The Kolmani drilling campaign is a strategic move for Nigeria.
This is according to Dan D. Kunle, an oil and gas analyst. In a brief phone call with Nairametrics, Mr. Kunle said the Kolmani drilling campaign, which will be set off by President Muhamadu Buhari on Tuesday, November 22 is a strategic move for the country.
Buhari will officially kick off a drilling campaign in 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 significant discovery of crude oil in the Kolmani prospect. At the time, the NNPC had drilled a depth of about 13,701 feet and had discovered traces of sweet crude, gas, and condensates.
Full exploration previously hampered: According to Dan Kunle, Nigeria’s frontier basins: Lake Chad, Gongola, Anambra, Sokoto, Dahomey and Bida basins and the Benue trough, all situated in Nigeria’s north are long overdue for exploration and exploitation. The reason why Nigeria has waited this long to explore the resources in these basins is that the NNPC was both a regulator and a player in the sector, so it could not effectively carry out full exploration over the previous 40 years.
The PIA: However, that has changed as the NNPC became a limited liability company in 2021 as a result of the Petroleum Industry Act (PIA). The same Act also states that a frontier exploration fund shall be created and shall be 10% of rents on petroleum prospecting licenses and 10% rent on petroleum mining leases; and 30% of NNPC Limited’s profit oil and profit gas as in the production sharing, profit sharing, and Risk service contracts. The fund shall be applied to all Basins and undertaken simultaneously.
Mr. Kunle told Nairametrics that the drilling campaign is only the first step and other steps will include determining the commercial quantity and attracting investments then, usage options, which are determined through knowing what Nigeria intends to do with its newfound oil and gas resources.
An important question to ask in this instance would be: when the resources in the prospects are determined, will Nigeria use the gas for domestic purposes, and will the oil be taken to local refineries for processing or still exported to be refined?
Why this matters: Nigeria has recently lost the opportunity to gain from the rise in global crude oil prices as a result of crude oil theft, which has led to a loss of about $150 million every other day, as of September 2022, according to Umar I. Ajiya, the chief financial officer at NNPC. If Nigeria explores and discovers more commercial quantities of crude oil, the country’s crude oil production will increase and the country will gain more revenue.
