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Oil exploitation in the north: Matters arising

By Editorial Board
06 December 2022   |   2:04 am
The official flag off of the long awaited crude oil drilling in the North is a historical landmark that could change the economic landscape in Nigeria if properly managed. Coming 66 years after oil was discovered in the Niger Delta, the development is a laudable and indeed, a good omen to have oil in the North.…

Oil workers on an oil rig. Source: Nairametrics

The official flag off of the long awaited crude oil drilling in the North is a historical landmark that could change the economic landscape in Nigeria if properly managed. Coming 66 years after oil was discovered in the Niger Delta, the development is a laudable and indeed, a good omen to have oil in the North.

However, players in the sector, starting from President Muhammadu Buhari as Minister of Petroleum, have a whole lot of work ahead, if the country is not to be further embroiled in the crises that have permeated oil exploitation in the Niger Delta region.

The issues begging for resolution include poverty in oil-producing regions, degradation of the environment, agitations of producing communities for better deals, oil theft in humongous quantities, control of oil and other natural resources, management of the oil industry and payment of derivation, among other salient issues.

There is no doubt that oil drilling in the North would create a balance and remove the long-standing envy between the north and the south. President Muhammadu Buhari, who doubles as the Oil Minister, performed the ground-breaking ceremony of the Kolmani Oil Prospecting Lease (OPL) 809 and 810 at the Kolmani field site located at the boundary between Bauchi and Gombe states.

Currently, Nigeria produces far less than its Organisation of Petroleum Exporting Countries (OPEC) quota of 2.1 million barrels per day due to hostilities and oil theft in the Niger Delta region. How discovery of oil would translate to economic prosperity for the country as well as bring a new dawn for the oil and gas industry will remain a major challenge for the country. But there is more than sufficient experience from the exploration and exploitation of the oil industry in the Niger Delta area to provide enduring lessons for the authorities. Whether they are ready to learn or not will depend on how much political will the leaders can summon.

The effort for oil exploration in the Gongola Basin has been ongoing for some years with geologists optimistic of commercial discoveries in the zone. Industry observers lauded the political will of the Nigerian National Petroleum Company Limited (NNPCL) to intensify the search for hydrocarbon resources in the region amidst stiff opposition from various stakeholders. The flag off of oil drilling in Kolmani River-11 has given credence that the NNPCL was right in its sustained search for oil in the region.

We recall that in July 2019, during an inspection tour of the ongoing drilling operations at the Kolmani River-II Well drilling site, Mele Kyari with the late Dr. Maikanti Baru, the then Group Managing Director of NNPC, reportedly said he could not wait to see President Muhammadu Buhari light the first flame at the area, signifying a potential discovery of hydrocarbons. That hope has been fulfilled by the flag off event.

But while there is ecstasy over the oil discovery on one hand, there is, on the other hand, genuine apprehension in some quarters as to why Nigeria is investing heavily in oil exploration at a time the world is moving away from fossil fuel. While it is wise and proper for the country to invest in non-fossil technology, in line with global focus, it is equally true that whatever may be the case, the world may not likely do away with oil in the next 53 years based on the current rate of production. That is to say oil would still remain relevant in the global economic scheme.

Nevertheless, the discovery of oil in the North has thrown up some pertinent questions. For instance, what management model is going to be adopted to ensure that the oil is not mismanaged like the oil in the Niger Delta? Is the issue of environmental pollution being taken into consideration? What happens to the controversy over the adequacy of 13 per cent derivation and the larger issue of resource control by producing states? Would the oil now help to restructure the country and enthrone real federalism? These are critical issues that were not satisfactorily managed in oil exploration in the south.

While the expectation is high that the new-found oil would be effectively utilised to bring prosperity, there is apprehension as to why the oil has been placed under the management framework of the New Nigeria Development Company (NNDC), instead of the Nigerian National Petroleum Corporation Limited (NNPCL) that statutorily manages oil and gas resources in the country. The question is why? Why choose a different template for managing the oil in the North?
The NNDC is a conglomerate owned by the 19 Northern states of Nigeria with interests in agriculture, textile, solid minerals, etc. Does it mean that the oil belongs only to the North, while the oil in the Niger Delta belongs to the entire country? What is the justification? The Federal Government certainly needs to clarify the posers quickly before they assumed dimensions dangerous for the Nigerian polity as a whole.

Certainly, the process is not transparent. There is need to review the derivation formula to ensure equity to the producing states but this must be universal to all states and regions concerned. It is still worrisome that revenue from mineral resources mined in the North does not appear to enter the national coffers as those mined in the South. Gold, precious stones and now oil, among others, seem to belong only to some states in one part of the country while they belong to the federation when produced in other parts of the same country. This is an important political issue that needs to be sorted out to sustain the Nigeria Project.

There is also need for full details and information on how much has been spent on the oil exploration activities. The entire process should be transparent from the outset. There should be lessons learnt from the mismanagement of the oil in the Niger Delta. There is need for superior management to avoid making the same mistake made in the Niger Delta. The new oil should not add to the curse of oil in Nigeria. And that would depend on how honest and transparent the managers are.

It is gladdening that after a long search, oil has been found in the North. The oil should be a national asset and not restricted to NNDC. By virtue of the clamour for federalism, oil and other natural assets should belong to the region where they are found; and appropriate royalties paid to the centre. That way, the new oil would be setting in motion the process towards realising true federalism.