- Its frenetic search for oil and retention of refineries are wrong-headed
Two most recent developments within the Nigerian National Petroleum Corporation (NNPC) would again serve to remind of how far the corporation is from getting its bearing, or even in understanding its rationale as a service–oriented commercial entity.
The first is the frenetic pace of exploratory activities launched by the corporation in selected inland basins. Two weeks ago, newspapers reported the group managing director of the corporation, Dr Maikanti Baru, as telling the visiting Governor of Yobe State, Ibrahim Geidam, that modalities were on to open up the basins of Niger Delta, Anambra, Chad, Benue Ttrough, Benin, Sokoto and Bida to prospective investors as part of the corporation’s efforts to shore up the nation’s reserve base.
While informing his visitor that preliminary exploratory activities had indicated some signs of hydrocarbon in eastern Yobe of the Chad Basin, he had reportedly enthused: “We are on target and we are looking at the prospect of the whole basins of Niger Delta, Chad, Anambra, Benue Trough, Benin, Sokoto and Bida. We are focused on delivering on these basins in line with our mandate”.
Earlier last month, the same Dr. Baru had on a visit to Sokoto told the governor, Aminu Tambuwal, that the corporation had extended the search for crude oil to the Sokoto Inland Sedimentary Basin. He told his host that in addition to procuring aeromagnetic data from the Nigerian Geophysical Survey, the corporation had awarded contract for the mapping and procurement of apt samples to further the understanding of the area. NNPC’s subsidiary – the Integrated Data Services Limited, IDSL, he said, had been contracted to carry out various geochemistry investigations to boost the gathering and integration of all relevant data ahead of the planned procurement of seismic 2D data position which would in turn determine various prospects.
More than half-century of commercial oil exploration, there is a lot to be said of the latest obsession not just to find oil but to ensure it flows in commercial quantities in the so-called inland basins. Much as we will agree to the boost that such a find will engender to the nation’s reserves as indeed its revenue in particular, what we cannot discountenance is the open-ended approach given the quantum of public funds being expended by the corporation on what is increasingly turning to be a voyage to nowhere. For an oil corporation whose activities are shrouded in utmost secrecy, the quest naturally, starts with the question of how much it is costing the treasury, more so at a time of global shifts to alternative energy sources.
The other related development is the shutdown of Kaduna and Warri refineries, due to what officials attribute to increase in their operation costs and maintenance interventions. Both, reportedly down since July are yet to resume production. The 125,000 barrels per day (bpd) Warri refinery, is said to have resumed production in January only to have its operations halted again in March due to a power problem. Whereas the quantum of funds pumped into the Turn Around Maintenance under the Buhari administration is yet unknown, suffice it to say that the corporation in its latest operations report for July reportedly posted N11.87 billion loss which it attributed to the downtime and ”unimpressive performance of the refineries.”
On both quests, the suggestion is that the corporation keeps some piggy bank of sorts whose funds are not only inexhaustible but are available for any and every purpose under the sun. It serves to explain why politics more often than not, trumps rationality even when issues are strictly of geo-scientific and commercial nature.
It should not be so.
For us as a newspaper, the issue of the refineries would appear long settled: the Federal Government has no business spending a dime of public funds further on their rehabilitation. They should be sold to private investors as soon as possible. On the issue of inland basins, the quest shouldn’t be driven by the whims of NNPC but by proven seismic data. Clearly, if the potential of the basins are truly what the NNPC says they are, getting operators with requisite technology and know-how to partner with under a long term cost-recovery arrangement should not be a problem.