Nigeria’s Untapped Frontier Basins: A Reservoir of Potential Hampered by Investment Hesitation
Nigeria, a nation renowned for its substantial oil and gas reserves, faces a critical juncture in its energy journey. While the established Niger Delta basin continues to yield resources, attention has increasingly turned towards the untapped potential of the country’s frontier basins. These unexplored geological areas, including the Anambra, Benue Trough, Chad, Dahomey, Bida, Sokoto, and deep/ultra-deep offshore regions, hold the promise of significantly boosting Nigeria’s hydrocarbon production and driving economic growth. However, realizing this potential hinges on attracting substantial investment, a challenge compounded by investor apprehension regarding the uncertainty of hydrocarbon reserves within these basins.
The Nigerian Association of Petroleum Explorationists (NAPE), recognizing the strategic importance of these frontier basins, is actively working to address the investment bottleneck. NAPE President, Johnbosco Uche, highlights the crucial role of high-quality seismic data in de-risking exploration and attracting investment. He emphasizes the current inadequacy of available data, particularly in the Anambra basin, where only 2D seismic data exists, while 3D seismic data is essential for a more comprehensive understanding of the subsurface geology and potential reserves. Acquiring this data requires substantial funding, and Uche argues that attractive fiscal incentives and tax regimes are necessary to entice investors to undertake the financial risk associated with acquiring this data.
The reluctance of investors to venture into Nigeria’s frontier basins stems primarily from the inherent uncertainty surrounding hydrocarbon reserves. Unlike established producing areas, where the presence of commercially viable resources has been proven, frontier basins present a higher level of risk. Without sufficient data to confirm the existence of substantial reserves, investors are hesitant to commit the significant capital required for exploration and development. This cautious approach, coupled with the perceived riskier nature of frontier exploration, has contributed to a lull in activity within these basins.
NAPE is actively collaborating with EnServe, a company specializing in front-end studies, including seismic acquisition, to drive the frontier basin agenda. The partnership aims to gather the necessary data to assess the hydrocarbon potential and de-risk exploration for potential investors. This collaborative effort recognizes the importance of data acquisition as a prerequisite for attracting much-needed investment into these under-explored areas. By providing reliable information about the subsurface geology and potential reserves, NAPE and EnServe seek to build investor confidence and unlock the vast potential of Nigeria’s frontier basins.
The significance of these frontier basins extends beyond merely increasing oil and gas production. They represent a vital source of future revenue for Nigeria and hold the potential for substantial natural gas reserves, critical for both domestic consumption and export. Natural gas, a cleaner burning fuel, is increasingly recognized as a crucial component of a sustainable energy mix, and the frontier basins could play a key role in Nigeria’s transition to a more environmentally friendly energy future. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plays a vital role in overseeing frontier basin exploration through regulations and promoting investment. These basins are increasingly seen as crucial to ensuring Nigeria’s long-term energy security and economic growth.
Despite the recognized potential, progress in these basins has been slow. NAPE, in commemorating its 50th anniversary, is aiming to use the occasion as a platform to strategize on rejuvenating both the established Niger Delta basin and the frontier basins. The focus is on developing frameworks that encourage increased production, unlock new reserves, and ensure energy security for Nigeria and the African continent in the coming decades. A key aspect of this strategy is the intentional exploration of gas, particularly in deeper reservoirs and frontier basins. With about half of Nigeria’s gas reserves being non-associated, NAPE emphasizes the importance of increasing this proportion to meet national aspirations. Expanding into frontier basins and exploring older rock sequences in the Niger Delta are seen as crucial steps towards achieving sustainable energy security through gas, a cleaner fuel alternative. The challenge remains to translate this vision into tangible progress by attracting the necessary investment to unlock the untapped potential of Nigeria’s frontier basins.
