Lagos: Story Of Oil In The Nation’s Economic Hub

In this report, George Okojie observes that with the recent discovery and consequent commencement of crude oil production in Lagos, the state is set to consolidate its economic dominance among its peers in Nigeria.

When Yinka Folawiyo Petroleum Company Limited, a wholly-owned indigenous firm embarked on the complicated process of looking for crude oil in Lagos State some 25 years ago many thought it was another grandstanding, a wild goose chase  that will fizzle out without achieving the desired results.

However, the oil firm proved cynics and critics wrong when it, in partnership with Panoro Energy ASA and First Hydrocarbon Nigeria (FHN) Limited, among others, on May 3, 2016 achieved first oil on Aje field in western axis of the ancient town of Badagry. Indeed, the discovery catapulted Lagos State into the league of oil and gas producing states in the country. Again, it is historical because the feat made Lagos the first basin out of the Niger Delta to become an oil producing state.

Shortly after the discovery, the Indices and Disbursement Committee of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) proclaimed the state as an oil producing state, in line with the constitutional provision.

According to the Chairman of the Committee, Alhaji Aliyu Mohammed the development was significant for the Nigeria economy that Lagos state has emerged as the first oil producing state outside the Niger Delta basin.

Mohammed affirmed that Committee had visited the state to verify crude oil and gas production from Aje Oil Wells for the purpose of disbursement of the 13 per cent Derivation Fund.

He said the Commission had set-up an Inter-Agency technical Committee comprising of the RMAFC, DPR, Office of the Surveyor General of the Federation and the National Boundary Commission to determine the location of the Aje Oil Wells.

Mohammed explained that the Technical Committee recommended that for the purpose of the Derivation Fund as spelt out under Section 162 (2) of the 1999 constitution as well as the provision of the Allocation of Revenue Act 2004, number 1, 2, 4 and 5 of the Aje Oil Wells fall within 200m isobaths and therefore should be attributed to Lagos State.

“It is also important to state that the commencement of oil production from Aje oil field by Yinka Folawiyo Petroleum Company Limited is the first time oil is being produced outside the Niger Delta basin and therefore of a significance in diversifying the source of crude and gas production in the country,” Mohammed said.

LEADESHIP Sunday checks revealed that oil produced from the Aje field will be stored in the Front Puffin which has a production capacity of 40,000 barrels of oil per day (bpd) and storage capacity of 750,000 barrels.

The oil field is currently located in the extreme western part offshore Nigeria, adjacent to the Benin border in the Dahomey Basin and it is situated in water depths ranging from 100 to 1,500 metres, about 24 kilometres from the coast.

Crucially, experts and stakeholders say with the discovery and exploration of the two wells in Aje oil field located in Oil Mining Lease (OML) 113, offshore Lagos which has tested in excess of 10,000 barrels of oil equivalent per day, the Lagos economy is expected to achieve further robust growth.

Aside the oil wells, several key factors in the same sector expected to stimulate explosive economic growth in the state include the largest single line refinery in the world being developed at the Lekki Free Trade Zone (LFTZ) by Africa’s richest man and business mogul, Alhaji Aliko Dangote.

Indeed, with the discovery of oil and the subsequent commencement of drilling activities, Lagos state which unarguably has one of the most vibrant economy among the 36 states of the nation, is on the way to further consolidating its economic dominance.

Basking in the euphoria of the success of their doggedness, the Group Managing Director, Tunde Folawiyo, said the discovery of crude oil in Lagos, which had taken over 25 years to achieve, has gone a long way to show it is possible to achieve any feat if government continues to lend support to indigenous investors and companies.

“At so many points along the way, we could have given up because it was a very rough road, but the point is that only a Nigerian company would have continued to do what we did” Folawiyo said adding that “the main crux is that we need government and government needs us and where government supports assiduously, it can only be success”.

He said the company spent about $400million dollars to achieve the feat, adding that the current status of the oil well has the capacity to produce at least 12,000 barrels per day, with a possibility to increase to 25,000 to 50,000 barrels per day in the nearest future.

Corroborating Folawiyo his development partner, Panoro’s Chief Executive Officer, John Hamilton, said exploration of oil in Lagos “is a transformational milestone for Panoro and represents a great achievement by the Aje project teams”

Continuing, Hamilton said “the commencement of production at Aje is also significant for Nigeria as it is the first commercial production for the country in the emerging Dahomey Basin.”

But for the Lagos state governor, Akinwunmi Ambode, nothing can be more plausible than the doggedness of the indigenous firm to achieve the feat after 25 years of hard work.

Ambode was however, elated that by the provision of Section 162 Sub-Section 2 of the Nigeria Constitution, his state has become an oil producing State.

“Because I know that based on section 162 Sub-Section 2 of the Nigeria Constitution, Lagos becomes an oil producing state and by virtue of this, the 13 percent derivation that is due to oil producing states, Lagos will start to partake from it by your very good gesture”

Ambode pointed out that the feat has not only placed Lagos in the history books as the first state outside the Niger Delta to become an oil producing state, but has also opened up a new page for revenue generation in the state.

“It also means that by the additional revenue that is coming from this action, we would have more resources to provide infrastructure for Lagosians”

“And this is what we want other investors and businessmen to emulate, so that beyond the issue of profit, you are actually creating impact on people without them necessarily knowing that it is actually coming from a venture like this that you have embarked on,” he added.

According to him, the resilience of Yinka Folawiyo Petroleum Company, an indigenous firm, has shown the possibilities and opportunities for investors and businessmen willing to commit their resources to boost local production.

“The Federal Government has always said that we all need to look back inwards and start to do things for ourselves. Spending 25 years to be able to get to this stage and get something productive shows a lot about your belief, tenacity and doggedness and I want to recommend you to every other Nigerian investor that there is still greater hope for Nigeria with the likes of you around”.

“I don’t see any reason why any Nigerian needs to be afraid because you have just shown by this indigenous discovery that anything is possible in Nigeria,” he said.

Ambode said the historic discovery means that the three senatorial districts, Lagos West, Lagos East and Lagos Central have all combined to open up the economic and investment potentials of the state.

“From the Lagos West axis, we have crude oil coming out of it, from the Lagos East axis, we have the petrochemical refinery coming from the Lagos Free Trade Zone by the Dangote Group which will come on board by 2018 and from the Lagos Central axis, it’s the financial district of Nigeria,” he said.

But experts has warned that it may not be smiles all the way and hence urged both the government and relevant stakeholders to put in place measures that will mitigate impact of oil exploration so as to avoid a repeat of the Niger delta debacle.

Specifically harping on the downside of the crude oil exploration, Mr. Gabriel Akinwale, an environmentalist, said though it is a very good development that should be celebrated by Lagosians, oil exploration has over the years posed several environmental economic and social problems in the country.

The fear he said is the nation’s has intense environmental degradation issues as it relates discharges of petroleum effluent, degrading land, water bodies and the atmosphere at large. According to him, exploration activities such as drilling, pipe laying and sea transportation within the marine environment are bound to create an impact which will inevitably have some negative consequences if not properly handled.

“We are witnesses to the fact that one of the major environmental problems in the Niger Delta Region of the country since the inception of oil exploration, exploitation, has been that of oil spillage. And it goes without saying that the problem has caused hardship and poverty among the host communities”.

“If the government and oil companies maintain the posture of not caring about the plight of the host communities, it could cause youths restiveness in Lagos. Youths in Apa and other communities in Badagry will turn to monsters, militants and rise up against constituted authorities”.

 http://leadership.ng/news/548160/lagos-story-of-oil-in-the-nations-economic-hub?