President Muhammadu Buhari flagged off the drilling of oil and gas within Kolmani oil field in northeast Gombe and Bauchi states, which has a reserve of up to 1 billion barrels of crude, on Tuesday.
“We are pleased with the discovery of over 1 billion barrels of oil reserve and 500 billion cubic feet of gas within the Kolmani area, and the huge potentials for more deposits as we intensify exploration efforts,” he said.
According to President Buhari, the project has attracted a $3 billion investment.
The Kolmani field would feature an oil refinery with a capacity of 120,000 barrels per day, a gas processing site of 500 million cubic feet per day and a power plant.
This is the second drilling activity that is taking place in the northern part of the country, the first being Chad Basin where over 20 unsuccessful wells have been drilled.
This is however taking place in an area faced with potential security threats to lives and equipment because the states where the drilling is taking place are neighbours to Borno and Yobe states which are centres of Boko Haram activities
According to the minister of State for Petroleum Resoueces, Timipre Sylva, he said given the fact that most players within the international financial ecosystem are progressively moving away from funding fossil fuel development, financing for demand, supply and infrastructure projects will need to incorporate decarbonisation into project plans in order to attract funding.
“Nevertheless, the opportunity for investment and fantastic returns remains undimished and is continually available to the discerning investor.”
He said he was particularly excited at the partnership between NNPC Limited, Sterling Global Oil, and New Nigeria Development Commission (NNDC) to carry out this drilling campaign.
“This is a testimony of the fact that the hydrocarbons sector still holds promise of returns on investment, highlighting the role that this resource will continue to play in the global energy mix.”
The minister stated that drilling for hydrocarbons, such as will happen in the Upper Benue Trough/Gongola Basin, is crucial to our survival as a nation and needs to happen in tandem with the measures that we are taking on our pathway to the energy transition.
“We recognise that reduction in fossil fuel revenue, without sufficient time and support to manage macroeconomic risks and the structural transformation required to build a diversified, sustainable and resilient economy, will have catastrophic social knock-on effects for millions of people in Nigeria and this cannot be allowed to happen.”
“The project promises many benefits and these include energy security, financial security, food security as well as (the) overall socioeconomic development of our country,” the president said.
The start of the drilling “marks yet another significant milestone in our collective quest as a nation to ensure energy security and access” for Nigeria’s citizens, the minister said.
The drilling began nearly three years after Nigeria announced the discovery of oil in commercial volume in the region, which is embroiled in a decade long war against Islamic extremists. Analysts have raised questions about security measures to protect energy facilities there, while there are environmental concerns about tapping into more climate-changing fossil fuels.
Crude oil has been critical in expanding infrastructure in Nigeria, accounting for 41% of total federal government revenue in 2021 and N4.34 trillion ($10.1 billion) in earnings. However, oil theft has had a huge impact on the country’s finances and economy, which is Africa’s largest.
Officials project billions of dollars in earnings from the new oil project, which is being developed by the state-run Nigerian National Petroleum Company Ltd. in partnership with Sterling Global Oil and a conglomerate owned by Nigeria’s northern states called the New Nigeria Development Commission.