Oil Exploration: Ogun On Path to Eldorado

Femi Ogbonnikan

It is no longer in the realm of speculation that Ogun State is on the path to becoming an oil-producing State. It is an age-long desire based on its natural location along the Dahomey (Republic of Benin) Basin corridor but located at Tongeji Island within the purview of Ipokia Local Government (Ogun State). So, as the Gateway State, it is only natural for the government to tap into the full advantage of its proximity to the Basin where there is a high prospect of oil deposits.

To be sure, the search for the black gold remains a work in progress. But the prospect of turning the dream into a reality looks very promising. Promising to the extent that the Nigerian National Petroleum Company Limited (NNPCL) has indicated its readiness to commence oil and gas exploration along the Dahomey Basin corridor. Section 9 of the PIA empowers the Nigerians Upstream Petroleum Regulatory Commission to carry out some functions concerning frontier basins.

Last Friday, Ogun State Governor, Prince Dapo Abiodun,  played host to the Federal Government team consisting of the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, Managing Director, SHELL Petroleum Development Company Ltd, Mr. Osagie Okubor; Chief Executive, Nigeria Upstream Petroleum Regulatory Commission, Engr. Gbenga Komolafe and the Group Chief Executive Officer, NNPC Ltd, Mr. Mele Kyari,

The purpose of the visit was to unveil the federal government’s plan to start oil exploration in the state without any further delay. The leader of the team, Hon. Lokpobiri, while speaking at the governor’s office, Oke-Mosan, Abeokuta, the state capital, noted that Ogun State had always been part of the Dahomey Basin with the prospect of having a huge deposit of hydro-carbon.

“We decided that we are going to resume exploration in the different Basins; we decided to come to Ogun State to reassure the people that we have very high potential of discoveries here. Ogun has always been part of the Dahomey Basin and our presence underscores the seriousness the federal government attaches to the exploration activities that we want to carry out in Ogun State,” he said.

Lokpobiri, emphasised that oil and gas remained the quickest way to Nigeria’s economic prosperity, adding that his team was in the State in continuation of the renewed campaign for exploration activities. He said the visit was to demonstrate the seriousness and commitment of the federal government to shore up its revenue generation in the oil and gas sector.

“Today we are here to tell the people of the federal government’s commitment to ensuring that we continue our campaign and exploration activities across the country. We are doing these exploration activities in several places across Nigeria and today we are in Ogun after which we will proceed to Sokoto State,” he added.

Kyari, on his part, said Ogun State was lucky to be in the Dahomey Basin corridor with an expected high deposit of oil, assuring that the corporation would be coming back in earnest to commence full-scale exploration activities. He expressed confidence that oil would be found in commercial quantity.

In his remarks, the Executive Director of Nigerians Upstream Petroleum Regulatory Commission, Mr. Gbenga Komolafe, said the coming of the team to Ogun State was to further demonstrate the commitment of the Federal Government to grow the oil reserves and enhance federation revenue.

“We all understand that Nigeria is very prolific in oil and gas, but then there is still a need to grow the reserves through exploration activities given our huge hydro-carbon as a benchmark,” he stated.

Komolafe said the Petroleum Industry Act (PIA) makes provision for the funding of the development of the Frontier Basins. According to him, the Nigerian Petroleum Regulatory Commission is working in synergy with the NNPCL to leverage the PIA to aggressively carry out oil exploration in the Dahomey Basin.

“The Dahomey Basin stretches up to Delta, Edo, Ogun and Ondo states. We intend to in the course of this exercise, cover all those states leveraging the provision of Section 9, Subsection 4 of the PIA. This is a good opportunity for the people of Ogun State and it would be complementary to the reforms and transformation initiatives of the governor. We want to congratulate the governor and the people for being the beneficiaries of this initiative,” Komolafe added.

