BY ABUBAKAR A. NUHU-KOKO

Abubakar A. Nuhu-Koko, a researcher in petroleum policy and economics, is founder and pioneer executive director, The Shehu Shagari World Institute for Leadership and Good Governance, Sokoto, Nigeria. He can be reached on +234 706 330 6887 or aanuhukoko4000@gmail.com

Let me join in congratulating President Muhammadu Buhari (GCFR), who also doubles as Nigeria’s minister of petroleum resources; the Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Company Limited (NNPCL), for the huge success registered in the annals of the history of petroleum exploration in Nigeria in the 21^st Century. There are no doubts whatsoever, that the 2016 discovery of crude oil and gas in commercial quantities at Kolmani River that straddles between Bauchi and Gombe states, respectively, is something to be joyful about.

More importantly, the Presidential flag-off of the development phase of the two promising oil prospecting fields under the two Oil Prospecting Licenses OPL 809 and OPL 810 respectively, performed by Mr. President in company of some very important dignitaries on Tuesday, November 22^, 2022 was a landmark historical occasion and enduring legacy to be bequeathed by his administration that will forever be remembered by generation after generation of Nigerians and the international oil and gas industry players and stakeholders.

The next very important issue to address after discovery of oil and gas, particularly in Nigeria, is to pose the proverbial question of whether the discovery will be “a blessing or a curse” to the nation; judging from the past experience of 66 years and the contemporary global push for energy transition away from fossil energy resources and technologies to “Net-Zero Emissions” by 2050 or 2060 as the case may be!

The vast literature on oil –  a Blessing or a Curse – has deep roots in trying to explain why on the one hand, some nations, blessed with God-given fossil energy (oil and gas) resources, are doing well economically and socially. For example, Saudi Arabia is one of the richest nations on the planet, thanks to its large oil reserves. On the other hand, some oil, gas and other natural resources rich countries are performing below expectations compared even with those with almost zero presence of such bounties (Japan and Singapore for example). For instance, from Iraq to Iran, Venezuela to Nigeria, few oil-rich countries have prospered from the discovery of crude oil and gas. Economists call it the “curse of oil”. Oil discovery, if not handled properly, destroys a nation’s traditional diversified export economy, and replaces it with a mono cultural export (enclave) economy with all the consequential negative impacts on the macro economy, especially the distortion of its exchange rate mechanism.

Thus, there is vast empirical literature out there which provides comparative analyses and explanations among the nations that are blessed with oil and gas (and other natural resources – gold, diamond, copper and timber etc.) resources which have become very successful in the management of the huge financial in-flows from exploiting, developing and exporting them in the global oil and gas markets and those that are similarly blessed with oil and gas resources but have not successfully managed the revenue in-flows arising from exploiting, developing and exporting the oil and gas in the international markets.

Therefore, these two paradoxical situations gave rise to the notion of “a blessing or a curse” scenarios. Unfortunately, Nigeria falls into this latter category of nations abundantly blessed with God-given oil and gas resources but who seem afflicted with the “curse of oil” and gas due to the squandering of the greatest opportunities brought about by the discovery of oil and gas.

However, as pointed out above, the discovery of oil, gas and other natural resources (gold, diamond, copper, timber etc.) have been blessings for those countries who used these resources right and wisely too. For example, it is not only the Kingdom of Saudi Arabia, but nations such as Norway, USA, Canada, The Netherlands, Russia and some of the very rich Gulf oil and gas producing countries are considered lucky in successfully managing the easy incomes and wealth accruing from the depleting oil and gas resources. It could be recalled what Saddam Hussein did with oil revenues in Iraq while other countries, like Nigeria, Angola and Venezuela have misused their oil and gas revenues and impoverished their economies and peoples; making them poorer than they were before discovering oil and gas resources!

Nigeria has a record history of 66 years of discovery of oil and gas in its southern onshore coastal mangrove delta region of its land territory in 1956 at Oloibiri in the present day Bayelsa State and not long ago, in its deep water offshore international maritime boundary. Thus, it took another 60 years for crude oil and gas to be struck in commercial quantities in the Northeastern region of Nigeria!

