The Sahelian Dance

The Sahelian Dance

By

Bello Salihu, PhD

Earlier this year in June I was invited to a function in the UK government’s Foreign and Commonwealth Office in the Palace of Westminster aimed at selling Niger Republic as a safe and promising destination for foreign direct investments - anchored, of course, to their dual status as an established solid minerals exporting country and as newly-minted petro-state. From the speech of the Nigerien President, Mahamadou Issoufou, to that of his ministers in-charge of key ministries of mining, petroleum, etc., one is given the impression of a country trying its hardest to avoid the mistakes and pitfalls of other countries afflicted with the resource curse, and like Obama’s speech in Ghana, no one there mentioned the name of any country but everyone in the audience knows which one they all are talking about. It will indeed do well for Niger Republic to be extremely assiduous in avoiding the path towed by some resource-endowed countries of their neighbouring Gulf of Guinea, the Middle East and Latin America.

Niger Republic’s arrival as an oil producing country is no longer news to Nigerians - some of whom are already  filling up with refined products from their northern neighbour. One could almost imagine the collective gasp of indignant surprise followed immediately by a shrug of resignation when it was at first rumoured, then later confirmed, that, indeed, Nigeria, Africa’s pre-eminent oil giant, is importing products from lowly Niger Republic. After all, wasn’t it like yesterday that Nigeria’s refineries were overheating trying to satisfy not only internal demand for products but also near-dry tanks in nearby West African countries - fed illegally by smugglers through porous border?

To most people, it was less a surprise that countries like Ghana, Cote D’Ivoire and even Sierra Leone are joining the exclusive club of African oil producers after all their oil finds were all in the  shallow and deep waters of the Gulf of Guinea - which seems to have more prolific oil bearing basins - and not in a sprawling, arid and lifeless desert. But the gods of oil are known to have a fondness for showing their disdain for monotony.

For the past ten years, the local crude oil consumption for Niger’s fifteen odd million inhabitants averages 5000 barrels per day. That of their big southern neighbour, and the most populous  country in Africa, averages about 270,000 barrels per day. So it doesn’t take much evaluation to know who that spanking new refinery in the Zinder province is actually meant for.

Niger Republic has its own thorny history in oil and gas exploration. In the 1960s PetroPar of Paraguay drilled two wells in the Tamesna-Talak and Djado blocks. Nothing came of that. Then in 1992 Djado permit was given to Hunt Oil while the Tenere permit was awarded to Canada’s TG World Energy.  In 2004 the Niger government approved the joint venture arrangement between CNPC of China and TG World Petroleum Limited. A year later, a subsidiary of Malaysia’s Petronas announced that it had found hydrocarbons in the Agadem Block, for which it shares equal rights along with a co-venturer, a subsidiary of America’s ExxonMobil. 

The successful exploration well, Jaouro-1, was drilled in the 1,000 kilometres east of Niamey, the country’s capital. The well achieved a total depth of 2,462 metres. Production tests of the well resulted in a maximum flow rate of 2,540 barrels of oil per day.

But in 2008 the rights, along with the estimated 350 million barrels reserves, were transferred to CNPC for USD$5 Billion investment. The one million tonne a year refinery in Zinder mentioned above and a 2000 KM oil pipeline were a promissory note from China’s CNPC, which Niger has already begun to cash.

CNPC is planning an aggressive exploration programme that aims to shoot 4,000 km of 2D seismic in the Diffa region near Chad Republic. About 18 wells also are planned over the next 8 years, of which 11 will be drilled within the next 4years,

Recently, a Nigerian company, Sirius Energy Resources with head office in Victoria Island, Lagos has won an oil exploration license for the 22,000 square kilometers Grein Block in the North West Region of Republic of Niger - just east of CNPC’s play. Pre-spud expectations points to estimated reserves of between one to three billion barrels of oil.

