The North’s Oil Fixation

The North’s Oil Fixation

by

Bello Salihu, PhD

In recent months, the issue of oil exploration and/or discovery in the north seems to be everywhere. During the recent Democracy Day celebrations a few months ago, perhaps because it was a time when it is normal for the various component parts of the country to bring to the fore issues they feel need the attention of the central authorities, one of the issues tabled by the North is that of oil and gas exploration in the frontier basins in general and the Chad Basin in particular. So it is heartwarming to see that the latest version of the Petroleum Industry Bill awaiting deliberations by the Nigerian National Assembly is on course to releasing the Frontier Exploration Services (FES) from the shackles of bureaucratic inertia by bringing it under the Petroleum Technical Bureau under the direct supervision of the Petroleum Minister. If the vision of the FES is properly executed, it has the capacity to be the financial mainstay of the bureau.

The way things are now, if (and when) oil is eventually discovered in the north, it will have minimal impact on the life of the poor man on the street. Only very few northerners will find rewarding vocations in the industry. The nature of the oil industry is that it is more capital and technology driven than labour intensive. So if there will be any noticeable spike in employment generation it is bound to be during the construction and and commissioning phases of the various infrastructure that happens in the field development stage of the field's life unless of course more fields are being discovered continually. 

So the greater majority of people in the geographical north will still be living off the land and tilling it for subsistence like their ancestors have done for over a millennia. If we have had very limited success in lifting our agriculture from that level to becoming fully industrialised in all these past centuries, a few billion barrels of oil found in our backyard will not do that for us overnight. 

Hitting a massive oil field in the north, even if it is in the size of the legendary super giant Ghawar field of Saudi Arabia, which has been producing an average of five million barrels a day for the past sixty years and still represents almost 12% of the entire global oil reserves, will do little to change the reality of illiteracy and abject poverty that has defined the minutiae of existence of the average northerner. Saudi Arabia, even with its Ghawar field and other giant fields,  an estimated oil reserve of nearly 300 billion barrels and with a population of less than half that of Northern Nigeria is still grappling with nearly 30% unemployment and sitting on a powder-keg of youth restiveness. So oil alone will not be the silver bullet that will solve the economic desolation and social despondency the north is bedeviled with.

Taking our own country as an example, since the first commercial discovery in Oloibiri nearly sixty years ago and after exporting billions of barrels of oil since then, we are still struggling to add real value to the technical processes involved in the extraction of the so-called mainstay of our nation’s economy. Even worthy stratagem such as the Nigerian Content initiative is but a feeble scratching on the surface. As economic models for resource-rich countries go, Nigeria would be in a much better stead exporting skills and technologies related to hydrocarbon exploration than it would be exporting tanker-loads of oil or LNG.

For a while now, Nigeria is said to be pumping out and exporting over two million barrels of oil and nearly 7 billion cubic feet of gas everyday. Some of these hydrocarbon resources are developed and produced with technologies that, in some instances, are equal to or even beyond NASA’s space exploration technology. But the same country has been struggling for the past two decades to make refineries functional and producing to capacity or, for that matter, light up its towns and cities. This not only shows the glaring disconnect between the upstream and downstream sectors of the industry - but also the deplorable fact that there is almost nil technology transfer between the component parts of the energy industry in particular - and the rest of the industrial infrastructure of the country in general.

I see the newly-submitted Petroleum Industry Bill as trying to address this, but, like with most things in our country, the theory in the bill may fall very far from the eventual reality!

Every morning in Nigeria, brains, nearly a hundred times the number of barrels of oil we produce, wake up uninspired to creatively think us out of the current doldrums. Each one of these brains, if properly empowered has the potential to produce much more value to the Nigerian state than all its oil wells put together. The difference between a developed nation and an undeveloped one is more likely to be found in an empowered and productive citizenry than in what is buried under the soil. 

As an asset in the arcane permutations of defense, national security and human development, the United Sates of America will not, for a second, consider trading their knowledge assets such as Harvard and MIT for all the oil in Arabia. Because they are all too aware that human capital makes nations great - not oil or any  other resource for that matter. No country has ever developed from oil wealth.....not Saudi Arabia with its giant gushers, not Qatar with is prized gas assets, not Venezuela with its large proven oil reserves, and definitely, not Nigeria with its struggling and dysfunctional semi-developed energy industry. 

Narrowing all this to the current state of affairs in the north in terms of intellect, economy and good governance one would be forgiven to deduce that massive injection of easy money in the form of petro-cash will only turn the north into another rentier state and deepen the social dysfunction and security challenges the region is grappling with now.

