A Review of the Nigerian Energy Industry

Search for Oil in the North: Important yet diversionary

Drilling rig 11 February 2014, Abuja – Some questions have political, economic, emotional and even existential undertones clouding the possibilities for rational discussions but that is no excuse not to try. Whether or not oil exists in the north of Nigeria is clearly one of them.

Politically, some groups are of the opinion that power should be “restructured” in favour of those sections of our nation providing the largest resources (or share of the so-called national cake). Economically, it would be great if oil can be found in other parts of the country to add to our reserves and the federally allocated revenue. At an emotional level, most Nigerians from areas with no oil are tired of being insulted as “parasites” and not just by social media-site rats. Indeed, because of oil, the likes of Edwin Clark and Asari Dokubo are blackmailing us with the spectre of secession.

Yesterday, governors of some 13 northern states, under the umbrella of the Association of Petroleum Inland Basin States of Northern Nigeria (APIBONN), were billed to start a meeting in Minna, Niger State, to explore avenues of reinvigorating oil and gas exploration activities in the inland basin states of Adamawa, Bauchi, Benue, Gombe, Kogi, Kebbi, Niger and Sokoto states. Others are Zamfara, Kwara, Nasarawa, Taraba, Yobe and Plateau. This is to “enable them brainstorm on the modalities and action plan to kick-start and sustain oil and gas exploration activities” in the Sokoto, Chad, and Bida Basins as well as the Benue Trough”, whose hydrocarbon contents are yet to be properly developed and estimated,” according to the press release.

It could be recalled that Daily Trust had reported last week that plans for oil exploration in the inland basins had run into trouble as a result of shortage of funds, unfavourable regulatory policies, inadequate (or withheld) data, pervasive insecurity and ineffective foreign technical partnerships. This is in spite of the fact that the New Nigerian Development Company (NNDC), owned by the 19 northern states, has been handling the oil search in the areas since 2005 when it won four oil blocks (OPLs 809 and 810 in the Benue Trough, and OPLs 722 and 733 in the Chad Basin) following the inclusion of inland sedimentary basins in the bidding process by the Obasanjo administration, and even after it had signed MOUs with Gazprom of Russia.

I find the belated concern of these northern governors rather surprising, if not outright hypocritical. Also, while oil discovery in other parts of Nigeria, and especially in the North, would be of tremendous significance, I strongly believe it is overrated and is becoming a dangerous diversion.

The search for crude petroleum and other hydrocarbon deposits in Nigeria, including its northern parts, had been on since Shell/D’Arcy obtained from the Colonial Government of Nigeria, in November 1938, an Oil Exploration License covering the whole of the territories and, by some accounts, drilled about six core holes by the beginning of World War II. Exploration was subsequently suspended until September 1946, when two geological parties resumed work. By 1949 a decision was taken to concentrate prospecting in the southern parts, and by 1951 Shell/D’Arcy officially reduced their Oil Exploration License from the whole of Nigeria to just 58,000 square miles, mainly in the south, stretching from our borders with Dahomey to the Cameroons.

Years later, around 1956, Mobil Exploration Nigeria obtained an exploration license covering all the abandoned Shell/D’Arcy acreage, mainly in the northern margin but including that portion of what was then British Cameroon. With the encouragement of Ahmadu Bello, the Sardauna of Sokoto, it concentrated its exploration efforts in the Sokoto Basin, and took out a concession covering 12,700 square miles. Geological and seismic work was completed only for them to pull out because seismic work proved shallow basement and few real prospects. Mobil followed Shell into the Delta and coastal areas and obtained an exploration license for Western Nigeria covering about 4,000 square miles of the coastal sedimentary area extending from the Dahomey frontier to a line about 50 miles east of Lagos. Four wells were drilled eventually but the area proved dry and was abandoned. Since then, oil and gas exploration and development activities have focused mainly in the south, especially the Niger Delta and our territorial waters, except for some bitumen in some places.

Which is not to say that all efforts to find oil and gas in other areas were abandoned. Almost every regime has paid some lip service to finding oil and gas inland, and so have the NNPC and other agencies, with different levels of enthusiasm and very little success. Northern politicians and technocrats like complaining of little progress in oil exploration inland, which they blame on lack of interest by the Nigerian National Petroleum Corporation (NNPC), on the multinational oil companies who are making easy money in the Niger Delta, and even on hostile federal authorities. This line of reasoning is suspect, just as the focus on the “black gold” as our “saviour” seems to me misplaced.

We should remind ourselves that when the Sardauna realised (even if based on faulty technical and business advise) that focusing on finding oil in the then Northern Region was leading to a dead-end, he did not just sit down to “cry over spilt milk”. He decided to focus instead on agriculture (especially groundnuts and cotton), on education and manpower development, and on building the basis for an industrial take-off (around the Northern Nigeria Development Corporation, now the New Nigerian Development Company). He focused on textiles, ginneries, tanneries, oil mills and other light consumer goods with great employment, and backward linkage potentials. He built Arewa Hotels, Northern Nigeria Construction Company, the New Nigerian Newspapers, Gaskiya Corporation (later Northern Nigeria Publishing Company) and Bank of the North to kick-start the transformation. All these he did on internally generated tax revenue and the surplus from the operations of the Marketing Board.

The Sardauna and his aides were real development economists who showed us that wealth is not just what we can dig up from the ground and sell, but what the human brains and physical efforts coupled with good management can produce or transform. The Northern Governors Forum destroyed all these because they did not want accountability, nor did they want to share control. Now they want to send us on a wild goose chase.

Educate people, build infrastructure, create jobs, provide accessible funds for businesses, support and modernise agriculture and animal husbandry, use funds judiciously and honestly; that is the only way out. Oil, gas or any other mineral would be a bonus but they are no magic wands. Let us not get fixated on the notion that real wealth is only in the ground to be dug out or pumped up; real wealth is in innovations, in intellectual efforts, in agriculture, in manufacturing, and in building things and providing services that people need and are willing to pay for. Wealth is created and not just discovered in the dirt below our feet


– Sanusi Abubakar, Daily Trust

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