There is a general unstated consensus amongst petroleum geologists that the Iullmeden Basin,  which is predominantly in Niger Republic but the southern tip of which is in Nigeria and known locally as Sokoto basin, has so far yielded little cause for optimism. Even the much-touted oil discovery in Niger Republic is in the eastern Agadem Block which is situated in the Termit Rift Basin and not in the southern Iullemeden Basin that extended southward into Nigeria and terminated in Sokoto. The Iullemeden is the least explored of the basins and thus there is little data on it as an oil bearing basin. This could be attributed to low sedimentary thickness especially in the Nigerian end.

Since its inception over a century and a half ago, hydrocarbon exploration remains a very risky commercial venture anywhere in the world. Sound feasibility studies go along way to mitigate the risks. Companies or countries averse to this risk-taking culture may save their deposits, but will be amongst those to cash in  on a possible jackpot. Just ask those who shied away from investing in the Jubilee field exploration in Ghana a few years ago.

But the industry survives to this day and remains one of the most lucrative because it is a risk that has a habit of paying off handsomely when it does pay up - take the case of what happened in the same basin across the border in the Chad Republic. A consortium led by American oil major ExxonMobil invested about four billion dollars in the development of their concession in the early noughties. That venture started producing at 20000 barrels per day in 2004, peaked at 22000 barrels in 2005 and has now stabilised at just over a hundred thousand barrels per day. Less than a decade after the investment was made, ExxonMobil and friends are close to recouping their original four billion pounds.

A sub-plot to  that happy ending is that the success has also heralded Chad Republic as an oil producing country subsequent to which it started attracting the attention of companies and countries interested in new energy frontiers to invest in. Heightened interest led the country to review prospecting licenses it issued long before the ExxonMobil campaign but had remained unused - some were revoked and re-issued to other companies while in others a farmed-in arrangement was agreed. The biggest beneficiary of this review are, of course, the chinese. Who, through the China National Petroleum Corporation, has now made a discovery in the Bongor Basin east of the Chad Basin thereby opening a new oil producing region in the country. 

Almost all inland hydrocarbon bearing basins in west and central Africa are under-explored - as such the game plan for countries with large land mass and involved in the exploration game is to prove one basin and then encourage companies to take it over and foray into other similar basins yet explored. 

Sudan is now already established as an oil producer. And as the old and new global superpowers wage a proxy war of influence over the land, people and resources of one of Africa’s largest countries, Africa welcomes its newest nation-state, the Republic of South Sudan. 

The Comprehensive Peace Agreement between the two countries gives the young republic  between 50 to 60 percent of the estimated 6.7 billion barrels of proven reserves of the country before it was broken. 

Because negotiations are still on-going between the two countries about resource sharing and compensations, we may have to wait a little while before a decent analysis of the hydrocarbon potentials of this northern Sahelian region can be made. Suffice it to say, in terms of both reserves and production, it will take both Niger and Chad republics a while to catch up with either of the Sudans. In terms of full on participation in their country’s oil and gas industry, it will take Niger, Chad and the South Sudan ages to be where Sudan is today. 

In the not-too distant future it would be easier to count West and Central African countries that have not discovered hydrocarbon deposits in their borders than those that have. The  energy-hungry nations of the world will soon herald the arrival of the Sahelian region as a prolific hydrocarbon bearing region.

While all this is good, this generation of leaders of these countries will be judged by how much they can use these gifts from God to transform their region. One may even hazard a hope that Niger will somehow solve their unspeakable rural poverty that sees every drought as a certain famine. With the political maturity that was shown in the handling of ex-President Tandja’s power hunger and belligerence to the emergence of Issoufou,  a mining engineer, to midwife the efficient exploitation of the country’s natural resources and hopefully bring about a stable investor-friendly polity, one can only hope that Niger will not become another hope betrayed.

The same prayer and hope extends to both Chad and Sudan. Each one of the two countries has been grappling with a crippling insurrection for most of Africa’s modern history. Hydrocarbon revenues, judiciously used for national development may be the harbinger good fortune and peace in countries that have seen more than their share of want and strife.

As they welcome the world to their resource dance, this is hoping they keep a keen eye on both the dancers and the drummers.

This was earlier published in my column'Oil and Gas Weekly' in Government,
a publication of Leadership Newspapers, Abuja, Nigeria.