What is the real price of a barrel of oil?

What is the real price of a barrel of oil?

By

Bello Salihu, PhD

J. Paul Getty made a name, not mention lots of money, for himself as the founder of the Getty Oil company. In 1966, the Guinness Book of World Records named him the world’s richest private citizen. During that era he was a poster boy for a lot of folks involved in free enterprise but especially those involved in the oil and gas business. He was to our industry in the 50’s and 60’s what Bill Gates, Larry Ellison and the late Steve Jobs are to today’s IT entrepreneurs and enthusiasts.

It was quintessential Getty to pay Ibn Saud, the founding king of Saudi Arabia and the father of the current monarch, King Abdullah, nine and a half million dollars plus a promise of 1 million dollars a year for a 60-year concession on a barren tract of land near Saudi Arabia’s border with Kuwait.  This was in 1949 when such an amount was more whispered than spoken of. And for the next four years he invested further multiples of that sum searching for oil in what everyone in the oil game then told him was a waste of time. In 1953 his gamble paid off with a massive find that would produce 16 million barrels of oil a year  - every year - thereby catapulting him to be amongst the very rich. A few years after that he was named by Fortune Magazine as the richest living American.

But I introduce today’s discourse with this larger than life personality more for his epigrammatic wit and less for his fabulous wealth or business acumen. Two of his many famous sayings sit succinctly and comfortably with the two global and linked viewpoints on the issue of the actual value of a barrel oil.

So let us start with his answer to the question I paraphrased and used above as the title of this article; when asked what he thinks should be the price of a barrel of oil, he was reported to have answered simply, “However much you are ready to pay for it”.  With such a deft and intelligent response, Getty switched the question from that of price to that of value. Which we all know are not always one and the same thing.

As I write this the current price of a barrel of oil hovers just over $110 dollars for the Brent blend light crude. Other crude benchmarks vary in price but I will take the Brent blend as my reference benchmark not only because it is used to price over two-thirds of the worlds traded crude oils, but, most importantly, because it is the benchmark for the Atlantic Basin crude oils, under which Nigerian production falls.

The same barrel was sold for slightly less than $25 dollars a quarter of century ago. It experienced a spike in 1990 when Saddam adventurously annexed Kuwait and a dip -  averaging just above $12 - in the 1997 as a consequence to the Asian financial crises. But for the twenty years between 1987 and 2007 its average peak was about $40.

The nearly $100 dollars above that average peak price that is being paid today for each barrel has been attributed to many factors - principal of which is the dreaded peak oil scenario - which paints a gloomy picture for the future easy availability of oil if the current production rate at which global reserves are being produced and depleted is maintained. Another major factor is the rise in demand from emerging economies - especially India and China. Countries with both massively expanding manufacturing bases and billion-man populations.

From all pointers, oil price will continue to soar for sometime - the peak oil prediction is taking root everyday as nations, basins and fields continue to conform to the predictions made by the proponent of the peak oil theory over half a century ago. And at the rate at which China and India are going, the two countries will continue to move massive swathe of their population into the middle class bracket where, with more disposable income, the new ‘global citizens’ will be expecting and demanding an energy-hungry way of life equal to that which obtains for the citizens of developed, first world economies. The aforesaid factors add more fuel, if you will forgive the pun, to the massive price speculation that has forever been intrinsically linked to the energy industry.

But even after considering all of the aforesaid factors one still has to concede that there are a few commodities in the world that can manifest such a rise in value in a span of 60 months - without a global war and/or a major natural catastrophe or some form of disruption at their production source.

To try to put such a rise into perspective we have to remember that oil and gas drive the global economy because of two simple reasons - the first is that hydrocarbons are unsurpassed as a cheap form of energy and industrial feedstock and the second is that almost anything we can touch or feel is either made from hydrocarbons or has hydrocarbons involved in its production. As an example, 90% of all transportation globally is powered by hydrocarbons, 95% of all goods in a typical supermarket have hydrocarbons as their base raw material or a major processing input and most importantly, 99% of global food production and processing involves hydrocarbon products either as fertilizer, other agrochemicals or fuel. So it is not far-fetched to see that, yes, as long as current global demand holds - and all trends show that it will - then the price of a barrel of oil will continue to rise.

When refined, out of the 42 gallons that make up that barrel of oil that was sold for just over $110 dollars refiners can obtain up to 20 gallons of gasoline, up to ten gallons of diesel fuel and another ten gallons of jet fuel/kerosene depending on refining yield. All the three fractions mentioned above average about $3 a gallon in today’s international commodities market. So in a simple ‘back-of-the-envelop’ calculation it can be seen that with its first three major derivable fractions our barrel has already paid back its cost. 

But these three major fractions are just the beginning of a long list of  value that will be extracted from that barrel. Heavy fuel oil for industries, propane gas, asphalt for road building, petrochemical feedstocks for plastics, resins, medicines and fertilizers and many other derivatives will be extracted from that barrel. And these are just the tangibles. The intangibles include employment and a raised standard of life in the country where the barrel is refined. 

For some of the developing nations of the world, and especially those in Africa, for  centuries our fore bearers were selling agro-based primary commodities to the developed world, which were processed and returned to them as value-added goods for much higher amounts than they sold the raw materials for. These primary commodities were sold cheaply when viewed in contrast to the value of the finished product derived from them.  Not to mention the jobs they generate - which feeds an upward spiral of literacy, social stability and development in their citizenry - in the receiving countries. 

