A Review of the Nigerian Energy Industry

Oil discovery: ‘Lagos deserves derivation’

GovFasholaLagosState09 July 2013, Lagos – Recently, Afren Plc and Lekoil Limited announced the discovery of oil in Lagos. The discovery has thrown up a lot of issue with regard to Lagos becoming an oil producing state.

In this interview, the State Commissioner for Energy and Mineral Resources, Mr. Taofiq Tijani, sheds light on the perspectives of the state regarding some of these issues.


How does Lagos feel about the discovery of oil in the state?

“We at the Ministry of Energy and Mineral Resources, have done our due diligence about the activity of oil and gas within our own state, and we know the different status and level of activities. We know the companies that have drilled and found oil, but are yet to commence operation after about seven years ago. They are yet to produce the oil they have found, that is Agip group, owned by Folawiyo.

We are also aware about this new discovery, we know about that oil block, AML, Group of companies. We know they have been building that block many years back. We are aware when they found the oil and they contacted us so that we can work in partnership to develop that block. So we are in touch with them

We know about another block owned by Sunlink. We have also been interacting with all the professional groups, Geologists, Geo-physicists’, petroleum engineers and stakeholders to know about the kind of resources we found within our offshore, onshore Lagos.

We have been told all along, that offshore Lagos is also a potential oil producing region like the Niger Delta, if they do enough exploration and exploitation activities. We know that the reservoir that we are talking about of the new discovery will amount to that of the Jubilee Field in Ghana where they are now producing. So it’s not news to us that they found oil, it is a thing of joy that they put in money to be able to explore and making arrangement for production.

What then is the economic impact of this discovery to the state?
As for the economic impact for Nigeria and Lagos in particular, it has a very positive economic implications for Nigeria. Considering the fact that Nigeria has made a projection that we are going to achieve certain billion barrels of reserves in certain years

We have not been able to make good the projection because most of the international oil companies are not doing what they are supposed to do – developing their resources. They are not drilling as they are supposed to, and we don’t blame them because the instrument they need to do all that is not available.

One of the instruments is the fiscal regime that will guarantee them to develop these assets, such as working out the tax they are going to pay, what is the federal government thinking in terms of incentives. They are not there because they have not even passed the Petroleum Industry Bill, PIB, so for them to develop these resources they have to depend on the old bills.

We know a new bill is coming on board, but we don’t know when it is coming. So if they start using the old law to guide our economy, when the new bill comes, the oil companies will be shortchanged because things will change immediately. That is why the Lagos State Government cannot blame them.

What is the importance of Ibile Oil to Lagos?
Ibile Oil is to Lagos, what Owena is to Ondo State. It’s what Delta Oil is to Delta State; every state has such agency. So we have that agency so that Lagos State can also start partnering and participating in all the aspects of oil and gas activities – Upstream, midstream and downstream.

Is Lagos going to lay claim to the oil, and will it demand for derivation like other oil producing states?
As far as the oil in Lagos State is concerned, there is nothing we can do with the oil discovery because the oil belongs to the Federal Government and Afren and co.

The reason why they give derivation to all those states where oil was found is that when they are producing oil from their states, they have tampered with their environment and definitely, the state must benefit from the proceeds due to the activities of oil and gas in their states.

It will affect the fishermen, the social activities of certain people, that is why the Federal Government always gives certain amount of fund to the states to make up for these challenges.

And we as a state, we have been disadvantaged and we have been short changed in terms of the activities of oil and gas in the country. Every day they are drilling. What about the downstream where the products are transported especially Lagos state. In Lagos, they are polluting our water as they as they discharge the oil products from their tankers and their storage facilities. All the tankers are in Lagos damaging our roads and the state isn’t getting anything.

What is the state doing about the proliferation of tank farms?
Lagos has been complaining about the proliferation of tank farms in certain parts of the state. The State Government however has been doing some things underground. And the government has heightened their activities effectively after the last explosion at the MRS storage tanks in Apapa. I may not be able to give you the full details but I can assure you that the State Governor, Babatunde Fashola is concerned about it, and we have set up a committee on it.

And this committee will make the required recommendations to the State Government.

– Olasunkanmi Akoni, Vanguard

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