The modern oil industry can trace its origins to Baku in 1837, where the first commercial oil refinery was established to distil oil into paraffin (used as lamp and heating oil). This was followed by the first modern oil well in 1846, which reached a depth of 21 metres. At this time, a single oil field in Baku accounted for over 90% of the world’s oil production, mostly going to Persia (now Iran). Commercial oil wells soon followed in Bobrka, Poland (1854), Bucharest, Romania (1857), Ontario, Canada (1858) and Pennsylvania, USA (1859), sparking a ‘black gold’ rush in several of these regions. Pennsylvania was the clear winner and within a couple of years was producing almost half of the world’s oil. Prices rose quickly – from roughly $0.49 a barrel in 1861 to $6.59 a barrel in 1865.That is now history!

Oil is now “the source of energy that’s more than coal, and more than twice as much as nuclear, hydroelectric and renewable energy sources combined.” Furthermore, “Oil and gas together provide a quarter of the world’s electricity, and the raw material for more than 6,000 different products, including plastics. Edwin Drake who discovered crude oil in Pennsylvania, USA, may have questioned who would buy gasoline after obtaining his paraffin, but the internal combustion engine was about to give him an answer. From cars to trucks, cargo ships to jet planes, oil-derived fuel still moves us and stuff – around.”

But is this about to change? Renewable electricity (Solar and Wind, and Green Hydrogen) and other new non-polluting (fusion energy) and low-carbon emission sources of energy and technologies are about to replace liquid and gas fuels that power vehicles, airplanes, and ships; thereby replacing internal combustion engines that drive the world’s transportation systems. Similarly, the major industrial economies of the world are transiting from fossil fuel powered economies; fossil fuels based-electricity generation and industrial manufacturing processes to clean renewable energy sources and technologies. The energy transition from dirty fossil energy sources and technologies became necessary because of the need to address the global climate change phenomenon brought about by the greenhouse gases (methane and carbon in particular) emissions from the utilization of fossil energy resources and technologies beginning from 1864.

Therefore, the recent discovery of oil and gas in commercially exploitable quantities in the north-eastern corridor of the country should be analyzed from at least two major perspectives or paradoxes. Firstly, it comes at the time of the global transition from fossil energy sources and technologies to cleaner non-fossil energy sources and technologies.  Secondly, it brings about a fresh breath for not only substantially adding to Nigeria’s proven national reserves of oil and gas (additional over one billion barrels of crude oil and over 500 billion standard cubic feet of gas) in the Southern onshore oil and gas rich region and the offshore territorial deep waters of the country, but also, joy and blessings to the good peoples in the northern region of the country (i.e., no longer blackmailed and seen as a “parasite region”) in particular, and the rest of the country in general.

Hence, it is against the above backdrop that the question that bugs the minds of many concerned Nigerians, including mine, is whether the past mistakes of oil and gas discovery in Nigeria are going to be repeated once again in the management of this recent discovery of oil and gas reserves at Kolmani oil and gas bearing geological formation? In other word, is the discovery going to be a blessing or the proverbial curse associated with what Juan Perez Alfonso referred to as the “Devil’s Excrement” (crude oil)? “We are drowning in the devil’s excrement.” (Alfonso, 1975).

Finally, for the new discovery of oil and gas reserve deposits to be a blessing and avoid the associated curse, it is my prayer and conclusion that Nigeria should not continue to repeat the mistakes of the past (there are still many of them indeed). President Muhammadu Buhari’s speech delivered at the official flag-off ceremony of the validation phase of the first integrated Oil Development project in the area on Tuesday, November 22, 2022 at the Kolmani River OPLs 809 and 810 exploration sites (a boundary community between Bauchi and Gombe States), equally cautioned about the repeat of the mistakes of the development of the oil and gas reservoirs in the geological formations in the Niger Delta area.

The mistakes go beyond environmental despoliation, host community poverty and underdevelopment, oil theft, vandalism of oil and gas infrastructures and militancy by the frustrated and unemployed poverty-stricken youths. They include monumental public policy failures that breed high level of corruption and mismanagement across all the layers of management of the sector.

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