The push by President Muhammadu Buhari’s administration for oil and gas in the northern part of the country has come under spotlight as the end of its second and final tenure nears.
Since coming to office in May 2015, Buhari has been determined to find oil and gas deposits in the country’s northern region.
He has consistently made the supremacy of the north as a political and economic power in the country a paramount issue for his government.
In October 2017, the then president of the World Bank, Jim Yong Kim, told reporters that Buhari had requested the bank to prioritise its developmental programmes across the northern parts of Nigeria.
“In my very first meeting with President Buhari he said specifically that he would like us to shift our focus to the northern regions of Nigeria and we’ve done that,” said Kim, who added that his organisation had largely complied with Buhari’s request.
In 2015, Buhari told a live audience during a visit to Washington that the regions that overwhelmingly voted for him should expect more from his government than the one that did not.
“The constituents, for example, who gave me 97 percent (of the vote) cannot in all honesty be treated on some issues with constituencies that gave me 5 percent,” he said when he was asked about his administration’s policy of inclusiveness at the United States Institute of Peace on July 22, 2015.
The president, a one-time federal commissioner for petroleum resources and current minister of petroleum resources, ordered the Nigerian National Petroleum Company Limited (NNPC) to drill for and find oil deposits in the North immediately he assumed office.
In 2016, the NNPC began a search for oil in several northern states.
Oil majors operating the country had in the past ventured into the region to prospect for hydrocarbon deposits. Drilling campaigns were, however, halted because of the low success rate in the discovery of hydrocarbon deposits in commercial quantities.
In 2019, the NNPC announced that crude oil, gas and condensates were discovered in the Kolmani River region, a border community between Bauchi and Gombe states. The company has also been instructed to find oil in Kogi and Nasarawa states.
Buhari said Kolmani possessed 1 billion barrels of oil reserves and 500 billion cubic feet of gas.
While diversifying Nigeria’s hydrocarbon sources, increasing existing reserves and boosting daily production remain critical to the country’s economy, there are fears that the president is politicising and ethnicising an otherwise commercial decision that ought to have been taken based on rational business case basis.
As the oil majors stay away from the drilling of oil in the nation’s North, the state-owned NNPC has been responsible for driving the exploration for and commercialisation of oil in the region.
The NNPC has over the years failed to maintain its four refineries, all of which are lying dormant. The company was accused in 2022 by the Office of the Auditor-General for the Federation of failing to account for about 107,239,436 barrels of crude oil lifted for domestic consumption in 2019.
While the company and the federal government claim that the Kolmani project has attracted $3 billion in investments, sources within the organisation dispute that.
“Practically the entire funding for the project and others in the North is coming from NNPC alone,” a senior NNPC official said, adding, “SEEPCO is providing minimal technical support while NNDC (New Nigeria Development Company) is a partner just on paper because they hold the Oil Prospecting Licences (OPL) 809 and 810 at the Kolmani field sites in Bauchi and Gombe states.
“The reality is that the funding for the exploration of hydrocarbons in the North is coming from the Frontier Exploration Fund, which allocates 30 percent of the profit from NNPC’s upstream oil and gas contracts for the purpose of oil exploration in frontier basins. Simply put, the proceeds of oil deals from the South are being used to fund explorations of Kolmani and others in the North with little being done by NNPC to expand the search for more oil acreages in the South,” the source added.
Sterling Oil Exploration and Energy Production Company (SEEPCO), partner in the Kolmani project, is an India-based oil firm. According to Indian financial daily newspaper, Mint, in June 2016, several people, claiming to be employees of the company in Nigeria, reached out to the Indian government for help through Twitter. They had not been paid salaries for more than seven months.
Responding to one of those tweets by Prashant Singh, who said he was working as a geophysicist at SEEPCO’s exploration facility at Lagos in Nigeria, minister of state for external affairs V.K. Singh, said on June 15 that the “Indian embassy was making all efforts and will solve your problem”.
According to the paper, SEEPCO “is owned by fugitive brothers Nitin and Chetan Sandesara. The Central Bureau of Investigation recently sought information from Interpol Nigeria on whether Nitin Sandesara and his family were in Nigeria or not. The Sandesara brothers were under scrutiny already. Earlier this year the Enforcement Directorate attached properties worth ₹ 4,700 crore of Sterling Biotech Ltd, of which they are promoters, in connection with a money-laundering investigation of ₹ 5,000 crore in a bank fraud case.
“The brothers told people in their business circles about how they were confident of making $100 million per month (roughly Rs.700 crore) annually from their crude oil business in Africa. But they could not produce the desired results in Nigeria.”
In November 2022, Buhari ordered the NNPC to utilise and leverage its vast asset portfolio across all corridors of its operations to de-risk the project in order to attract the much-needed investment.
An official of the Kolmani Integrated Development Project told BusinessDay that oil has not been produced at the project site. “We are still drilling to check viability. We have not hit big yet,” he said.
The official’s statement contradicts the position of the federal government that Kolmani has 1 billion barrels of oil reserves and 500 billion cubic feet of gas.
“The NNPC’s northern project has been characterised by extreme opacity and ambiguity,” an industry stakeholder said on condition of anonymity. “It is as if they are hiding something. They need to come clean and be transparent with Nigerians.”
The stakeholder said: “Based on evidence we see, there is no reason to doubt that there is oil and gas in other parts of the country outside the Niger Delta.
“The model we have in Nigeria is that commercial oil companies bid for blocks and spend their resources to prospect and when they find, they exploit them. We need to ask ourselves: Why is this new effort to find oil being led by NNPC? What’s the data like? And where is the data? There is always data available and commercial companies can buy the data and prospect for oil.
“The problem is that NNPC is leading these explorations and announcing timelines that are politically expedient – timelines before Buhari leaves office. It would be advisable that the search for oil in different parts of the country should be commercially driven and not politically driven so that we don’t incur huge debts that will end in nothing to show for it.”
Damilola Olawuyi, a professor of Law at Afe Babalola University and member of the Governing Board of the Nigeria Extractive Industries Transparency Initiative (NEITI), said last year that the federal government must provide clear and verifiable data on commercially viable fields, progress so far made, the challenges that remain and the next steps forward.
Such transparency and clarity, according to him, would provide relevant information for prospective market participants to properly evaluate the opportunities available and the investment contexts. According to him, after a prospect is technically and commercially viable, a lot of other regulatory steps have to be taken before the prospect can move to full production and commercialisation.
Olawuyi said: “For example, a development plan has to be submitted to the relevant authorities for review and approval. Similarly, the right to drill must be secured through a competitive bidding process before drilling can begin. While it is quite discouraging that several of these next steps have proceeded rather slowly in the North, it does not call for despair.
“Oil and gas production activities worldwide are currently undergoing complex challenges in light of the ongoing global energy transition, which has continued to limit the availability of financing for new oil and gas assets. Also, the sector is recovering from oil price volatility, which has resulted in all forms of production quotas and limits for existing and new production activities.”