Years after the search for petroleum deposits in the North appeared to have been jettisoned, a new effort is on to explore gas resources believed to be abundant in the area.
There are indications that a bright ray of light is appearing in northern Nigeria�s quest to harness the oil and gas resources believed to be abundant in the region�s sedimentary basins, which comprise the Middle and Upper Benue Trough, the southeastern sector of the Chad Basin, the Mid-Niger (Bida) Basin, and the Sokoto Basin.
This follows efforts by the New Nigerian Development Company (NNDC), which has so far spent N400 million on oil and gas exploration in the Lake Chad Basin and the Benue Trough. According to the Group Managing Director of the NNDC, Alhaji Aliyu Alkali, the company has been involved in exploration for the past two years when it bid for and won licences for four oil blocks, two each in the Lake Chad Basin and the Benue Trough.
“Our exploration activities have been on for the past two and half years when we bid for and won four oil blocks; two in the Benue Trough and two in the Lake Chad Basin,” he told Sunday Trust.
The company reportedly budgeted $70 million (about N8.1 billion) for oil and gas exploration.
According to Alkali, NNDC is already in talks with a Russian company, OAO Gazprom and Australian Anzion Energy Limited on the prospect of exploration in the Benue Trough which has been found to have a large quantity of gas reserve.
“We have been discussing with different groups who showed interest in what we are doing but they are waiting for necessary data on what have been found in those oil blocks,” Alkali said.
The gas reserve, he said, can power an independent power project (IPP) capable of supplying 20 megawatts of electricity daily for 20 years.
Alkali also said that in addition to the IPP, the North in particular and the nation in general stand to benefit from the Benue Trough gas reserve in the form of fertilizer plants.
“If the potential of the well to be drilled is higher than what we expect, nothing stops us from starting a fertilizer company there in addition to the IPP. But what we have in mind now is to establish an IPP that would benefit the country as a whole, serve as a source of income for the country, alleviate the poverty of the people living around the area and provide the much needed energy to drive our industries back to life,” he said.
Alkali lamented the lackadaisical attitude of the Department of Petroleum Resources (DPR) to the project which, he said, has resulted in delaying its exploitation.
“We can establish the IPP within 18 to 24 months if other things are ready and there are no regulatory constraints. But with the current foot-dragging of DPR, it is difficult to estimate when the projects would become reality,” the GMD said.
The NNDC, Alkali said, started discussions with Gazprom some weeks ago. Gazprom confirmed last month that it was in talks with the federal government over plans to develop the gas sector in different parts of the country.
In what is seen as a strategic move in the global fight for Africa�s energy assets, both the government and Gazprom said that they were discussing a proposal under which the company would offer a package of investment in the energy sector.
The Group General Manager in charge of Public Affairs of the Nigerian National Petroleum Corporation (NNPC), Dr Levi Ajuonuma, confirmed the FG-Gazprom talks to Sunday Trust on Friday. He said based on the plans, the Russian group would gain a foothold in some of the biggest gas deposits in the country, including some abandoned reserves in the North.
Speaking to Financial Times last month, President Umaru Yar�Adua�s special adviser on petroleum, Mr Emmanuel Egbogah, said that Gazprom is offering to spend “significant numbers” of billions of dollars on a project with Suntera, a Russian-Indian energy company, to harness gas to generate electricity.
“I think they are looking at the overall scenario of gas competition and the world market, and Europe in particular. I think their approach is to position themselves to be quite relevant in that market,” Egbogah said.
Oil exploration in the North began in earnest in 1987, when the NNPC started drilling in the region, but it was stopped in 1999. Areas covered during the exploration included parts of Bauchi, Gombe and Borno states. Although the NNPC was reported to have found wet gas in only one of 23 exploration wells and three other multi-national corporations who were also drilling for oil in the region were said to have found no commercially viable deposits, political undertones were suspected to have informed the suspension.
The NNPC maintains that a total of 28 exploratory oil wells have been drilled outside the Niger Delta area, all showing various levels of prospectivity. These wells, the corporation says, include one discovery well in Benue state and 24 wells in the Chad Basin. “However, production is yet to commence from any of the wells,” the corporation says on its web site.
According to Alkali, the oil reserve in the North was not harnessed because “adequate efforts have not been made to exploit it.” He also said that the companies engaged in exploration activities in the Benue Trough between Gombe and Bauchi states, compelled to work in the area by the federal government in return for oil blocks in the Niger Delta, abandoned it because they discovered more gas there than oil.
“They left it because they were more or less compelled to prospect it by the federal government in return for oil blocks in the Niger Delta. And because they found more gas than oil�they realised that they have not been able to do anything with the gas in Niger Delta not to talk of the one in the hinterland,” he said.
With the arrival of Gazprom on the scene, however, Alkali said the potentials are more realisable as the Russian firm “came into Nigeria with the intention to utilise the abundant gas reserves in the country and they met and discussed with us after realising that we have the same interests.”
Half-owned by the Russian government, Gazprom is the largest gas company in the world, with the largest natural gas reserves in its possession. The company�s share of global and Russian gas production is estimated to be 20 and 85 percent respectively.
It is expected that Gazprom�s scheme to capture a share of the Nigerian vast gas reserve would not only add to the global stature of the company, whose strategy is to acquire the leading position among global energy companies by entering new markets, diversifying core business activities and ensuring reliable supplies, but also reinforce a trend where state-backed energy companies are increasingly challenging the dominance of their western rivals globally.
This, according to the Financial Times, is particularly easy for Gazprom to achieve in view of the belief among government officials that western corporations have profited from Nigeria�s oil wealth for decades without giving enough in return.
Nigeria is said to have the world�s seventh-largest reserves of proven natural gas reserves at 180 trillion cubic feet, but the resource has been mostly untapped for lack of utilisation infrastructure and investment.
Every day oil companies burn off about 2.5 billion cubic feet of gas that comes out of the ground with the oil they pump estimated by the World Bank to account for 12.5 percent of the world�s total gas flaring in 2005.
It has been estimated that the African continent is endowed with some eight percent of global gas reserves as well as some of the highest quality hydrocarbons reserves in the world which are relatively unexplored.