the company is putting so much hope, the NNDC put it at 33 BCF, while the data on OPLs 722 and 733 in the Chad Basin, which were initially drilled by NNPC is being kept by the Nigerian Petroleum Investment Management Services (NAPIMS) and would soon be gotten.
Explaining further on why Shell and Chevron stopped further activities on the wells initially dug, Alkali said: "They left because they were more or less compelled to prospect it by the Federal Government in return for oil blocks in the Niger Delta. And because they found more gas than oil they left because they realised that they have not been able to do more with the gas in the Niger Delta, not to talk of the one in the hinterland. But the issue of Independent Power Project (IPP) had not been looked into then.
Currently, the Federal Government is encouraging the oil exploration companies to look into IPP, while imploring them to stop gas flaring. "We want to establish an IPP in the area (Bauchi and Gombe States) where the gas deposit is found, we want to generate electricity in that area and put it in the national grid or sell it to major users," he added.
On why Shell and Chevron which started oil exploration in the area were not brought back as technical partners but new ones like Gasprom in the picture, Alkali explained that "we did not abandon anybody. It is rare in this kind of venture to start and finish with one company. The foreign companies did the work on the blocks because it was allocated to them by the Federal Government; it was not done in conjunction with NNDC. We started the prospecting with Anzion Energy Limited about a year ago, then Gasprom came into Nigeria with the intention to utilise the abundant gas potential in the country. They met with us and discussed after hearing that we also have the same interest."
Meanwhile, work would soon commence fully in OPLs 809 and 810 in the Benue trough, while OPLs 722 and 733 in the Chad Basin will also be given full attention as soon as the data being kept in storage by NAPIMS is retrieved. Whether the north can start producing oil and gas in commercial quantities or not is about to be answered by the NNDC, which has an authorised share capital of about 57 million dollars. But as to when the answer will be gotten remains anybody's guess.
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