Most students of oil or, more broadly, energy security, would stand by the claim that there is no coup, war, subversion, insurrection, grave intrigue, peacekeeping operation or market volatility anytime, anywhere that oil is not at the heart of it. No one needs more than Daniel Yergin’s two books on oil, (The Prize and The Quest) to prove this claim. Although his own subject matter is different, it is still a reflection of this paradigm that we see in James Smith’s 2009 academic paper “World Oil: Market or Mayhem”. The oil industry is completely and permanently about mayhem, whose synonyms range from chaos to anarchy, bedlam, havoc, turmoil, confusion, disorder and pandemonium. No better word captures the oil industry than mayhem.
The world cannot do without oil. There is nothing or no one oil doesn’t touch and in many, many ways. So, everyone and everything is locked into oil: geopolitics, development, politics, business, religion, culture, war, peace, medicine and, in fact, living and dying. But almost everywhere that oil has been found has also experienced conflict and destruction, either of the livelihood of the local people or of the environment; the development of an enclave economy, the neglect of agriculture, intrigues with multinational oil companies and the dangers of the rentier mentality, the precursor of graft. It is such that aloofness from the politics of oil is the beginning of wisdom much as it is as well the greatest act of foolery.
This, it would be argued, is the situation at hand in Nigeria today regarding exploration of oil in the northern part of the country where the Federal Government has stepped up efforts in exploration of oil. The president was reported last week as having literarily ordered the NNPC to ‘go get am’. In the circumstance, a key question popping up is whether it can be any other option?
This is the tough question explored in this special report in which five distinct voices can be heard. The first voice is that of Dr Abubakar Siddique Mohammed, a product of the elite Ecole Des Hautes Etudes en Sciences Sociales, Paris and an energy scholar at Ahmadu Bello University, Zaria’s Department of Political Science. He also runs the Zaria based Centre for Democratic Development, Research and Training, (CEDDERT). The second voice is that of Barrister Nankin Bagudu, the Executive Director of Jos based League of Human Rights and a sustained voice on the environmental crisis of tin mining around Jos. The third voice is that of Dr Moses Ekpelomo who earned a PhD recently on Nigeria’s energy crisis from the Department of War Studies, King’s College London where he also teaches. The fourth voice is that of Abubakar Sokoto Mohammed, a left activist who, for decades, was a key resource person with the National Institute for Policy and Strategic Studies, Jos while the last is the voice of a technocrat, politician and peace advocate, Engineer Mohammed Abba Gana, former Minister for the Federal Capital Territory in Obasanjo’s first term. Each was aware that there are four others participating in the interview which were conducted separately between July 28th and 30th, 2016. Please, note that the interview is not being produced in the sequence in which it was conducted. That is impracticable with technology and the transcribing process. Although there is a consensus among the respondents that Nigeria needs more oil wealth, the respondents offered a kaleidoscope of views, points of departure, caution, emphasis and alternatives policy planks.
Dr Abubakar Siddique Mohammed
You are aware of a long concern with discovering oil in the northern part of the country. Do you think oil is the way, everything related to oil considered?
I am aware of the concern. It is justified given what is happening in the Niger Delta. But human beings have the capacity or the ability to learn from their mistakes. Oil, diamond, gold and other mineral resources have been the sources of problems in many parts of the world, especially in developing countries. But it is not given that it will always be the case. The north needs everything, including oil. It depends on the leadership. Yes, we cannot ignore what happened yesterday but it is not pre-determined that we will repeat the same errors. It would be good for Nigeria because, now, a part feels it produces oil and that they should have disproportionate share. They advance the erroneous argument that the North brings nothing to the table. A discovery of oil in the North may shift us away from the bickering over this. We can then address national development seriously, more than we have been doing. In any case, it brings more revenue to the Federal Government.
That’s the fear in some quarters that the answer to a naughty problem is being sought in no less a problematic answer
The apprehension is justified because of our experience but we have to unlock our potentials. If the oil is found, the fears can be addressed, if care is taken to address the problems associated with oil exploration and exploitation. And this should not be only oil. If you have a dam in a village, it should not make sense to leave those villagers without electricity and supply the same stuff to some people several hundred kilometres away. The people in the village should benefit from the dam. This was the error in the Niger Delta. But the people in the Niger Delta should also recognize and take on board the current efforts to remedy the situation. It is an admission that such errors occurred.
