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From James Ume
Public Forum
The refreshing rhyme in the caption of this essay captures in poignant terms, the unmatchable passion, unwavering commitment, grit and patriotic zeal of Mele Kolo Kyari, the Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPC) to nurture to fruition President Muhammadu Buhari’s charge to the company to re-strategise and expand its oil and gas exploration footprints to the frontier basins of Anambra, Dahomey, Sokoto, Benue trough, Chad and Bida basins.
The successful flag-off by President Buhari on Tuesday of the drilling of crude oil at the Kolmani field lapping on the border of Bauchi and Gombe states, the first in the north 66 years after crude oil discovery in Nigeria is the result of the firm commitment of the Nigerian National Petroleum Corporation Limited under the leadership of Mele Kyari and its partners to see through the vision of the current administration to expand our country’s strategic crude oil reserves.
One billion barrels of crude oil reserves and 500 billion standard cubic feet of gas exists in Kolmani River Oil and Gas field and when fully developed, Nigeria stands to gain about 73 billion pounds or about N32 trillion at an average global crude oil price of $73 per barrel benchmark used for the 2023 budget projection.
Details of the first phase of this Integrated Development project shows that NNPC would not only build an oil refinery of up to 120,000 per day capacity but would also build a power plant which would utilise energy from the wells to produce electricity.
According to the provisions of the Production Sharing Contract (PSC), the NNPC is the concessionaire of the blocks, the NNPC Exploration and Production Limited (NEPL) and the New Nigeria Development Company Limited (NNDC) are the contractor parties. The AOML Consortium signed a strategic partnership with the contractors to provide funding and technical capabilities for the project and would be compensated from the contractor’s profit after commencement of operations.
The project has an In-Situ integrated development plan that guarantees evacuation and monetisation route for the hydro carbon in the location. This would eliminate the high cost and burden of building a crude and product lines.
At the midstream level, the NNPC and its partner, NNDC would build a gas processing plant of up to 500 million standard cubic feet daily, a power plant capable of generating up to 300 mega-watts of electricity and a fertilizer plant with 2,500 tons production capacity per day.
The significance of this feat considering that efforts to find oil & gas in commercial quantities outside the established Niger Delta basin failed to deliver desired outcomes was not lost on President Buhari.
At the flag-off of the project executed through Oil Prospecting Lease (OPL) 810 and 809 at the Kolmani oil field site, Alkaleri in Bauchi state, he said: “It is therefore to the credit of this administration that at a time when there is near-zero appetite for investment in fossil energy, coupled with location challenges, we are able to attract investment of over $3billion to this project.”
“As a fully integrated in-situ development project, comprising upstream production, oil refinery, power generation and fertilizer, the project promises many benefits for the nation. This includes but not limited to energy security, financial security as well as overall socio-economic development of the country.”
While the country awaits the harnessing of the transformative potential of this consequential project especially in the north-east, it is pertinent to applaud the consistency, doggedness and the unrelenting spirit that continues to define the quest by NNPC to discover new oil deposits to achieve its target of raising the country’s oil reserve to 40billion barrels by 2025 and also to boost the revenue profile of the country.
Under the leadership of Mele Kyari, the NNPC Limited has sustained an aggressive search for oil to boost our oil reserves with drilling in the north-east with similar activities across other basins currently actively ongoing.
The depletion of the country’s strategic reserves and the risks involved has always been a source of worry to experts, industry watchers and of course the present administration.
Rather than throw in the towel in capitulation, Mele Kyari has demonstrated core competence in rising up to the challenge by walking the talk. In 2019, the Nigerian Association of Petroleum Explorationists (NAPE) had raised the alarm warning that the continuing depletion of the nation’s oil reserves posed a grave danger to its survival and economic vitality.
Specifically, NAPE had warned that reduction in hydro carbon exploration and steady depletion of the oil reserves would drive Nigeria into risks of long-term disruption to oil & gas supplies, power generation, collapse of industries and significant loss of revenue.
“Nigeria is at the risk of long-term disruption to oil and gas supplies, power generation, a collapse of industries and significant loss of revenue due to continuous reduction in hydro carbon exploration activities. Reduction in hydro carbon exploration and exploitation has dire consequences for a country like Nigeria with a mono-economy hinged on crude oil.
“Procurement and contracting cycles in the Nigerian oil & gas industry is about 36 months, making it the longest and the most inefficient in the world. The long contracting cycle results in high level of uncertainties in costing and planning, thereby creating a sluggish business climate.
“Insecurity, oil theft and illegal refining are bigger threats to the oil & gas industry in Nigeria than the declining price of oil. The current low oil price is rather a reflection of an over-supply of oil in the world market,” he had said.