In many cases the under-developed and developing world is still doing that. Most of the chocolate-loving world have cocoa producing countries of West Africa to thank for even if the actual cocoa farmers in Nigeria, Ghana, Cote D’Ivoire see only a trickle of the actual value of their produce get paid to them. The same goes for countless other commodities both agricultural and mineral that today’s world cannot do without.

Unfortunately, same goes for hydrocarbon resources - which almost the entire oil producing nations of Africa sell to the outside world without adding any value to. But what makes hydrocarbon resources a different issue all together is three fold; firstly, unlike farm produce, they are a non-renewable and wasting resources in which case every barrel produced and sold or used up is gone for good. Secondly, hydrocarbon resources are so intricately intertwined with political, social and economic stability of the present world that, for now, no people or nation can do without them. The huge price movements that we see in the market for crude oil only goes to show that we are still far from a point of value of saturation that the world can see a barrel of oil as being too expensive to buy. 

At a given peak price point the world can find a bar of chocolate too expensive to buy - which will see the crashing in the price of cocoa in the international commodities market or the manufacturers finding an alternative raw material as substitute to cocoa in satisfying the craving of their sweet-toothed customers. But, for the foreseeable future, that scenario cannot be seen to happen to a barrel of oil.

Third and most importantly, the availability of directly useable form of oil and gas, especially in the form of energy-producing fuels, in any country dictate how far and how fast that country develops industrially - because these fuels constitute an energy source that is so dense that, at its current price, it is essentially free energy. Apart from nuclear fission there exists no richer source of energy in the world than fossil fuels.

To drive this point home, all one has to look at is the roll call of the top oil producing  and exporting nations on one hand and that of top consuming nations on the other.

Russia, Brazil, Mexico and Saudi Arabia are the only countries that feature in all the three lists of fifteen top oil producers, exporter and consumers. About the only surprise there to the uninitiated is Saudi Arabia. Russia and Brazil are part of the BRIC countries that include China and India - countries with emerging industrialised economies that are enjoying unprecedented economic growth - a growth that is occasioned and powered by massive energy consumption. Mexico on the other hand is in the backyard of the world’s richest and biggest consumer nation, the United States of America for whom most of their industrial output is targeted - so their high energy consumption can also be explained.

Some of the countries in the top list of producers such as United States, China and Canada do not feature as exporters because they consume what they produce internally and, in the case of United States and China, even have to depend on imports to satisfy their thirst.

However, countries such as Iran, United Arab Emirates, Venezuela, Nigeria, Iraq and Angola all feature in the list amongst the top fifteen major producers and exporters of oil and gas.  But none of them feature amongst the top fifteen consumers of energy. They all depend on oil and gas as the mainstay of their economies - but not oil and gas as an energy source to power their industries, generate employment and raise the standard of life of their people - but oil and gas to be exported in crude form to generate easy revenue that, more often than not, is whittled away through fanciful projects or corruptly diverted.

If Nigeria can process and consume half of what it currently exports in the form of raw crude oil, there will be no clearer indication to the rest of the world that the country is using its strength as an energy producer to empower its massive population to be industrially productive. That in turn means that the country is turning its strength in numbers from being a liability to being an asset.

China understands this all too well. That is why the chinese are all over the world cutting deals and exploring for hydrocarbons wherever they can. The chinese may have laid the first ever recorded oil pipeline using bamboo sticks thousands of years ago, but they have now come to the scary realisation that they have arrived a tad too late for the massive oil and gas rush of the past century where European and American companies and countries have carved for themselves massive slices of the global hydrocarbon reserves.

The current estimate is that by the middle of this decade China will overtake the United States of America as the number one oil consumer in the world. With such a rising demand China must find its own source of energy to remain competitive. About the only thing that can hamstring China’s current double digit growth is an inability to access cheap energy. The only scenario in recent history comparable to that is General Rommel  of Germany losing the battle fields of North Africa in the Second World War because his troops were immobilised by lack of fuel!

Each barrel of oil sold in its crude form with no value added by the producing nation - even at prices multiple of what currently obtains - is more a loss to the selling nation than a gain. It is an unequal barter in which the buyer gives the oil producing nation a token amount of cash in return for a commodity that provides for the buying country abundant and cheap energy to power their industries, raise their people’s standard of living, provide jobs and fuel their relentless development. The end products so produced by the industries in the buyer’s country, in more ways than one, find their way back to the oil exporting country as valued added goods paid for with the same petro-cash earlier earned selling crude oil. 

The so-called developed nations of today became developed at the expense of nations that sell to them cheap energy.

In the peculiar case of Nigeria it is additionally disturbing that a great chunk of the revenue gained in selling that barrel is again “dashed” back to the buyer in return for petroleum products bought at a premium that are used not to power industries or drive tractors in our farmlands, but to fuel cars and electricity generating sets.

This brings us to the second wise quip from Getty. He was reputed to have rephrased a famous biblical injunction by stating that “The meek shall inherit the earth, but not its mineral resources”. Or in other words, it is not enough that your country sits on top of massive mineral resources - it amounts to nought if you are too timid, docile and tame to take advantage of such a gift to better the life of your people. The not-so-meek will take that mineral resource from you and show you how better to use it while you watch mouth agape.

At prices even higher that what it is currently sold for, there will always be someone ready to take that barrel from you - not because their dollars are not valuable to them but because what they are buying from you is far more valuable to their country’s economic and social stability than the paltry sum they are giving you in exchange for it. 

This was published earlier in my column 

'Oil and Gas Weekly' in Government, a publication of
Leadership Newspapers , Abuja, Nigeria.

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.

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