Desperate to find oil Chad Basin could yet burn its fingers in the long as the zone may not guarantee a commercial find - Geologist warns Buhari

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 re¬sponsible for their inability to invest in the North East after 30 years of exploration.

But the Group Managing Direc¬tor 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 conver¬sant with investments in the sector say the NNPC’s plan to resume ex-ploratory 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 Ni¬gerian 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 exten¬sive probing of some allocated and non-allocated oil blocks in the region to establish the magnitude of the de¬posits. 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 Depart¬ment 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 ex-plore 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.”

Who should take the lead?

Having explored the Chad Basin for some decades without any successes in oil discovery, experts have advised that the NNPC should not take the risk by getting involved in the process, rather, private sector op¬erators and International Oil Companies (IOCs) should be the ones driving the process that would eventually lead to oil discovery and subsequent exploration activities.

They argued that it would not be economically rational for the nation’s leadership to commit to financing exploratory activities in the North East with the staggering economic headwinds buffeting the nation.

Director, Centre for Petroleum Economics and Energy Law, University of Ibadan, Prof. Adeola Ad-enikinju, said considering the huge financial obligation of the NNPC, adding the burden of oil exploration in the Chad Basin would be foolery.

He specifically mentioned the in¬ability of the NNPC to manage its upstream assets in the Nigerian Pe-troleum Development Corporation (NPDC), coupled with its failure to meet up with its cash call obligations currently put at about $6 billion in its various Joint Venture (JV) operations with IOCs.

The petroleum economist ex¬plained that committing huge resources for oil search in that region at a time the global oil market is going through a difficult time would not be a good investment decision for the country to take.

‘‘I doubt if NNPC has the resourc¬es to commit to such cause. Again, this is where the issue of political interference comes in. This is not an issue of politics but business. Directing the NNPC to resume oil search in that region is not good for the corporation. The corporation should run as an independent business entity devoid of political interference. They should be able to determine whether to resume oil search or not, and not the government telling them what to do,’’ he warned.

His views were equally supported by the publisher of Africa Oil and Gas Report, a magazine focusing on the petroleum sector, Mr. Toyin Akinosho, who warned against the involvement of NNPC in the re-sumed search for oil prospects in the Chad Basin.

Akinosho said though the IOCs were not interested to get involved in exploration activities in that re-gion, they prefer to concentrate their energy and resources in deep water operations, having gradually moved out of onshore prospects as a result of attendant security challenges.

The publisher who is also a geologist with several years of working experience with Chevron, advised NNPC to allow those that are more experienced in that terrain to develop the assets and then pay returns to government, stressing it would be a more sustainable approach.