The discovery of oil or hydrocarbon in the northern part of Nigeria has elicited great excitement and investments. SUCCESS NWOGU writes

Nigeria’s capacity to increase its oil production and ramp up the much needed revenue for the country was enhanced on November 22, 2022, as President Muhammadu Buhari performed the ground-breaking ceremony of the commencement of Integrated Project Development activities of the Kolmani Oil Prospecting Lease (OPL) 809 and 810 at the Kolmani field site in Bauchi and Gombe states.

The Kolmani Integrated Development Project and the first oil drilling in Kolmani Oil Wells 2,3,4 and 5 (Kolmani River II Oil Field Prospecting Lease (OPL) 809 and 810) is the first of its kind in the history of Northern Nigeria.

Also accompanying it is a petrochemical refining site with an oil refinery of 120,000 bpd, a gas processing site of 500 million cubic feet per day, and also a 300 MW power plant. As the excitement continues to radiate, Sterling Global Oil, New Nigeria Development Commission (NNDC) and the Nigerian National Petroleum Company Limited, (NNPCL) are reported to have spearheaded the development of the oilfields.

President Buhari, who is also the Minister of Petroleum, said during the ceremony that his administration had been able to attract over $3 billion in investment to the Kolmani Integrated Development Project at a time of near-zero appetite for investment in fossil energy.

He stated that the commencement of oil and gas exploration at the Kolmani Oil Field had broken the jinx of many years of oil search outside the Niger Delta region. President Buhari said: “Considering the landlocked location and the huge capital requirement, the economics of the project is a challenging proposition. Consequently, from the outset, I instructed NNPC Limited to utilise and leverage its vast asset portfolio across all corridors of its operations to de-risk the project to attract the much-needed investment.

“It is, therefore, to the credit of this administration that at a time when there is near zero appetites for investment in fossil energy, coupled with the location challenges, we are able to attract investment of over $3 billion to this project.” The Minister of State for Petroleum Resources, Chief Timipre Sylva, said the ceremony marked yet another significant milestone in the collective quest as a nation to ensure energy security and access for Nigerians.

He stated that from North to South, East to West, Nigeria is replete with rich hydrocarbon resources, adding that the administration of President Buhari and the Ministry of Petroleum Resources were committed to finding an end to energy poverty, creating shared prosperity and enthroning sustainable development.

He recalled that in 2019 when the NNPCL announced that it had encountered oil in commercial quantities at the Kolmani River well II, the nation celebrated the news as a fitting outcome for the year of geological investigation, which was carried on with tenacity and consistency that embody the pioneering spirit of the organisation.

He noted that despite the enormous challenges that NNPC was confronted with, the day came when Nigerians collectively witnessed and celebrated drilling for hydrocarbon in the Northern part of the country. According to him, the commencement of drilling of K9lmani fields which could hold as much as one billion barrels crude of the reserve will significantly contribute in boosting the nation’s oil reserves and ensuring continuous energy sufficiency for Nigerians.

The Minister opined that given the fact that most players within the international financial ecosystem are progressively moving away from funding fossil fuel development, financing for demand, supply and infrastructure projects would need to incorporate decarbonisation into project plans in order to attract funding. He, however, said the opportunity for investment and fantastic returns remained undiminished and is continually available to the discerning investor. Sylva said:

“This is why I am particularly excited at the partnership between NNPC Limited, Sterling Global Oi, and New Nigeria Development Commission (NNDC) to carry out this drilling campaign. This is a testimony to the fact that the hydrocarbon sector still holds the promise of return on investment, highlighting the role that the resources will continue to play in the global energy mix.

“Drilling for hydrocarbons, such as will happen in the Upper Benue Trough/Congola Basin, is crucial to our survival as a nation and needs to happen in tandem with the measures that we are taking on our pathway to the energy transition.

“We recognise that the reduction in fossil fuel revenue, without sufficient time and support to manage macroeconomic risks and the structural transformation required to build a diversified, sustainable and resilient economy, will have catastrophic social knock-on effects for millions of people in Nigeria and this cannot be allowed to happen.”

The GMD, New Nigeria Development Company, Alhaji Sheu Usman, expressed delight at the discovery of hydrocarbon in commercial quantity in the north. He explained that the order given by President Buhari in 2016 to commence exploration in Benue was responsible for the discovery of oil in commercial quantities in northern Nigeria.

According to him, the discovery ends doubts that there could be oil in the North, and also ended the stagnation and growth of Nigerian oil wells. He added that only NNPCL assured interest in the frontier basins, and the determination of the NNPCL to drive the desires led to the historic success.

He stated that the impact will bring value creation for host communities starting with strategic partnerships, and also crude and gas uptake from the field and added that more of such partnerships should be forged to open up the north for oil and gas exploration. Usman said the NNPCL revealed that commercial prospects started 30 years ago with Shell, but were abandoned as no significant outcome was achieved.

According to him, it was revived through Kolmani River 2, 3, and 4 to explore deeper targets, flagging off the first phase in 2019 that led to the discovery of one billion barrels of oil and 500 billion cubic feet of gas.

IPMAN hails development

The Independent Petroleum Marketers Association of Nigeria (IPMAN) said oil drilling in the north was a great and laudable development that will increase Nigeria’s oil production and boost the country’s revenue base.

IPMAN National Operations Controller, Mr Mike Osatuyi, said drilling oil in the north was a great development that will accelerate development in Nigeria. He said: “It is a good one. It is a major breakthrough.

