With Eyes on $400m Annual Exploration Fund, NNPC Pushes for Oil in Sokoto, Niger, Others

Emmanuel Addeh in Abuja

The Nigerian National Petroleum Company Limited (NNPC) is pushing for more oil in the north, a move that could be made easier by the $400 million projected annual funding for the exploration of frontier basins under the Petroleum Industry Act (PIA).

New data obtained by THISDAY covering the national oil company’s frontier exploration activities between 2020-2022 indicated that some of the states in the north where the firm is hoping to discover oil include Sokoto, Nasarawa, Niger and Borno. Others are Yobe, Adamawa, Gombe and Bauchi states.

Outside the north, the Anambra basin was listed as another area where the NNPC is pushing for more oil, after a similar discovery of the commodity in Kolmani River 2  which straddles Gombe and Bauchi states.

According to the new PIA: “There shall be maintained for the purpose of this section, a Frontier Exploration Fund which shall be 30 per cent of NNPC Limited’s profit oil and profit gas as in the production sharing, profit sharing and risk service contracts.’’

Last year in the heat of the debate that followed the alleged discrepancy in funding of host oil communities in the Niger Delta and exploration of frontier basins, mostly in the north, as enunciated by the PIA, the Group Chief Executive Officer of the NNPC, Mallam Mele Kyari, revealed that about $400 million would be spent annually to fund exploration of oil and gas in the frontier basins under the new PIA. His projection was from the previous year’s activities in the sector.

When the sum, which is from 30 per cent of the proposed NNPC Limited’s profit from oil and gas, is added to the estimated $500 million to be spent on host communities, being the 3 per cent of operating expenditure approved by the Act, both cost centres would gulp a cumulative $900 million or roughly N450 billion every year, THISDAY learnt.

At the time, Kyari admitted that some of the misconceptions concerning the new law were due to the adoption of a wrong communication strategy, insisting that the 30 per cent exploration fund was not meant to explore oil in the north alone.

He said there were potential oil wells in the southern states, including Anambra basin, the Calabar embankment, as well as the ultra-deepwater areas of the Niger Delta.

“When you say profit percentage, it will probably come down to less than $400 million per annum. And, then, the other side of it is that 30 per cent is a big number, but when you come to the host community fund, you have three per cent of operating expense,” the GCEO stated while trying to douse the tension generated by the debate.

“What’s wrong in finding oil anywhere that you find it? Because once you find oil and gas, it becomes the resource of the federation, and therefore nobody loses from this participation,” he said in defence of the provision of the new law.

However, the latest NNPC document showed that 2D seismic acquisition has already been completed in the 700 Line Kilometre (LKm) in Sokoto basin and the 600 LKm in Bida basin where crop compensation payment has been rounded off and post-acquisition has reached 70 per cent on both sites respectively.

On the Chad basin, the NNPC report indicated that acquisition activities had been suspended, but that security clearance was received from the defence headquarters on November 7, 2022, while a waiver from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for Environmental Impact Assessment (EIA) was being awaited.

For Oil Prospecting Licence (OPL) 813A, Keana West, and phase 14, Kinasar, the NNPC document stated that seismic acquisition for the former two had been carried out and security assessment completed.

In Nasarawa State, the NNPC said that it has also obtained 3D seismic data of 86Km2 in Keana and final deliverables have been received.

Also in Yobe state, the company explained that it is prospecting for oil in Phase 13 in Wadi, where it is appraising a 168km2 likely area.

In Adamawa state, NNPC noted that it is on phase 14 of Kinasar Prospect spanning 170km2 and phase 15 of Ziye Prospect spanning 172km2 all in the Borno basin while the contract agreements for phases 13 and 14 have been executed while that of phase 15 is yet to be executed.

In November, a visibly elated Buhari, in his speech, at the unveiling of Kolmani 2, said it was to the credit of his government that at a time that financing of fossil fuel projects was drying up due to the energy transition drive, the administration was able to attract $3 billion to the facility.

Buhari described the day as important in the economic history of the nation as it moves closer to production of oil and gas in the Upper Benue Trough, specifically, the Kolmani River oil and gas field, straddling Bauchi and Gombe States in the North-east.

At the time, THISDAY learnt that the first phase of the integrated development project, will entail an oil refinery of up to 120,000 barrels per day capacity and a gas processing plant of up to 500 million standard cubic feet per day.

The Kolmani project also comprises a power plant of up to 300-megawatt capacity and a fertiliser plant of 2,500 tons per day  with over 1 billion barrels of oil reserves and 500 billion Cubic Feet of Gas cumulatively.

Buhari noted that the feat was significant considering that efforts to find commercial oil and gas outside the established Niger Delta was attempted for many years without the desired outcomes.

However, he explained that the successful discovery of the Kolmani oil and gas field by NNPC and her partners has finally broken the jinx by the confirmation of huge commercial deposits of hydrocarbons in Kolmani River field.

Among several other locations where exploration is ongoing in the north, the NNPC document revealed that it expected drilling of phase 8-X3 well in the Chad basin even as it has applied for permits from the regulatory agency.

The NNPC report further explained that a “petroleum play fairway analysis”, basin modelling activities and seismic interpretation were ongoing at the Anambra basin and had reached 65 per cent completion.