When Bayo Ojulari, the newly appointed Group Chief Executive Officer of NNPC, announced that preparations were underway to restart crude oil exploration at the Kolmani oil field on the Bauchi-Gombe border, the news was met with applause. After all, the northern region has long been touted as Nigeria’s next oil frontier. But beneath the celebration lies a troubling reality: over $3 billion has already been spent on exploration in northern basins — Kolmani, Chad, Upper Benue, with little to show for it.
Kelvin Emmanuel, an energy analyst, argues that Nigeria may be chasing a mirage. “Despite nearly $30 billion being appropriated across frontier basins, none have hit first oil,” he noted. These efforts are not just unproductive, they’re economically unsound.
Unlike deepwater projects like Bonga North in the Delta state, which are expected to reach first oil within five years, Kolmani hasn’t progressed beyond exploratory drilling. Why? The recovery ratios from reservoir modelling — the hard data that drives investment decisions — simply don’t justify commercial development. According to Kelvin, international oil companies (IOCs) won’t touch these fields because the numbers don’t add up. There’s no viable business case.
These frontier basins are proving to be more gas-rich than oil-rich. Yet, Nigeria lacks a gas development strategy that treats gas as an independent resource, not just a by-product of oil. “We don’t have a national gas strategy. The Gas Master Plan is not being implemented meaningfully,” Kelvin stated.
This oversight is costly. Nigeria has more proven reserves of non-associated gas than oil, yet continues to budget and plan as an oil economy. Meanwhile, Qatar — a country that produces less crude than Nigeria—is six times larger in LNG output, simply because it took gas seriously.
Even the Central Bank of Nigeria (CBN) has joined the call for a shift in strategy. Following the recent Monetary Policy Committee (MPC) meeting on the 20th of May 2025, Olayemi Cardoso, the CBN governor, noted: “The committee also called on the fiscal authority to strengthen current efforts at enhancing foreign exchange earnings, especially from gas, oil, and non-oil exports.”
But this recommendation was accompanied by a warning: “The MPC, however, expressed concerns about the recent decline in crude oil prices attributable to increased production by non-OPEC members, as well as uncertainties associated with U.S. trade policy, which present new challenges for fiscal receipts and budget implementation.”
Without mixing words, Nigeria’s fiscal base is shaky, and relying on oil, particularly speculative ventures like frontier basins, is no longer viable. The economy must lean into gas and diversify its export base.
The AKK pipeline: Ambitious, but misaligned?
NNPC’s $2 billion Ajaokuta–Kaduna–Kano (AKK) gas pipeline was supposed to be a game-changer, connecting Nigeria’s gas-rich south to its northern demand centres. But the project has been plagued by cost inflation and misalignment. Kelvin pointed out that AKK costs $3.2 million per kilometre — more than double the global average of $650,000–$1.5 million. “The Chinese left the project because it was overpriced,” he said.
Even more worrying is that while large segments of the pipeline have been laid, there’s no clear plan for sourcing gas to feed it. There’s also a lack of investment in the upstream gas fields that would make the pipeline viable. “Where is the gas coming from?” Kelvin asked. “The infrastructure for aggregation is not there.”
This misstep reveals a deeper problem: infrastructure is being built without alignment to feedstock or off-take. Planned power plants in Abuja and Kaduna that were supposed to use AKK gas remain on paper. Even Train 7 of the NLNG project is struggling with underutilised feedstock while the country rushes to expand.
Meanwhile, electricity remains a major inflationary trigger. As the CBN governor also admitted in his MPC briefing: “The committee… acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure, and other legacy structural factors.”
This ties directly into Nigeria’s energy governance failures. Gas powers most of Nigeria’s thermal plants, but producers are discouraged by low regulated prices, a weak transmission network, and a value chain burdened with debt. With electricity tariffs and gas pricing that don’t match reality, the entire system spirals into inefficiency, which the government pays for.
Fiscal risk and a broken power chain
The consequences of this misalignment aren’t just technical, they are fiscal. Nigeria faces mounting debts, and its electricity sector is a case study in dysfunction. Gencos, which generate about 80 percent of Nigeria’s electricity using gas, face underpricing from government-imposed price caps. Operators would rather flare gas or reinject it than sell it below cost. The result? Gas supply is erratic, electricity generation is unstable, and power plants run far below capacity.
“More than 4.2 trillion naira in unpaid invoices are stuck in the power value chain,” Kelvin noted. The government is relying on World Bank guarantees to keep gas flowing. Meanwhile, transmission infrastructure is too weak to carry generated power, and most end-users are on postpaid billing, with no incentive to conserve or pay properly. It’s a classic loop of inefficiency, and it drains the treasury.
A strategy reroute is urgent
With debt rising and revenues squeezed, the Nigerian government can no longer afford shadow-chasing. NNPC’s fixation on frontier oil exploration, in the face of glaring data and economic inefficiency, is a misallocation of scarce resources. If anything, the frontier is gas, not oil. But without a clear, enforceable gas development strategy, Nigeria risks losing again.
Rather than celebrating pipeline kilometres laid, or reviving politically convenient oil dreams in the north, Nigeria must ask: where is the gas, where is the strategy, and where is the return?
Until those questions are answered, the fiscal heat will only grow hotter. (BusinessDay)
