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Economy

Digging Into Endless Search for Inland Crude Oil

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fourteen oil workers
  • Digging Into Endless Search for Inland Crude Oil

The Federal Government had recently renewed interest in its quest to ensure that the country begins to explore crude oil outside of the Niger Delta region.

Barely a month ago, the Nigerian National Petroleum Corporation (NNPC), said that 21 oil wells out of the 23 drilled so far outside the Niger Delta have potential of full prospects of oil. NNPC said that a total of 23 oil wells have already been drilled by mining oil companies involved in oil exploration in the North, in the past 30 years. While two of them reportedly hit a dry run, 21 other wells were said to hold prospects of oil.

The exploration of the oil in the North has so far gulped about $340m and the NNPC is expecting to receive more money into the quest – in compliance with the recent presidential directive to resume oil exploration in the North.

The Guardian learnt that about N39.4b had been approved by the Federal Government to ensure full exploration of hydrocarbon in the North East and other basins outside the Niger Delta.

While many experts lauded the new move by the Federal Government, others believe that it is another exercise in futility.Specifically, some experts believed that the prospect of finding oil in the Chad Basin are more of politics, as it’s been proven that oil is not geography, but geology.This is because hydrocarbon cannot co-exist with solid minerals. The North is heavily endowed with so many minerals.

As such, pundits who have spoken on the prospects of the Chad Basin perhaps, are just humouring the political powers, rather than economic arguments.

For instance, a geologist in a Nigerian University who spoke on condition of anonymity described the search for crude oil in the Chad Basin as a wild goose chase, which would not result in tangible success.

The source said that he had done some study on the possibility of hydrocarbon in the Chad basin and is afraid to publish for the fear of loosing his job. “I believe the Federal Government is wasting money looking for hydrocarbon in the Chad basin.”

Also, a Northern Senator even called on the Federal Government to investigate the fund spent so far on the search for crude oil in the northern parts of the country.

The senator stated: “Oil exploration in the north has been carried out back to days far beyond that of former President Jonathan Goodluck. I am calling on President Muhammadu Buhari to order a probe into this questionable search for oil. Past leaders have amassed wealth through this venture, and I want the president to investigate this.

“If we cannot find oil, we must get our money back because so far over $3 billion had been wasted on oil exploration in the north, particularly in the Chad Basin and Benue trough”.

Some experts who spoke with The Guardian, said although, not much success has been recorded so far, application of new technology in the new oil search could bring positive result.

They emphasised the need for the Federal Government to adopt latest technology in its new quest for oil outside of the Niger Delta, as well as, explore solid mineral resource, which they said are in every part of the country, as part of its diversification strategies.

Professor of Applied Geophysics, University of Ibadan, Olayinka, Abel Idowu, said finding crude oil in commercial quantity couldn’t be ruled out, as oil has also been found in the Chad basins.

According to him, there is exploration already going on in the Niger side of the Chad basin, which gives the possibility of oil in the Nigeria part of the basin.He explained that there are many sedimentary basins in the northern part of the country, which is why government is trying to explore those basins called the new frontier.

He stated: “Up till now, most of the oil that has been found in Nigeria has been in the Niger Delta basin. You may also know that oil has been found off the coast of Lagos. When you have the sedimentary basin, the possibility of finding oil cannot be ruled out until you have done an extensive geological work. I think it also makes sense to the possibility of exploring crude oil in other basins”.

He pointed out that there have been reported cases of gas in the Chad basin, saying that crude oil has not been found in commercial quantity. “It is not just enough to find oil, we have to make sure it is available in commercial quantity. The truth of the matter is that you cannot foreclose the possibility of finding hydrocarbon. We have also found out there are abundance of gas in the frontier basin,” he said.

Idowu added, “They have to look closely at the scientific data, geological data and every other data and ensure that every opportunity has been explored before ruling out the possibility of finding oil in the basin. Until every opportunity has not been explored, it will not be wise to stop exploration completely. They should continue to collect ecological data to be able to say precisely what we have in the sub-surface.”

He also stressed the need for the government to employ latest technology, which he said, might facilitate the process of finding crude oil in the Chad basins. “The truth of the matter is that in the history of hydrocarbon exploration, there are areas where you have carried out Two Dimension Seismic (2Ds) study and you think there is no oil, with the application of latest technology by using 3Ds, oil has been found. Technology keeps improving and we have more sophisticated techniques, which may make oil easier to find in that basin”.

He emphasised the need for the Federal Government to utilise other resource, such as solid minerals, which he said are capable of generating revenue for the country.

According to him, solid minerals can be found in virtually every state of the federation. This, he believed, would reduce focus on oil revenue from the Niger Delta and help to solve the issue of militancy in the region. “It is in the interest of the country to explore other mineral resources, which would help reduce environmental degradation in the Niger Delta”.

