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Digging Into Endless Search for Inland Crude Oil

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  • 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.

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World Bank Lauds Kogi’s 2020 Financial Statement

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The World Bank has heaped praise on the Government of Kogi State concerning the state’s audited financial statement for 2020. The financial institution was said to have described the financial report as a standard to look up to concerning transparency and accountability in the public sector.

In a statement which was dated November 21, 2021 it was said that the bank made the commendation in a letter which was sent to the Accountant General of the state.

As said in the statement, the letter which was taken by the Kogi State Accountant General on November 2025 was signed by Deborah Hannah Isser, the Task Team Leader of the States Fiscal Transparency, Accountability and Sustainability Programme (SFTAS), Nigeria Country Office, Western and Central African Region.

SFTAS is a $750 million programme which has been set up to reward states for meeting any or every one of the indicators which demonstrate improvements in fiscal transparency, sustainability and accountability.

The indicators, which are nine in number were a byproduct of the former Fiscal Sustainability Plan of the federal government where States would be rewarded for meeting up to 22 targets.

The World Bank had previously backed the federal government to give incentives to the states in order to properly execute the 22-point Fiscal Sustainability Plan, which has now gone under a revamp as the nine Disbursement Linked Indicators under SFTAS.

Some of the criteria on which judgement will be based on are: improvement in financial reporting and budget reliability, improved cash management, increased openness, citizen participation in the budget process, reduced revenue leakages through the execution of State Treasury Single Account (TSA), a strengthened Internally Generated Revenue (IGR) collection, biometric registration and Bank Verification Number (BVN) used to reduce payroll fraud.

The World Bank commended the Kogi State government for preparing its audited financial statements in line with the basis of the International Public Sector Accounting Standards.

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Nigeria’s Rigid Forex Policy Discouraging Investors, Fueling Inflation – World Bank

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The World Bank has blamed the Central Bank of Nigeria’s rigid forex policy for the drop in Nigeria’s capital importation and rising inflation rate.

The bank disclosed in its November report, Nigeria Development Update.

Explaining modalities for its position, the World Bank stated that there had been constant pressure on the Nigerian Naira with the current forex policy, forcing the central bank to consistently increase its nominal official exchange rate in an effort to ease some of the pressure.

This, it blamed on the rigid foreign exchange management system of the Central Bank of Nigeria, saying the system has also been responsible for the rising inflation rate in Nigeria.

The report read in part, “The government’s exchange rate management policies continue to discourage investment and fuel inflation. Exchange rate stability is a key CBN policy objective, and to preserve its external reserves the CBN continues to manage FX demand and limit the supply of FX to the market.

“Pressure on the naira remains intense, and while the CBN has raised the nominal official exchange rate three times since the start of the pandemic (by 15 per cent in March 2020, five per cent in August 2020, and seven per cent in May 2021), FX management remains too rigid to respond to external shocks. Meanwhile, exchange-rate management has emerged as one of the key drivers of inflation.”

The World Bank further stated that the central bank foreign exchange system needs to be more flexible to withstand external shocks, especially given Nigeria’s mono-product nature. It added that the NAFEX rate does not reflect the true market rate but the central bank managed rate.

It read in part, “While the CBN supplied an average of $2.5bn to the Investors and Exporters forex window in the months just prior to the COVID-19 crisis, it only supplied an average of $0.5bn in the months thereafter.

“The NAFEX rate, which is now the guiding exchange rate for the economy, continues to be managed and is not fully reflective of market conditions. The parallel market premium over the NAFEX rate reached 29 per cent in August 2021 after the CBN cut off its weekly supply of $20,000 per bureau de change. The CBN has intermittently supplied forex to BDCs since 2005, providing ample opportunities for currency round-tripping.”

The institution however advised that Nigeria adopt a more predictable, transparent and flexible foreign exchange management system in order to attract and sustain private investment flows.

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Nigeria’s Non-oil Revenue Now N1.15 Trillion – Minister of Finance

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Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, has said that Nigeria’s non-oil revenue is now N1.15 trillion, representing 15.7 percent above the country’s target. This, she claimed, was a result of the federal government’s efforts at diversifying the nation’s economy.

Mrs. Ahmed disclosed this at the Institute of Directors (IoD) 2021 Annual Directors Conference which was held on Wednesday in Abuja.

According to the News Agency of Nigeria (NAN) the event with the theme: “Creating the Future: Deepening the Corporate Governance Practice through Multi-Sectoral and Multi-Generational Collaborations,” was meant to discuss economic development.

Mrs Ahmed added that the recent development was in line with President’s commitment to further diversifying the Nigerian economy which is heavily dependent on oil. She observed that Nigeria was showing resilience in recovery from recession from coronavirus (COVID-19) pandemic which intensely affected global economies.

The minister said the federal government alongside the private sector had implemented a wide range of monetary measures to stimulate economic recovery, growth and development, job creation and improved standards of living.

She also explained that the government was doing everything to improve and diversify Nigeria’s revenue generation.

Nigeria was quickly able to exit recession and is on her way to path of sustainable growth and we are intensifying efforts to grow and diversify our revenue sources to grow revenue from the current 8 per cent.”

“Our non-oil revenues have grown to N1.15 trillion, representing 15.7 per cent above set target. We are working on the 2021 finance bill and it’s nearing completion. Also, the recent approval of the medium-term national development plan is an important milestone of Buhari’s commitment to delivering sustainable growth and we require strong support and monitoring during implementation,” she said.

Mrs Ahmed reinforced the government’s decision to do something about infrastructure and reduce the cost of production for businesses in the country.

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