A Review of the Nigerian Energy Industry

Oil search in Chad Basin suffers setback

Four months after the Federal Government said it was going to intensify the search for oil in the Chad Basin in 2015, nothing has yet to happen in this regard

oil workersIn the face of dwindling oil reserves, the Federal Government, at the end of 2014, had said it would intensify the search for oil in the Chad Basin area.

It said the prevailing security challenges in the area would not deter it from the mission.

Nothing, however, has been said about the plan, and some stakeholders in the oil and gas industry have said Nigerians should not expect so much this year following the change of government at the federal level.

“In spite of the dire security situation in the Chad Basin area, the National Petroleum Investment Management Services, through our Frontier Exploration Services, continues to explore the frontier areas of Nigeria to increase oil and gas reserves,” the Group General Manager, NAPIMS, Mr. Jonathan Okehs, said in a post on the organisation’s website at the beginning of the year.

But a government source, who would not want to be named, told our correspondent that currently, there were more pressing issues to attend to than intensifying the search for oil in Chad.

According to him, high level of uncertainty in the Nigerian National Petroleum Corporation and the oil industry at large, given the change of government at the federal level, is enough to distract the NNPC from such a line of action.

The World Bank recently urged the President-elect, Maj.-Gen. Muhammadu Buhari (retd), to probe the NNPC over allegations of missing funds.

The World Bank’s Chief Economist for Africa, Mr. Francisco Ferreira, said looking into financial records of the country, especially allegation of corruption at the NNPC, would check impunity and build public institutions in the future.

He was quoted as saying that, “One norm that has to change is the norm of impunity. I am from Brazil myself. So I am also used to a country where people could be corrupt and escape justice. That keeps the people to keep doing it.

“So, the current stand of the government-elect to look into what happened in the past hopefully will have consequences for the future. And those consequences will be that institutions will be stronger; norms will be cleaner and people will not have to steal millions of dollars from the Nigerian National Petroleum Corporation.

“People have alleged in the past that there had been major corruption scandals there. If that stops, then that will have very high returns in terms of the money staying around to be spent on education, health, roads and power that the poor people across the country need.

“So, my sense is that it will be good to promote cleanliness in politics.”

While expressing optimism for 2015 prior to the political turnaround, the NAPIMS boss had said, “At the beginning of 2014, amid global economic uncertainties, we set ambitious and laudable targets for ourselves. However, the world economy continued to plummet, giving rise to spiral inflation, which consequently resulted in high cost of running our operations.

“This obviously impacted adversely on the government’s take from both existing and new projects. As we were still grappling with the global economic instability, the price of crude oil dropped drastically due to the glut in the international oil market. All these, coupled with the incessant vandalism of our pipelines and the attendant crude oil theft, have combined to affect our production level.”

Notwithstanding these challenges, he said the country was able to maintain crude oil and condensate production at an average of 2.037 million barrels per day last year. This, he noted, showed a marginal increase from the 2013 average figure of 2.029 million bpd.

“NAPIMS has also continued to explore for new opportunities to increase our reserve base and daily production. Under the Production Sharing Contract, new green fields were discovered by some of our partners like Newcross in OPL 283, while some others have already commenced production. Other projects, such as Ofon Phase 2, are near completion with expected production of 40,000 bpd by quarter four of 2015,” he explained then.

Corroborating this, a top official of one of the International Oil Companies in Nigeria, told our correspondent in confidence that the current instability in the sector would continue even after the May 29 handover date.

This, according to him, will mean a big distraction for the NNPC, which he said was capable of stalling projects already ongoing, as well as proposed projects.

“As it is now, you may discover that nobody, not even the NNPC, would be mentioning the Chad Basin oil search in 2015,” he added.

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