We have had oil but we have not had production in that area and now this development is a cheering one. We hope there will be no restiveness. “We hope that there will be no sabotage from the international oil companies (IOCs). It is a good one. In my view, it is Lprogress for the government and for the country.

“It will help oil production. It will enable us to meet our target based on the Organisation of Petroleum Exporting Countries (OPEC) allocation. It will also shore up the revenue or foreign exchange earnings of the country.

“When there is more production, there will be an increase in income and we will meet our target. For some time now, we have not been meeting our OPEC quota but now, we are going to be meeting our target. “Govenrment should continue to ensure that we have more and more sites for oil drilling.”

Analyst’s view

An oil and gas analyst, Dan D. Kunle, told Nairametric that the Kolmani drilling campaign was a strategic move for Nigeria. He stated that Nigeria’s frontier basins: Lake Chad, Gongola, Anambra, Sokoto, Dahomey and Bida basins and the Benue trough, all situated in Nigeria’s north are long overdue for exploration and exploitation.

The discovery of oil in the north entails that the northern part of Nigeria has joined its southern counterpart in producing oil that contributes over 80 per cent of the nation’s foreign exchange earnings, which before was only produced in the south.

Studies showed that there are about 37,050 billion barrels of proven oil reserves and about 187 trillion standard cubic feet of gas in the South-South of Nigeria, while exploration attempts in the North is for about 2.3 billion barrels of oil reserves and about 14.65 trillion standard cubic feet of natural gas available for four or more countries in the Chad Basin.

Discovery of oil in Nigeria

The first crude oil discovered in Nigeria was Oloibiri Oilfield, which is an onshore oilfield located in Oloibiri in Ogbia Local Government Area of Bayelsa State. The Oloibiri field is about 45 miles (72 km) east of Port Harcourt in the Niger Delta and about 13.75 square kilometres (5.31sqmi) and lies in a swamp within OML 29.

Oloibiri Oilfield is named after Oloibiri, a small, remote creek community, where it is located and was originally operated by Shell Darcy but is currently operated by Shell Petroleum Development Company of Nigeria Limited (SPDC) after Shell Darcy changed its name to Shell-BP Petroleum Development Company of Nigeria Limited to reflect BP’s interest.

In 1979, changed its name again to Shell Petroleum Development Company of Nigeria Limited following the nationalisation of BP’s interest by the government. The Oloibiri Oilfield, which was discovered on Sunday January 15, 1956 by Shell Darcy, was the first commercial oil discovery in Nigeria and it ended 50 years of unsuccessful oil exploration in the country by various international oil companies and launched Nigeria into the limelight of the Petro-State. The search for oil exploration in the north had taken many years

The Federal Government of Nigeria reportedly had spent about $340 million and an additional N27 billion, in the seismic expeditions for hydrocarbons in the Lake Chad Basin.

Exploration efforts in Chad Basin

Between 2011 and 2013, then Chairman of the Northern Economic Summit, (NES) Prof. Jerry Gana, revealed that NES got a $240 million approval for oil and gas exploration activities in the Lake Chad Basin and other areas of the North including the Benue Trough, Bidda Basin and the Sokoto-Rima Basin. It was reported that exploration of oil later commenced in the region.

Sambo’s declaration Also in 2013, former Vice President Namadi Sambo’s declared that oil prospecting in the Lake Chad Basin was yielding promising results and may lead to commercial exploitation of oil and gas. So an additional $100 million was earmarked for the project in addition to the N27 billion he said was already spent on the exploration activities.

Kachikwu’s revelation

The then Minister of State for Petroleum Resources, Mr Ibe Kachikwu, had, while in the saddle as the NNPC GMD, said the national oil company, through its Frontier Exploration Services and Renewable Energy Division (FESRED), progressed reasonably with seismic acquisition activities in the Chad Basin frontier area until insurgency led to its suspension.

Kachikwu said eight phases out of the planned 12-phase project to cover 3550sqkm had been acquired when the operation was suspended in November 2014. According to him, a total of 1,962sqkm was acquired and processed. He also claimed that interpretation was on at 90 per cent completion, and drilling activities will commence by the last quarter of 2016.”

Buhari’s marching orders At a time when the hope for the discovery of oil in the north for exploration was seeming waning, President Buhari handed a marching order handed down to the management of the then Nigerian National Petroleum Corporation (NNPC) to resume oil search in the Chad Basin after 30 years of futile efforts.

The then Group Managing Director of NNPC, Dr Maikanti Baru, had while receiving the then Governor of Bauchi State, Mallam Mohammed Abubakar, revealed that President Buhari had directed the NNPC to resume its oil search in the Chad Basin and other parts of the North East.

Abubakar noted that the Corporation has identified specific oil blocks in the area where some of the finds have been made and would move to re-invigorate exploration based on a fresh strategy. He said: “You know that very close home, we have exploration activities on the frontier basin in Chad and some areas close to the Kolmani River where Shell had made some indicative discovery of hydrocarbons.

Now, Mr President has directed me to go into that area to further explore the magnitude and prospect of those finds. “We are taking steps to re-strategise and get into those regions. We will reinvigorate the frontier exploration and see how they can collaborate with NNPC that is holding Block A09 where some of the finds have been made, and also for the Department of Petroleum Resources (DPR) to assign redundant blocks.”