Oil is always about tension between the local, national and the international and that is another area people draw attention to
It will always be there if the right things are not done. Why is there no tension or conflict in Norway or even in the North Sea? We can learn from them, not hook, line and sinker of course but it doesn’t mean we cannot pick certain things they did to avoid these problems. There are intellectuals here capable of telling or advising the government how to avoid the problems we had in the Niger Delta. The problems with oil exploitation are the same problems with mining minerals. May be the magnitude may differ. We have the capacity to learn from our mistakes. We cannot leave it just because people think there will be problems.
Do you think of distinct things that must be done as safeguards this time if oil happens?
Get into agreements with multinational companies, insist on international best practices, strengthen regulatory agencies and move on. Of course, you cannot ignore the communities, the environment. The kind of technology you bring should be such that people or vandals are not able break pipelines easily. Oil exploration is capital intensive. You put in place regimes for use of by products. Now, we are stuck in the mining aspect. We didn’t go far. If we had followed the national development plans, we would have by now developed our petrochemical industries and boost employment. We didn’t follow it through. We do not even have enough gas in the domestic economy. We do not refine enough petrol too. Those things have to be addressed.
You do not seem to think of a core drawback in the very nature, the anti-developmental nature of the ruling elite in Nigeria
Nothing is static about Nigeria. There are differences between different layers of the elite. Some of the governors are good. If you compare the performance of the governor of Kaduna with that of the governor of Zamfara, the difference is clear. In Zamfara, there is no leadership.
We wish we do not do not incur the wrath of any particular governor
But it is a fact. How can you compare El Rufa’i with the one who says he can run his state from anywhere? There is no leadership in Zamfara. The governor of Kaduna has one of the best programmes in terms of revamping education and water supply. Zaria started having problem of water supply in the 70s. Now, they are doing something about that. By the time they finish, that is when most people born after 1972 in this town would be seeing water supplied to their houses directly through pipes. The situation today is that many people in the city buy water from mai ruwa, (itinerant water vendors). And the government is dealing with many problems like that.
You imply that single example to mean a change in the constitution of the elite?
You want to tell me that there is no difference between your former boss and Saminu Turaki? I was in Jigawa for Sule Lamido’s inauguration. After sometime, I went back because Professor Haruna Wakili, the Commissioner for Education invited me. And Jigawa was totally different. Go to Dutse, it used to be a horrible village. Is there no world of difference between Lamido and Turaki? Lamido had the sense to establish a university. It is up to those who came after him to improve it. If you leave Jigawa and you go to Gombe, you cannot deny that some efforts were equally made there. You see signs
I do not deny what you are saying. I was witness to some of them but I am concerned with an elite with constitutive interest, with an instrumentalist view of oil revenue
Some oil producing countries did not allow oil revenue to distort their national budget. It is not like Nigeria where oil revenue enters the Federation Account directly and we share it. But our situation is not hopeless. You only have to look at history. When Tai Solarin went to India, he said something like “I saw valley on their faces”, an expression by which he meant how shrunk people were. That is a sign of poverty, of hunger, of malnutrition. India was very poor, hopeless. Go and read articles on India. Not too long ago too, a West European minister of foreign affairs was describing Russia as the Upper Volta of Europe but Upper Volta with nuclear weapons. Can anybody say that of Russia today with Putin? He has brought back the state. Ghana was hopeless too but it came out of it. I am sure we will come out of it.
Any last comments on the topic?
I do not see anything wrong with exploring for oil in the north. If it is found, fine. In fact, some of the explorations hit water. And I would say the people of Borno, for example, need clean water.
Barrister Nankin Bagudu
What is your thought on the intensified search for oil in the north when you consider all the problems oil brings along with its benefits?
Within the context of increased revenue to the government and the derivation it gives to the affected states, I think it is good. Lagos will start exporting next month and it will surely derive benefits that far outweigh the dangers. States that will be affected should learn from past mistakes.
Do you have any specific cautions in terms of lesson learning?
The lessons of the mess in the Niger Delta should be the starting point. Land degradation is a key area to warn against. We must now be able to select technology that enables us to avoid past complications. Lagos is off –shore but it appears lessons have been learnt. I think there has been some training for the youths ahead of the Lagos plan.
Does the dynamism of oil as a commodity worry you?
That shouldn’t stop us from exploration because oil prices are never stable. It is always a subject of demand and supply in its own unique way. Oil will still play a role.
Some people worry about discovering more oil wealth when they look at how Nigeria has spent her oil wealth. What is your take on that?
There are other places that didn’t spend like Nigeria. Norway and places like Dubai are different examples. It is only a stupid person who will not learn from the past.
