AFTER 3 decades of elusive search for hydrocarbons in the Lake Chad Basin where the Federal Government spent about $340 million and additional N27 billion, in seismic expedition, Nigeria looks set to continue its crude oil exploration in the North East region.
But petroleum engineers, investment experts and geologists have warned the Buhari administration could yet burn its fingers in the long run as the geography of the zone may not guarantee a commercial find.
It was on the basis of this sentiment that the recent marching order handed down to the management of the Nigerian National Petroleum Corporation (NNPC) to resume oil search in the Chad Basin after 30 years of futile efforts is eliciting reactions from stakeholders in the oil and gas sector.
They have argued that the quest for hydrocarbons in the Chad Basin, which is adjacent to Niger Republic, Cameroon and Chad, would seriously be hampered by economies of scale projections, insecurity and the unwillingness of oil companies to drill outside the Niger Delta with already proven reserves. This may also have been responsible for their inability to invest in the North East after 30 years of exploration.
But the Group Managing Director of NNPC, Dr. Maikanti Baru, had, while receiving the Governor of Bauchi State, Mallam Mohammed Abubakar, disclosed that President Muhammadu Buhari had directed the Corporation to resume its oil search in the Chad Basin and other parts of the North East.
The President’s directive is coming after the Federal Government had burnt a whopping N27 billion and $340 million in the three decades of search for oil in the region without commensurate result.
However, those who are conversant with investments in the sector say the NNPC’s plan to resume exploratory activities in the Chad Basin may not be a viable option for an economy in recession, at least, in the short and medium term.
Studies have indicated that the Nigerian end of the Chad Basin has little potential for commercial oil deposits and would require huge expenditure in addition to security challenges in the zone. In an era of low crude oil prices, international oil companies would be very unwilling to commit resources to drill in the North, particularly as prospects of commercial finds look largely slim.
“While there are about 37 billion barrels of proven oil reserves and about 187 trillion standard cubic feet of gas in the South South of Nigeria, what we want to explore in the North is an unproven reserve of about 2.3 billion barrels of oil reserves and about 14.65 trillion standard cubic feet of natural gas available for four or more countries in the Chad Basin,” the study asserted.
“If you do the cost benefit analysis, you can see that it is not viable in the short and medium term,” said Henry Boise, Petroleum Economics, Management and Policy Researcher at Emerald Institute for Petroleum and Energy Economics, Policy Strategy, University of Port Harcourt.
Notwithstanding, however, Baru has informed that the renewed search for hydrocarbon deposits in the Chad Basin would entail extensive probing of some allocated and non-allocated oil blocks in the region to establish the magnitude of the deposits. And this would involve huge investment from the public treasury.
The NNPC GMD noted that the Corporation has identified specific oil blocks in the area where some of the finds have been made and would move to re-invigorate exploration based on fresh strategy.
“You know that very close home, we have exploration activities on the frontier basin in the Chad and some areas close to the Kolmani River where Shell had made some indicative discovery of hydrocarbons. Now, Mr. President has directed me to go into that area to further explore the magnitude and prospect of those finds.”
“We are taking steps to re-strategise and get into those regions. We will re-invigorate the frontier exploration and see how they can collaborate with NNPC that is holding Block A09 where some of the finds have been made, and also for the Department of Petroleum Resources (DPR) to assign redundant blocks,” he said.
Boise, however, faulted Baru’s position, insisting that “exploration is an expensive activity. You can explore an entire field and you might not find anything. In the Chad region, oil has been found where the water is deeper. The Nigerian region has shallow waters.”
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