The President, National Association of Petroleum Explorationists, Nosa Omorodion, argued that the renewed quest for hydrocarbon resources in sedimentary basins like the Chad Basin and Benue Trough and recent commencement of oil production from Dahomey and Anambra basins are developments that are set to alter the Nigerian oil and gas landscape.

He said that the county has attempted to go beyond Niger Delta by exploring in Benue Trough, to Anambra Basin, Naomey Basin, Gongola Basin, which are geared towards achieving one goal of increasing the country’s reserves and production rate.

“To achieve that, we need to look beyond what we are currently doing. Nobody can do that, but the oil finders who will find oil before you can produce. Now we have identified that the places where new discoveries can come from would be at the deeper levels,” he said.

He disclosed that Nigerian explorationists were elated that government has stepped up its endeavors in the search for oil in any region where prospective finds exist.

“As you are aware, the search is not limited to the Chad basin alone, but covers extensive inquest in the Nigerian Frontier Sedimentary Basins, which include Bida Dahomey, Anambra, Gongola/and the Sokoto Basins along the Middle/ Lower Benue Trough, Yola.

“NAPE has always advocated for fiscal regimes to be structured to encourage exploration in the frontier basins, in order to replace reserves. As for the potential of crude oil exploration, I would say that discoveries made in neighbouring countries in basins with similar structural settings such as Doba, Doseo and Bongor, all in Chad amounts to over 2billion barrels (bbbls).

“NNPC has over the years embarked on intense studies. Hydrocarbons were encountered in previous campaigns, but were not of enough commercial interest. The drive, focus and technical preparedness to resume exploration are commendable and they have not been shy in engaging the brightest minds and best available technology to minimize the risk and increase the chances of success. It can also be said of the Benue trough, which incidentally recorded some gas success in the previous campaign.

The country, he said also under utilises other energy sources such as bitumen, coal, lignite, and shale oil, thereby leading to a monoculture economy that is largely dependent on crude oil export.

Emphasising on the role, which technology would play in the country’s quest for hydrocarbon in the new frontier, Omorodion stated: “New technology has improved the quantity and quality of information available about different geological structures and this has enhanced the likelihood of finding oil and gas. I will give an example, today many new tools enable us to find deeper and harder to reach fields. As a matter of fact, it was technology that literally extended the reach of the industry in grilling into frontier fields and deeper depths.

“Additionally technology also helps to unlock new oil in old fields. I must commend the Federal Government’s intensified and intentional efforts in finding hydrocarbon in frontier basins. Finding more oil from these other fields will improve our reserves base and mitigate the short fall in production arising from disruptions in the Niger Delta.

“One other way technology has helped is in transforming resources once thought to be unconventional into conventional ones. Don’t forget that only forty years ago, all offshore oil was considered unconventional. Today, this portion of total global oil supply accounts for 30 per cent. Improved technology has improved recovery rates and extended the life of existing fields and some fields feared to be depleted have been brought back to life.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

US Senate Passes $1.9 Trillion Stimulus Package

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US Senate Passes $1.9 Trillion Stimulus Package

President Biden’s $1.9 trillion economic stimulus plan would have far-reaching effects on society as the country tries to turn the corner on a pandemic that has killed more than half a million people in the United States.

The mammoth bill approved by the Senate on Saturday would provide direct payments to Americans, extend jobless benefits and provide a huge financial infusion to states and local governments as well as to schools to help them reopen. It provides funding for priorities like coronavirus testing and vaccine distribution. And it amounts to an ambitious antipoverty program, offering significant benefits for low-income people.

Here’s a guide to what’s included in the plan, which is scheduled to go before the House for final approval on Tuesday and then would head to Mr. Biden for his signature.

Individuals making under $75,000 and married couples making under $150,000 would receive direct payments of $1,400 per person. The bill would also provide $1,400 per dependent.

The payments would gradually decrease above those income levels and disappear entirely above an income cap: $80,000 for individuals and $160,000 for married couples.

Those caps were lowered from the thresholds in the House’s version of the stimulus plan, which set the cutoffs at $100,000 for individuals and $200,000 for married couples.

The Senate bill extends unemployment programs through early September, including the $300-per-week federal supplement provided in the last stimulus plan passed in December.

Mr. Biden had proposed bumping up that supplemental benefit to $400 per week, which the House agreed to, but the Senate kept it at $300 weekly.

The Senate bill also includes a provision intended to avert surprise tax bills for people who lost jobs, waiving federal income taxes for the first $10,200 of unemployment benefits received in 2020 for households earning under $150,000.

For 2021, the bill would temporarily expand the child tax credit, which is currently worth up to $2,000 per child under 17. Under the legislation, the tax credit would be as much as $3,600 for children up to age 5 and as much as $3,000 for children 6 to 17.