Your NGO has been vocal on environmental impact of past mining around Jos. Any links you draw between the past and the possible future?
I was in The Netherland in 1995 and I was shocked that the environmental degradation we experience because of oil exploration here is not part of the problems there. It is a very clean outcome. With new technology, we can mitigate the environmental impact.
What general comment have you got on whether the north needs oil or not?
The government should pursue the exploration but the right lessons should not be forgotten. I want to assume now that no government in Nigeria will repeat the approach in the Niger Delta. That is my view.
Dr Moses Ekpolomo
You studied the Nigerian energy scenario academically, you must be aware of efforts to find oil in the northern parts of Nigeria. Everything considered regarding the problems and benefits of oil, what is your thought about that?
This is not peculiar to Nigeria. In any economy, if you want to explore natural resources, you have three things to consider. You have to find
out if it is profitable. That is the cost – benefit analysis. Second is the global context of it. You need to ask what the situation would be in 30, 40 years from now and there is the third point. That concerns whether it is going to be detrimental to the local people, the environment and the alternatives. By alternatives, we are referring to alternatives to oil, agriculture in particular. I would say that the way you answer these questions will determine your next step.
How do these relate to looking for oil in northern Nigeria now?
I don’t know. It’s both frightening and interesting. There is a general statement to be made that the way oil is going now, the future for it is bleak unless something drastic happens. By 2030, worldwide demand for oil would have declined seriously. Oil prices have crashed. That is one. Two, the United States which imports most of the oil has simply moved from a net importer to a net exporter. The US has 770 million barrels strategic petroleum reserve. That leaves you with China and India. But China has just completed her strategic reserve, totally filled up, a billion barrels. India, the next big consumer will complete her own strategic reserve in 2020. After that, oil will begin to have real problems. Saudi Arabia which is the other bigger player is watching this closely. It has billions, it is trying to diversify but its attempt to diversify is not succeeding because it needs to have bred the skills that will propel and sustain the diversification. So, for us in Nigeria, the lesson there is to first build our capacity. Do something about the quality of education quick or your rhetoric about diversification will come to nothing.
You began by providing for the possibility of something dramatic happening. And such is the second nature of the world oil market. That is not coming up in your analysis
That’s right but we must still begin from what is on the ground. These are what we have now and that is where Nigeria’s projections must look. What happens tomorrow is a different stuff. You are right but we must still be careful. You are right in that ten years ago, China was consuming 50 per cent of the coal produced around the world. Today, it is closing all the coal mines because of pollution. So, those who planned on the basis of that data ten years ago might have to re-plan now. But the point about oil is the steady manner of the decline. Under Obasanjo regime, the US was buying a million barrel daily from Nigeria. Today, it is zero. The US is buying nothing from the entire West Africa. It only buys 150, 000 barrels of Angolan oil because that crude can be blended with Texas’ crude, unlike the Nigerian light crude.
The point to take away here is that the global market is unpredictable. What other point needs to be considered when thinking about finding more oil sites in Nigeria?
We are talking about the north, not any other part of Nigeria because when it concerns the north, the issue of the economic production margin comes in. It would not come in if you are talking of the coastal states. You need pipelines to export. The cost of building pipelines will make it unprofitable. If you are talking of say 1500 miles or kilometres, that goes into additional $5 to the cost of blending and maintaining pipelines. So, even if they find oil, there is the economics of it. That is what happened to Chad in 2002. So, they had to go through Cameroun to the seaside, a port city near Doula. It means that Chad gets only 40% of its oil exploration because 50% goes to Exxon Mobil and the World Bank which built the export pipeline. And Chad pays Cameroun 10% transit fee. This scenario is almost applicable to oil in northern Nigeria.
Your argument is that the economics of it is not too good. What of the industry point of view should the oil be found?
If it is found, I think they should drill it and create a domestic market or a West African market. The United States has lifted ban on oil export. They can afford to do that now. They now produce 10. 5 million barrels daily. It means almost all the ECOWAS countries would be importing from the US and the United Arab Emirate. If Nigeria can build the capacity to saturate that market, that would be it. if Nigeria is looking in that direction, then it has to do two things quickly. One, it has to build refineries that can refine both imported and domestic crude. That requires hybrid refinery system that can refine heavy and light crude simultaneously. If they find oil in the north without building this type of refineries, they Nigeria will be forced to do crude swap. Not too bad but why can Nigeria not build such refineries quickly if it finds oil?
The main reason people love but also fear oil is what happens to the environment. What is your main fear if we are talking about oil in the north?
