Oil rig
worker
Nigeria is
reviving its search for oil in the country’s conflict-riven northeast, aided by
China and emboldened by gains made against
Boko Haram. President Muhammadu
Buhari’s government is exploring inland basins ranging from central Benue state
to Boko Haram’s heartland in northeast Borno.
Renewed
attacks on oil and gas infrastructure in the southern Niger delta last year
crippled production and exposed Nigeria’s economic vulnerability.
But a new
discovery elsewhere would diversify the country’s supply, with the potential to
transform the impoverished northeast and wider north.
“The president
would be very happy if we made a significant find in commercial quantities
there,” Nigerian National Petroleum Corporation (NNPC) spokesman Ndu Ughamadu
told AFP.
“It’s a
priority to the NNPC and it’s a priority to the country.”
Yet industry
insiders warn pumping oil in the northeast, where the jihadists are still
fighting a guerilla war, could recreate turbulence seen in the south.
“It’s not
such a win-win situation for us. If we do find oil there, then it gives Boko
Haram more motivation to attack,” said Ecobank energy analyst Dolapo Oni.
“We’ll start
to see communities in the region looking to exercise more land control. That’s
what we’re seeing in the Niger delta.”
– Rosy
outlook –
There are
already disputes. In March, landowners in Alkaleri, Bauchi state, demanded
government compensation over claims that exploration work was damaging
farmland.
Abuja,
however, remains optimistic and maintains northeastern oil could provide a
buffer against unrest in the southern swamplands.
Nigeria,
Africa’s largest oil producer, has been one of the countries worst affected by
the plunge in global crude prices since mid-2014.
Last year,
its economy shrunk 1.5 percent — its first full-year contraction in 25 years —
while inflation soared and the naira currency weakened.
The squeeze
in revenue was compounded by the attacks from militants demanding a greater
share of crude revenues for local people.
Exploration
work in Borno state had started before Nigeria fell into recession.
Work is
centred on a triangle of hotly contested land stretching from Gubio in the west
to Marte in the east and Kukawa, in the far northeast corner near Lake Chad.
“We had to
suspend operations on November 24, 2014,” said Mazadu Bako, general manager of
NNPC’s Frontier Exploration Services.
But he said
the NNPC has received security clearance to move back in and a team had
recently visited army commanders in Monguno — between Kukawa and Marte — “to
discuss our strategy for the re-entry to the Chad basin”.
– Chinese
expertise –
To help spearhead the search, the NNPC is
working with the Bureau for Geophysical Corporation, a subsidiary of the China
National Petroleum Corporation (CNPC), that specialises in seismic data
exploration.
Nigeria is
banking on CNPC’s years of experience in neighbouring Chad and Niger to
discover commercial quantities of crude.
In Chad’s
Doba basin near the Cameroon border, CNPC, Exxon and Glencore are producing
around 110,000 barrels per day, according to energy consultants, Wood
Mackenzie.
In Niger,
CNPC has discovered around one billion barrels on the Agadem block and is
currently producing around 17,000 barrels per day.
That pales
in comparison to the delta’s output capacity of 2.2 million barrels per day,
but is still a significant source of income for the underdeveloped region.
Investors
are getting curious and in November last year, the NNPC signed a memorandum of
understanding with British firm Savannah Petroleum, a major player in Niger, to
evaluate the commercial potential of the region.
In January,
the NNPC said it had “stepped up its collaboration” with US oilfield services
company, Schlumberger, to search for oil in the Lake Chad basin.
– Far from
reality –
“There’s a
heap of basins in that northern area, which, to be fair, are clearly
under-explored,” said Gail Anderson, lead Nigeria analyst at Wood Mackenzie.
“There’s
definite potential and with insecurity in the Niger delta, there’s a lot of
sense in that.
“But then
again, if Boko Haram is active, maybe you wouldn’t want to go drilling in the
northeast.”
Today, Nigeria’s
government is focusing its exploration work in Bauchi and Gombe, states a safer
distance from Boko Haram hotspots in and around Lake Chad.
That means
for now, oil production in the far northeast is a distant prospect.
Similar
campaigns in the past have failed to result in commercial finds, explained
Aaron Sayne, a researcher at the New York-based Natural Resource Governance
Institute.
Northern
politicians, like Buhari, have summoned the chimera of oil before to use as a
promise of hope and as a show of strength against the more prosperous south.
“I’m sure it
could be real, but it sounds like it’s a long way away,” said Sayne.
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