Nigeria: Transportation cost stalls oil production in the North

26 July 2016, Lagos –  The challenges posed by transportation, geographic location and wide currency exchange gap have hindered crude oil exploitation in the northern part of Nigeria, according to the national president, Certified Institute of Geographers (CIG), Mallam Adamu Sambo.

TO GO WITH AFP STORY: Commodities-oil-energy-price-US-boom-crime, Oilfield thefts on rise in Texas amid booming prices by Mira Oberman. This June 24, 2008 photo shows oil drilling rigs in Midland County, Texas. The wide open oilfields of West Texas are ripe pickings for thieves these days. Some drive up to one of the thousands of pump jacks that dot the countryside and siphon crude out of the storage tanks. Some pull up to a drill site after the crews have gone for the night and haul away tools, pipes and equipment. Others take kickbacks, file false invoices or just plain steal knowing their bosses are too busy riding the oil boom to keep a close eye on accounting. AFP PHOTO/COR (Photo credit should read MIRA OBERMAN/AFP/Getty Images)

Crude oil drilling rig

Sambo, in an interview, told LEADERSHIP that oil companies were not keen to go as far as the Lake Chad Basin to explore crude oil when they can conveniently do same on the high sea and transport them easily by ship to overseas buyers.

“The issue of oil and gas exploration in the northeast has actually been there for a very long time. From geological studies, there is oil there and there is gas, but whenever it comes to the exploitation of the resources, the oil companies don’t want to go there. They ask the simple questions: Why should I go there? When I get the crude oil, what will I do with it? Export it or refine it? If I refine it, I will be getting local naira.

“The companies are coming to invest dollars and they will be getting local naira – they are not interested. They want to invest dollars and they want to get dollars back. So, why should I go to northeast to drill oil almost 2,000km (away) when I can drill the oil in the high sea and load the tankers in the high sea? That’s just the basic economics that prevented the exploitation of oil in the northeast,” the geographer said.

He noted that countries like Chad have no choice but to endure the rigour of exploring crude oil in the Lake Chad Basin where it is located, given the country’s economic condition.

“They have been drilling oil in the Republic of Chad for more than 10 years. They had to construct a 200,000 kilometres export pipeline. They are not refining in Chad; they are exporting it from Chad across the whole length of the Republic of Cameroon to the sea, to export their oil, because they do not have much natural resources around, or they do not have the capacity to tap the other natural resources.

“That one is the easiest one (from which) they would get forex, so they need it; they are still taking crude oil from that axis, but they have to pump it 200,000 kilometres from the pumps to export. And the proceeds they have garnered have actually changed the Republic of Chad for the better.”

Sambo, however, gave a glimmer of hope with the way another one of Nigeria’s oil-rich but landlocked neighbours to the north, Niger Republic, has found a way out of the problem.

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