In the north, oil exploration means that you need to find access to water somewhere. Gaddafi solved that problem by building 33 centimetre pipes that brought water from the Mediterranean. If the geology is not right, you can poison the water table of the particular area you are drilling. So, you need environmental risk assessment. Finally, if you divert water for agriculture to oil field, that’s a problem there.
I know I have overshot our appointment. Any general comments on this before we close up?
Well, the oil industry is quite complex. There is need to think through. There is need to look at the future, to look beyond the domestic and to consider diversifying to agriculture, tourism and industrialisation because industrialisation comes from agriculture. The key principle is when the energy required to extract a low grade or geographically adverse oil is equal to or greater than energy that would be provided by that new barrel of oil, there is always a logical problem in deciding to expand the energy to extract the oil. In such a scenario, the energy return on energy invested, we abbreviate it to EROEI, for that oil field becomes an energy sink and the oil will simply remain in the ground. For example, oil wells in deep water currently achieve an EROEI of less than 5%. Oil removed from the tar sands as found in Canada have a very low EROEI along with a slow extraction process. It is for that reason that drilling for oil in northern Nigeria has to be thought through carefully.
However you look at it, national interest is the most important consideration. The shale bonanza has dragged the US out of her position of weakness and now leaves it at the top of the world’s energy league tables. It is a product of decision based on national interest. This is not just the world’s biggest consumer of oil and gas but its biggest producer of both. Since Congress lifted the oil export ban in April 2016, Americans, our biggest buyer is now the highest producer and exporter of oil and LNG and has already started selling crude oil beyond the Americas as early as 2016. Shale drilling has hardly made a dent yet outside North America but North American’s shale-derived energy is about to go global. The global oil glut has many margins, including slower economic growth in China, but the light tight oil gushing out of American shales have been the dominant supply-side factor. US production growth since 2011 has more than compensated for production outages in the Middle East. West Africa’s light oil has been squeezed out of Canada and the US northeast. America oil imports were just 6.5mn b/d in May 2016. The fall in OPEC’s sales to the US has been spectacular—and a key reason why Saudi Arabia has set off on a strategy to reclaim market share. So, national interest is still the last word here. You get?
Engineer Mohammed Abba Gana
Efforts directed at finding oil in the northern part have been intensified. It sends good signals but oil is a complicated commodity. If you were asked whether the north needs oil, what would be your reply?
Our belief is that there must be oil in the Benue through, the Chad Basin, Bida and Sokoto areas. What has been the problem are the
multinational oil companies. They look at it like, if you strike oil in any of these places, the logistics for exporting the oil has a higher overhead than off-shore oil in the Niger Delta or anywhere from Akwa Ibom, Cross River, Ondo, Lagos. So, for them, the question is, how do you handle oil in the north. But that is their perspective. Now, from the perspective of national interest, we need to develop oil in the inland basins because, sooner or later, the available resources in the off-shore would be too expensive. The thing is if you strike oil in any of these places, you can have refineries in those areas and they are very secure. There is oil and gas in the Chad Basin and you can have independent power plants in any of these four possible places because natural gas is cheap and clean. There are by-products of oil to consider also. Actually, the country could decide to be exporting oil from the Niger Delta while developing oil from the inland basins for the domestic market. Nigeria is a quarter of Africa. The domestic market is so large that it can absorb all the oil and oil products in the north.
The time exploration is being intensified is also the time to anticipate the plausible crisis points. What safeguards are you thinking of?
It is a lot easier to police the north than the Niger Delta because of the terrain. So, the threats of militancy from the Niger Delta are not automatic with oil find in the north. But what we may fear is the threat from the attitude of the elite. This is the reason why anybody after Buhari would have to continue sanitising the Nigerian system and our reckless attitude to governance. The Nigerian situation is a classic elite failure and bastardisation of governance. South Africa is generating 50, 000 megawatts of electricity, Nigeria is talking of 4000 elegance. States such as Egypt, Algeria, Kenya and South Africa are doing better on most issues than Nigeria. It is their elite, using the instrument of the state to develop. In France, electricity is state owned. The same with India, China, Russia. The industrialization of Russia was started by Lenin. The slogan was ‘electrify everywhere’. The elite in Nigeria lack this sense. There is no leadership and you know, wherever things work, it is good leadership. Where otherwise, it is leadership.
So, is lack of leadership why oil or no oil in the northern areas has been a ding dong affair?
