Nigeria To Earn N32tr From North’s New Oil Fields

Nigeria may be in for another breakthrough in oil exploration as the first of such activities debut in the North on the Kolmani River range spanning Bauchi and Gombe states with fresh 1 billion barrel oil reserve generating over N32 trillion, when developed.

Daily Trust, at the weekend, confirmed from multiple sources at the Nigerian National Petroleum Company Ltd (NNPC) that President Muhammadu Buhari will on Tuesday supervise the first oil drilling in the North. The development is historic for Nigeria, with the country now boasting of crude oil reserves in both its southern and northern parts.

An official said that the oil finding activity would be the first major oil exploration since NNPC transformed into a commercially viable entity.

Drilling on the Kolmani Oil Prospecting Licence (OPL) 809 and 810 at the Kolmani field sites in Bauchi and Gombe will be the first oil drilling in Northern Nigeria after oil discovery in commercial volume was announced nearly two years ago.

These new assets are controlled by NNPC Ltd, the newly commercialised state-owned oil company, and the New Nigeria Development Company (NNDC), a conglomerate owned by the 19 Northern States of Nigeria. It was learnt that NNDC had won the OPL 809 and 810 since 2007 and had agreed with NNPC on developing the oilfields and getting proceeds in a Production Sharing Contract (PSC) which NNPC already operates with some International Oil Companies (IOCs) and National Oil Companies (NOCs) exploring oil in the Southern Niger Delta.

Nigeria may earn N32tr from new oil wells

With an estimated 1 billion barrels of crude oil reserve from the new northern oil wells, Nigeria is expected to gain nearly $73 billion or N32.3 trillion at an average global crude oil price of $73 per barrel benchmark used for the 2023 budget proposal. This earning could be realised over a period of 10 years; depending on when commercial production starts.

At the moment, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said crude oil reserves were at 37 billion barrels. With 1bn oil and perhaps gas reserves coming from the Kolmani fields, Nigeria’s oil and gas reserves could shoot up higher.

Analysis of the current crude reserve shows that the reserve slightly grew by 0.37 per cent to 37.046bn barrels as of January, 2022, from 36.910bn barrels in 2021. Gas reserves rose by one per cent to 208.62 Trillion Cubic Feet (TCF) from 206.53TCF. It is expected that gas reserves could grow to 220TCF in less than 10 years and 250TCF afterwards.

Kolmani: NNPC to build refinery, power plant, industrial hub

The Nigerian Petroleum Development Company (NPDC), a subsidiary of NNPC Ltd, had drilled Kolmani River 2 well in 2019 and the Kolmani River 3 well in 2021. By September, 2021, NPDC began shopping for oil exploration firms that could develop the OPL 809 and OPL 810. According to its requirements obtained by Daily Trust, the firms will provide financial and technical services for the integrated development of the assets.

According to officials at NNPC Ltd, the oil field in Bauchi and Gombe axis will be developed by Sterling Global Oil on behalf of NNDC and NNPC Ltd.

on new oilfields exploration.

A similar report in 2021 showed that NNPC spent N20.681bn on frontier oil exploration in the first seven months of last year.

The oil find in the north is coming at a time when crude oil production in the south has dropped to about 1.2 million barrels per day mainly due to oil theft and vandalism. Oil production in the north could be a backup to shore up revenue for Nigeria as it witnesses a huge budget deficit so far, experts say.

Commenting on the impact of the new oil exploration in the North, Mr Alechenu Anebi, a petroleum expert, believes it will make all the difference for the north and curb the desire for oil theft and sabotage in the Niger Delta.

He said, “When there is no alternative, the country is often held to ransom by restive youths and saboteurs around oil facilities in the South; with the start of oil production in the North, I believe appetite for such vices will drop.

“I also think it is good for Nigeria because we will have more refining capacity and the fuel scarcity we see in the north because you have to bring petrol from Lagos and other coastal areas will stop as there will be a refinery and oil wells supplying white products in the north.”

(Daily Trust)