Buhari’s flagoff drilling campaign at Kolmani a strategic move for Nigeria: expert

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The Kolmani drilling campaign is a strategic move for Nigeria.

This is according to Dan D. Kunle, an oil and gas analyst. In a short phone call with Nairametrics, Mr. Kunle said that the Kolmani drilling campaign, which will be launched by President Muhamadu Buhari on Tuesday, November 22, is a strategic move for the country.

Buhari will officially commence a drilling campaign on Kolmani Oil Prospecting Lease (OPL) 809 and 810 at the Kolmani field site located in Bauchi and Gombe states.

In 2019, the Nigerian National Petroleum Company (NNPC) announced a major crude oil discovery at the Kolmani prospect. At that time, NNPC had drilled to a depth of approximately 13,701 feet and discovered trace amounts of sweet crude, gas, and condensate.

Previously Hindered Full Scan: According to Dan Kunle, Nigeria’s frontier basins: Lake Chad, Gongola, Anambra, Sokoto, Dahomey and Bida basins and the Benue Depression, all located in northern Nigeria, are long overdue for exploration and development. The reason Nigeria has waited so long to explore for the resources in these basins is that the NNPC was both a regulator and a player in the sector and was therefore unable to carry out full exploration over the previous 40 years.

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The PIA: However, that has changed since NNPC became a limited liability company in 2021 as a result of the Petroleum Industry Act (PIA). The same Law also establishes that a border exploration fund will be created and will be 10% of the income from oil prospecting licenses and 10% of the income from oil mining concessions; and 30% of NNPC Limited’s oil and gas profits as in contracts for production sharing, profit sharing and risk services. The fund will be applied to all Basins and will be executed simultaneously.

Mr Kunle told Nairametrics that the drilling campaign is just the first step and further steps will include determining the commercial amount and attracting investment, options for use, which are determined by knowing what Nigeria intends to do with its new oil and gas resources.

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An important question to ask in this case would be: when resources are determined in the outlook, will Nigeria use the gas for domestic purposes and the oil will be taken to local refineries for processing or will it still be exported for refining?

Why this matters: Nigeria has recently lost the opportunity to profit from rising global crude prices as a result of crude oil theft, resulting in a loss of about $150 million every two days, starting in September 2022, according to Umar I.Ajiya, the CFO of NNPC. If Nigeria explores and discovers more commercial quantities of crude oil, the country’s crude oil production will increase and the country will earn more revenue.

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