Leadership is an issue there but there are other dimensions too. When I was Commissioner for Works and Housing in former Borno State, now Borno and Yobe states, the NNPC started the exploration. We built the road, about 60 kilometers, from Maiduguri to Gajiram for them. Gajiram was the first well. They called it Tuma in Kanuri, (translates to Hope in English). The original road could not take their rigs. That was around 1981. The Chief Geologist of the NNPC, one Jubrin from present day Nasarawa State, usually came to Maiduguri. After sometime, he mysteriously died. It is one of the reasons why you hear people say that oil exploration in the north was always sabotaged or resisted. There is that belief in the north that exploration efforts have always been downplayed by some critical staff in the NNPC.
But persons of northern extraction have dominated the political leadership of the country
Yes but I said some critical staff of NNPC. Critical staff can get away with anything. That is why they are called critical staff. Oil deposit has been proved geologically in Chad, Cameroun and Niger Republic where there is sincerity of purpose. The Chinese found it for them. Given that there is oil now in those three countries, why shouldn’t Nigeria’s own have been found for over three decades if not for official negligence? There is belief that some interest group within the oil and gas sector is resistant and is powerful enough.
What is the thing to do now then that the NNPC has woken up and everyone is interested?
Because of the logistics, make the oil deposit in the south exclusively for export and the north for domestic consumption as a matter of government policy.
What would be the implications and benefits of doing this?
There will be security and reliability of supply. Right now, the nation is always blackmailed by multinational oil companies and internal dissent.
What happens to the local communities, the environment and agriculture?
Now, there is a learning curve. What happened in Ogoni has to do with the nature of the environment too. Now, there is also new technology that would mitigate the impact of mining oil. It would help agriculture. Fertiliser plants will be facilitated and it will help agriculture and create multiplier effects which will devolve into employment too. Agriculture and agricultural production to achieve food security is not antagonistic of energy security. They are mutually supportive. The US can feed half of the world, still it is the champion of oil exploration. India, China, they all have huge populations and they feed them. 75% of the landmass of Nigeria is in the north. So, this region has a comparative advantage in agriculture and beefing that up with energy security makes the country stronger as a whole.
What about the market dynamics if Nigeria has more oil?
Nigeria has advantages in supplying Africa if only we organise ourselves properly. We can give more attractive terms to our African brothers and sisters. ECOWAS can rely on Nigeria.
You have expressed reservations about the elite. That seems to be the greatest fear for more oil wealth in Nigeria. There is a strong belief that the Nigerian elite is not even aware of itself.
The leadership is there in the number of educated bankers, doctors, engineers, space and nuclear scientists, agriculturalists. That layer of leadership is there. What we have lacked is the political leadership. What we should insist upon is getting the right political leadership. All along, we never bothered to look for them. The challenge is to look for them.
It is a question of the political parties holding a conference to adopt a template. The Arewa Consultative Forum produced one such template when Sunday Awoniyi and Hammed Ali were at the helms.
Who will lead the process?
The president can lead it but it is really for all the parties to adopt a template. APC, the ruling party; PDP, the former ruling party; APGA, labour party. They will all be there. Once they adopt it, that is it. before now, the leadership recruitment process was a serious business. In 1978, we had quality leaders. The governors were good materials whether in NPN or PRP or UPN or GNNP. There was Tatari Ali, a former Permanent Secretary; Adamu Attah in Kwara; Aper Aku in Benue, a seasoned administrator; Ambrose Alli, a professor of medicine; Lateef Jakande, tried and tested, Abubakar Rimi, Balarabe Musa, fire eaters all, Melford Okilo in Rivers, Michael Ajasin who taught nearly all Yoruba elite in Yorubaland. These were all people with clear background. Whether PRP, GNPP, NPN, NPP or UPN, they went for the best materials available. They were not traders or business people whom if you gave the key of the treasury, will use it in the night.
What general comments have you to make on the issue in question?
In northern Nigeria, we need oil because we need resources to develop infrastructure, develop social services and we need resources to do all these. But Nigeria has become a victim of its elite, of the attitude of the elite towards business, towards politics, towards governance and towards leadership. We need a major attitudinal change. Most of these other countries have done better. They have direction, we don’t; they produce, we don’t. Things like water supply, electricity, we couldn’t manage it. It is a shame. Our elite have not led well, both in public and private sector. We have seen failed banks phenomenon under Abacha, we see insider trading. So, in relation to the possibility of finding new oil wealth, this must change. There must be a shift in elite attitude. Nigeria as a matter of official policy must start making or manufacturing all our needs as much as possible. If we keep importing, then we will never solve our problems.