It should be emphasised that the present breakthrough achieved by NNPC in its sustained search for commercial oil & gas was made possible by the Buhari’s administration which has been very supportive of its quest to deliver on its mandate of growing the nation’s oil reserves through aggressive exploration activities across the basins in the country.
As far back as October 2019, when the president conducted his first supervision of the drilling exercise, the NNPC, then a corporation, had reported that its exploration activities had encountered oil in commercial quantities at the Kolmani River II.
The NNPC had stated that it had discovered hydro carbon deposits in the Kolmani River II well on the upper Benue trough/Gongola Basin. According to the statement, “Preliminary reports indicated that the hydro carbon discovery consisted of gas, condensate and light sweet oil of American Petroleum Institute (API) gravity, ranging from 38-41 found in stacked siliciclastic cretaceous reservoirs of Yolde, Bima Sandstone and Pre-Bima formations.”
In pursuit of its target, the NNPC had acquired 435.54 Kilometeres in square(km2) of 3D seismic data over Kolmani prospect in the upper Benue trough in the Gongola basin to evaluate Shell Nigeria Exploration and Production Company (SNEPCo) Kolmani River1 well discovery of 33billion standard feet (BcF) of gas and explore deeper levels.
Under Kyari’s guidance, the NNPC also acquired additional 1183km2 of 3D seismic data over highly prospective areas of the Gongola basin with a view of evaluating the full hydro carbon potential of the basin. According to the national oil company, “NNPC has deployed world-class cutting edge technologies including Surface Geo-Chemistry, Ground Magnetic Stress Field Detection, Full sensor gradiometric aerial surveys to De- risk exploration in the frontier basins.”
It proposed an onsite midstream refinery and power plant, it was the considered opinion that this would allow it to use these resources for local needs as well as create an industrial hub to provide economic benefits and employment.
As a result of NNPC’s relentless quest to achieve its core mandate, it did not take long for industry watchers, experts and policy analysts to applaud the Buhari’s administration and Mele Kyari for the impact of the progressive policies on the oil and gas sector and the positive signals these policies continue to send to both local and international investors.
Kyari continues to drive the ongoing transformation of the oil and gas sector with a strong commitment to achieve desired results. Not even the coronavirus pandemic could slow down the pace of the exploration and exploitation activities he initiated when it berthed in 2020.
In 2020, NAPE commended NNPC under the leadership and guidance of Kyari for executing oil exploration in the Benue trough and Chad basin in spite of the Corona Virus.
In his remark during a virtual workshop for oil & gas journalists, Mr. Alex Tarka the then association’s president noted that the exploration being carried out by the NNPC was attracting the attention of the International Oil Companies (IOCs) who the corporation was considering entering into partnership with. He said that government’s doggedness, commitment and the creation of the enabling environment would cause IOCs to join the search for oil.
The NNPC has over the years committed resources on frontier exploration activities but the spending was not structured and domiciled under a specific law. But the signing of the landmark Petroleum Industry Act (PIA) into law in 2021 by president Buhari raised funding for frontier exploration to 30 per cent.
This means that the NNPC now has more funds to develop oil fields across the country. It has not shirked from this responsibility. The coming on stream of the Petroleum Industry Act has indeed strengthened the capacity of NNPC to make huge investments its exploration activities.
In 2021, FAAC Report showed that it spent N20,681bn on frontier oil exploration in the first seven months on 2021. This year, NNPC according to the FAAC Report has already spent N14.3 billion on frontier exploration but targets spending N29.4 billion at the end of the year on new oil fields exploration.
The August FAAC Report of the NNPC Limited showed that it spent N3.8 billion in January; N1.2 billion in March; N2.9 billion in April; N2.1 billion in May and N4.2 billion in June.
With the dizzying pace of exploration undertaken by NNPC under the leadership of Kyari, it would not be long before it meets its desired target of 40 billion barrels of crude oil reserves.
According to Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s reserves slightly grew by 0.37 per cent to 37.046 billion barrels as of January, 2022, from 36.910 billion barrels in 2021. This is before the fresh injection of one billion barrels of crude oil from the Kolmani oil fields.
Gas reserves rose by one per cent to 208.62 trillion cubic feet (TCF) from 206.53TCF. It is projected that gas reserves could grow to 220TCF in less than 10 years and 250TCF afterwards.
The inauguration by President Buhari, of the Kolmani oil field which kicked off the drilling of crude oil in the north sixty-six years after the discovery of crude oil in Nigeria is both consequential and transformational.
It has sent a strong signal to both local and international investors and players within the oil & gas industry that Nigeria means business in its efforts to get value from its abundant natural resources. It would spur economic growth, create employment opportunities, enhance energy security and promote economic prosperity.
•Ume, a communication advisor wrote in from Abuja