The host Governor, Abiodun, in his response, identified Ogun State as part of the OPLs 302,303 306, 307, saying the acreages present unique opportunities for the qualification as a Frontier Exploration State as defined in the PIA section 9.

He observed that investment under the frontier exploration basin funding was not meant to realize the oil and gas potentials only, but to also acquire data that would aid Bitumen exploration and exploitation in Nigeria.

According to Abiodun, studies have shown the potential of the basins, which brings Ogun State to the fore and projects it towards becoming a beneficiary to achieve commercial success and derive economic benefits from exploration and production within a minimum schedule. This is a region of the country that provides ease of access, low entry and operating costs, a safe and welcoming community and a very active state government support and participation.

“Ogun State, therefore, presents some unique opportunities towards the realization of the full intentions of the PIA section 9 on frontier exploration as it will contribute to guarantee additional petroleum production of additional petroleum products for the country and afford more supply to potential refineries in the area.

“As a low-hanging result, this area also presents the opportunity for Bitumen extraction, thereby reducing import dependency and bringing with it savings in foreign exchange expenditure on this single line item,” the governor said.

By the time the exploration effort comes to fruition, Ogun State will be entitled to the full benefits of being an oil-producing state, thereby adding to the revenue generation for the state. Beyond that, the state will also be entitled to benefit from the 13 percent derivation fund which is meant for the development of the oil-producing communities. This is in addition to some percentage of funding for socio-economic and infrastructure development from the federation account.

At present, Akwa Ibom tops the list as the largest producer of oil in the country. It is closely followed by Bayelsa, Delta, Rivers, Cross Rivers, Imo, Abia, Anambra, Ondo, and Lagos State respectively.  Akwa Ibom, Bayelsa, Delta, and Rivers account for 80 percent of crude oil production in Nigeria, while Cross Rivers, Imo, Abia, Anambra, and Ondo account for 20 percent.

With the readiness of the NNPC limited to commence oil exploration, Ogun State has also begun its journey to the Eldorado. Therefore, optimism is high that the search effort will bring something tangible for the state based on its historical antecedents.

Abiodun, referencing the aborted effort made by Shell D’Arcy Nigeria Ltd along Dahomey Basin in 1937, in an interview with TVC on Friday evening, emphasised the significance of the renewed commitment of the Federal Government to oil exploration, expressing confidence that it would succeed.

He had this to say: “This afternoon, the entire leadership of the Ministry of Petroleum led by the Minister of State for Petroleum, Senator Heineken Lokpobri; NNPCL GCEO, the CEOM of the Nigerian Upstream Regulatory Commission, was here in Abeokuta to formally declare Ogun State a frontier state for oil exploration in line with the establishment of the Frontier Exploration Fund Administration Regulations as defined under Section 9, subsection 4 of the PIA.

“What this basically has done or will do is to allow Ogun State to join the comity of states that are oil-producing when this exploration is successful. We don’t have a doubt that it will be successful because Ogun State is part of the family of states that belong to the Dahomey Basin, a geographical area that starts from just beyond the Delta and goes all the way to the Eastern part of Ghana. And when you look at the fact that there are OPLs that have become very prolific by the Delta and that other oil-producing explorations have been made by Benin Republic and Ghana, it stands to reason that that same basin that our state belongs to, when that exploration commences, should be very positive. Beyond that, we have studies that have revealed that in 1937, Shell D’Arcy Nigeria Ltd began exploring for oil in Nigeria and the Dahomey Basin and actually explored oil around Ogun State, around where we now have OPL 303, OPL 306, and OPL 307.

“Unfortunately, as soon as they discovered oil in Oloibiri, they abandoned the exploration in Ogun State.”

The benefits of successful oil exploration and exploitation are countless. Apart from increase in the revenue generation capacity, when production of crude oil eventually starts in the state, it will also generate jobs for the teeming population of youths. The combined effects of all these will further open up the economic and investment potentials for the state.

Ogbonnikan writes from Abeokuta, Ogun State