Sometimes one wonders if the north’s unhealthy fixation with oil discovery borders on the obsessive. The column inches we dedicate to the issue of oil discovery in the North only mirror our obliviousness to the conspicuous opportunities that lie unheralded and uncelebrated in the vast land area of the region.

The social and environmental problems in some petro-states in the world can be traced to the exhilaration of the populace to a newly-found wealth that leads to abandoning other sectors of their economies that were, hitherto, responsible for the livelihood of their people long before the discovery of oil. An oft used term for that is ‘resource curse’. One of the most pitiful examples of countries that suffer from that is the South American nation of Venezuela, with has one of the world’s largest proven hydrocarbon resources. 

Venezuela with less than a fifth of Nigeria’s population, and is neither at war nor under any form of insurgency or internal strife, experiences an average of over sixteen thousands homicides every year in its federal capital, Caracas. These deaths are mostly from petty criminal actions occasioned by the social dysfunction brought about by oil. No wonder, the late Juan Pablo Perez Alfonso, who, as the country’s oil minister in the early 60‘s co-founded the OPEC along with Sheik Abdullahi Al-Tariki of Saudi Arabia, called oil the “Devil’s Excrement”. And he said that at a time when things were not this bad. 

Other examples abound in history of countries that have found nothing but grief from a God-given natural resource. The home truth is that human or national development is more a function of deliberate and well thought out policies, rigorously pursued and selflessly and religiously applied. No amount of oil wealth can buy that.

A recent case in point, for all the colossal resource wealth of the tiny gulf nation of Qatar -  thirteen toddlers and their four teachers died in a fire that engulfed a nursery school situated in a shopping mall few months ago. According to reports the victims could not be evacuated because the escape routes were not sign posted and the victims died because the emergency sprinkler system installed for eventualities like this, malfunctioned at the very time it was needed. A question that no one so far is asking is why situate a nursery school in a shopping mall? That is even before we asked when last the sprinkler system was tested, a fire drill undertaken, the building inspected by fire marshals or whether the staff in the mall or the nursery were trained on emergency escape procedures. 

My point is, Qatar went out and bought itself a beautifully designed and built shopping mall that will not look out of place in any rich, developed first world country while their nation, systems and people are all stuck in the third world. In fact, it has been proven time and again that easy oil money in the coffers of the state makes national leaders or rulers indolent and uncreative. They also become unresponsive to the aspirations of their people because they do not feel beholden to them. 

Legend has it that when, in 1956, the U.S. chargé d’Affaires in Tripoli reported to King Idris of Libya that an American consortium had struck even more oil in the deserts of the then kingdom, the king was said to have responded “I wish your people had discovered water. Water makes men work; oil makes men dream.” 

The dreamers in the gulf have dreamt of elegant golden palaces, shopping malls, grand hotels, air conditioned soccer stadia and even hosting rights to the football world cup for good measure - but they still pay others to think for them. Not one state-of-the art edifice built in Dubai, Doha, Dharan or Abu Dhabi was designed by an indigenous brain or built with indigenous skills. And neither are the custom-made Bentleys, Rolls Royces and Jaguars that are a-dime-a-dozen on the wide, sprawling boulevards of those cities. And this is in the land of the people whose ancestors gave the world algebra, alchemy, astronomy and the Arabic numerals - the most common symbolic representation of numbers used in the world.

On a lesser scale, the dreamers in Nigeria built a massive refinery complex in the North, a part of the country that has, so far, no local source of raw material for the complex and would be much better off with a facility of similar size that uses raw materials readily available in its immediate vicinity as feedstock. A facility that would have gone a long way in empowering local producers and creating a daisy-chain of employment opportunities was until recently crippled with chronic capacity under-utilisation.

Today, Nigerians living in the vicinity of the Chad Basin, from Gajiganna village a few kilometers from Maiduguri to the receding banks of the Lake Chad, will attest to the fact that the water wells drilled as a precursor to spudding the exploratory oil wells during the last drilling campaign are now oases in that vast desert providing water for humans and  livestock. Each of the 24 water wells drilled and, in some cases, access roads laid as part of the requirements before drilling the wild cat oil wells have impacted on the lives of the people greatly. The cost of each oil well drilled, found to be dry, plugged back and abandoned, could drill approximately hundreds of such water wells or construct hundreds of kilometers of similar access roads. Ironically, the oil wells are now plugged and abandoned adding no value to the immediate community while the water wells are still quenching thirsts and nourishing the land.

This, in itself, should point to the North’s policy makers where to direct sincere developmental initiatives.

Dr. Salihu, a Chartered Petroleum Engineer, writes from London, UK. 

e-mail: bellosalihu@gmail.com
Twitter: @bellosaleh