President Muhammadu Buhari of Nigeria announced on Tuesday the discovery of a massive oil reserve in the north of the country that may hold over a billion barrels of crude.
Buhari was on hand in a border area between Gombe and Bauchi state, in the country’s northeast, to inaugurate a long-term drilling and refining project that he expressed hope could improve the nation’s economy. The discovery and subsequent development of resources in the area is the first of its kind in northern Nigeria.
Nigeria is an OPEC member nation and was once the largest oil producer in Africa, but its industry has suffered tremendously under the elderly Buhari, scheduled to depart the top office in February. Buhari’s poor handling of terrorist threats such as the jihadist Boko Haram organization, roving Fulani “bandits” that have devastated Christian communities and stolen countless billions in natural resources, and other criminal organizations has left the country with little interest in supporting the 79-year-old’s administration or his party, the All Progressives Congress (APC).
Nigeria has largely failed to capitalize on its prodigious natural resources, particularly oil, as a result of neglecting the refining facilities it has and not investing significantly in building more. The country has also faced a wave of widespread oil theft in which unspecified “bandits” built illegal pipelines into the government’s pipelines and stole the oil out of them, resulting in billions of dollars in losses for the government.
In his announcement on Monday, Buhari said the Kolmani area in which the oil was found is estimated to hold over one billion barrels and another 500 billion cubic feet of natural gas.”
“This is indeed significant considering that efforts to find commercial oil and gas outside the established Niger Delta Basin were attempted for many years without the desired outcomes,” Nigeria’s Premium Times newspaper quoted Buhari as saying.
“As a fully integrated in-situ development project comprising upstream production, oil refining, power generation and fertilizer, the project promises many benefits for the nation,” he promised. “This includes but is not limited to Energy Security, Financial Security, Food security as well as overall socio-economic development for the country.”
Buhari also applauded himself and his administration for attracting significant foreign investment, which he estimated to be around $3 billion, into an oil and gas project “at a time when there is near zero appetite for investment in fossil energy.”
Nigeria’s Daily Trust, which broke the news of Buhari’s planned visit to the Kolmani area on Monday, predicted that, should the government manage to extract the oil in question and keep it from being stolen, it could generate as much as 32 trillion naira, or about $72 billion.
“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,” Daily Trust predicted. “This earning could be realised over a period of 10 years; depending on when commercial production starts.”
That newspaper’s report offered more details on the extent of the project, including plans to build a refinery in the region rather than simply extract and sell the crude product. NNPC Limited, Nigeria’s primary oil company, will reportedly manage the construction of a refinery and “build a power plant which will utilise the energy from the wells to produce electricity.”
Figuring out how to secure the oil so that criminals do not steal it out of storage tanks and pipelines will be critical to the success of the project. In southern Nigeria, where all the nation’s oil wealth was previously located, organized criminal syndicates have nearly perfected building clandestine infrastructure to steal the government’s oil. Last month, NNPC revealed that it had discovered an elaborate, 2.5-mile-long secret pipeline built into a key export terminal. The secret pipeline had been reportedly operating for at least nine years, siphoning oil out and costing NNPC about 600,000 barrels of oil a day.
In a separate theft operation, an NNPC official revealed in September that criminals had punched 295 illegal taps into one of the company’s pipelines, resulting in 95 percent of the oil in one terminal being stolen.
A study by a Nigerian Senate committee published on Wednesday found that Nigeria had lost $2 billion in stolen oil between January and August 2022. Nigeria’s Punch news outlet noted, however, that the report “failed to name a single person or corporate entity carrying out the oil theft.”
The Senate’s estimate is much more modest than a similar attempt to quantify the theft by the Premium Times which found in September that Nigeria had lost $10 billion to oil theft between January and July.
The thefts resulted in Nigeria losing its status as Africa’s top crude oil producer in May to Angola.
Oil thieves have also set up networks of illegal oil “refineries” throughout Nigeria, creating tremendous safety hazards. In April, an explosion at an illegal “refinery” in southern Nigeria killed 110 people. The explosion was so large that it incinerated a nearby forest and multiple cars in line to buy illegal fuel.