The bill would make the full value of the credit available to low-income people who are currently ineligible or receive only a portion. And for the second half of this year, it would have the federal government send advance payments of the credit to Americans in periodic installments, akin to a guaranteed income for families with children.

The legislation would also expand the child and dependent care tax credit for 2021, and it would expand the earned-income tax credit for workers without children for this year as well. Through 2025, it would exempt student loan forgiveness from income taxes.

The bill would provide funding for vaccine distribution as well as coronavirus testing, contact tracing and genomic sequencing. It would give money to the Federal Emergency Management Agency as well.

It would provide $350 billion for states, local governments, territories and tribal governments, and it contains about $130 billion for schools. It also includes funding for colleges and universities, transit agencies, housing aid, child care providers and food assistance.

In addition, the bill contains funding to help businesses, including restaurants and live venues, and it includes a bailout for multiemployer pension plans that are financially troubled.

The bill would temporarily increase subsidies for people purchasing health insurance through the Affordable Care Act’s marketplaces. It includes billions of dollars for public health programs and veterans’ health care.

It also seeks to help those who have lost jobs keep the health insurance coverage they had through their employer, covering the full cost of premiums through a federal program called COBRA through September.

As part of the stimulus plan, Mr. Biden wanted to raise the federal minimum wage, which is now $7.25 per hour, to $15 per hour.

The stimulus bill passed by the House would increase the wage to $15 per hour by 2025, but the Senate parliamentarian said the provision violated the strict rules that Senate Democrats had to follow to pass the bill through a special process that shielded it from a filibuster and allowed for its approval with only Democratic support. A vote in the Senate on Friday to add the wage increase back to the bill failed.

The Senate bill also dropped funding for a rail project in Silicon Valley in Northern California and a bridge between upstate New York and Canada, two provisions that were included in the House bill and drew criticism from Republicans.

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Economy

Seplat Petroleum Pays US$564.165 Million to Federal Government in 2020

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Seplat Petroleum, an indigenous Nigerian upstream exploration and production company, announced it paid a total sum of US$564.165 million to the Federal Government in 2020.

In the report on payments made available to the Nigerian Stock Exchange and seen by Investors King, Seplat Petroleum paid US$389.576 million to the Nigerian National Petroleum Corporation (NNPC) as production entitlement in 2020.

Production entitlement is the government’s share of production in the period under review from projects operated by Seplat.

This comprises crude oil and gas attributable to the Nigerian government by virtue of its participation as an equity holder in projects within its sovereign jurisdiction (Nigeria).

Also, Seplat paid US$130.009 million to the Department of Petroleum Resources in 2020. A breakdown of the amount showed US$111.633 million was paid as royalties while US$18.376 million was paid as fees.

Similarly, US$579,361 was paid as a fee to the Nigeria Export Supervision Scheme.

The energy company made another payment of US$17.935 million in fee for 2020.

While the Nigerian Content Development and Monitoring Board received US$4.826 million in fee from Seplat in 2020.

Seplat paid US$21.239 million in taxes to the Federal Inland Revenue Service in 2020.

Therefore, Seplat Petroleum paid a total sum of US$564.165 million to the Federal Government in the 2020 financial year. See the details below.

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Economy

FIRS Sets N5.9 Trillion Revenue Target for 2021

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FIRS to Generate N5.9 Trillion Revenue  in 2021

Mohammed Nami, the Chairman of Federal Inland Revenue Service, FIRS, on Friday said the agency is projecting total revenue of N5.9 trillion for the 2021 fiscal year.

Nami stated this while meeting with the House of Representatives Committee on Finance led by Hon. James Falake on the Service’s 2021 budget defence of its proposed Revenue and Expenditure Estimates.

According to the Chairman, N4.26 trillion and N1.64 trillion were expected to come from non-oil and oil components, respectively.

However, Nami put the cost of collecting the projected revenue at N289.25 billion or 7 percent of the proposed total revenue for the year, higher than the N180.76 billion spent in 2020 to fund the three operational expenditure heads for the year.

He said: “Out of the proposed expenditure of N289.25 billion across the three expenditure heads, the sum of N147.08 billion and N94.97 billion are to be expended on Personnel and Overhead Costs against 2020 budgeted sum of N97.36 billion and N43.64 billion respectively. Also, the sum of N47.19 billion is estimated to be expended on capital items against the budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive.

Speaking on while the agency failed to meet its 2020 target, Nami said “There’s lockdown effect on businesses, implementation directive also for us to study, research best practices on tax administration which involves travelling to overseas and we also have to expand offices and create offices more at rural areas to get closer to the taxpayers, we pay rent for those offices and this could be the reason why all these things went up.

“And if you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential”, he said.

 

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