THE COMING GLOBAL ENERGY ORDER
There's bad news. In less than seven years from now, the United States would have overtaken Saudi Arabia and Russia to become the world's largest producer of oil and gas. And, 10 years hence, it could become completely oil independent. The implications for Nigeria are stark: The United States, which currently imports 42 per cent of its total oil needs, 9 per cent of it from Nigeria - which translates to a little less than half of Nigeria's total oil export - would no longer have the need to do so. And if anyone thinks this should not be troubling because we can simply shift our oil supplies to other big consumers like China and Europe, then, that person is mistaken.
The reason why the United States would become oil and gas independent is because they have perfected the technology of hydraulic fracking, which can get oil and gas out of shale rock. The shale rocks have always had lots and lots of trapped oil and gas but getting them out had proved more expensive than simply importing them. But, today, with improved technology, hydraulic fracking and horizontal drilling have been combined to extract the trapped oil and gas at a much cheaper rate. And it will get even cheaper in the coming months as efforts are being intensified to make it so.
Unfortunately for oil-producing countries like Nigeria, these shale rocks also litter the landscapes of China, Germany, the United Kingdom, Mexico, Colombia, Indonesia, etc. The reserve in shale oil in China surpasses that of North America by 50 per cent; in fact, studies have shown that recoverable reserves of shale gas are present in almost all countries of the world. In other words, oil and gas may soon become as common as water.
For a country like Nigeria that depends on oil for 95 per cent of its foreign exchange needs and 65 per cent of its budget, this should be seen as a life and death matter. It should call for a proactive leadership on the part of our government.
Unfortunately, as in every other issue of statecraft, our leaders simply do not give a damn. The technology that would give the US this oil independence status - hydraulic fracking and horizontal drilling - will also be available to other large consumers like China, Germany and the United Kingdom.
President Barack Obama, who made oil independence a major plank of his 2008 presidential bid, appears to be succeeding. Between 2008 and 2011, the US crude oil production jumped by 14 per cent; natural gas was up by 10 per cent in the corresponding period. In 2012, the US domestic production went up a further 7 per cent, the largest jump since 1951. During Obama's re-election campaign last year, he informed the American people that he had already cut oil imports by one million barrels daily. This is already showing in our crude oil transactions with them. The United States is the biggest importer of our crude oil and, already, this new trend is showing. American oil imports from Nigeria slumped in 2012 from 810,000 barrels per day to 361,000 barrels per day. But the reality is yet to dawn on our leaders. In 2013, this import will drop by a further 50 per cent and, by 2015, it may be 0 per cent import of Nigeria's oil to the US.
But the good news is that Nigeria's real wealth is in its human capital, huge arable land resources (which can turn Nigeria, as they did Brazil, into an agricultural superpower) and its huge untapped solid mineral reserves, which is found in all states. But converting this potential to real wealth is squarely a function of leadership, the quality of which we do not have at the moment.
Nigeria currently earns about $100 billion annually from oil but this is frittered away by our food import bill of about $20 billion, petroleum products import bill of about $29 billion and several other scandalous imports. This $20 billion annual food import is money that should be going to Nigerian farmers for food production, creating jobs and wealth if we were a more sensible nation. If our farmers got this $20 billion (N3.2 trillion) we send overseas annually to import milk, tomato paste, rice, wheat, salt, sugar, cookies, biscuits, cheese, jam, butter, etc, agriculture would change Nigeria forever.
We can produce all these food items in good quality in Nigeria if we were serious about it as a nation. And if we expended the current $29 billion (N4.6 trillion) we spend annually on importation of petroleum products into Nigeria in constructing several small to medium-size modular refineries, the type that are now commonplace all over the world, Nigeria would, by now, have become a net exporter of petroleum products like every other major oil producer in the world with which we started together. These are not fantasies. They already work in other countries with better leadership than ours.
Every other oil-producing country has envisaged the emerging global energy order and has been frantically diversifying its economy as a result. Brazil, the home of Petrobras, one of the world's largest multinational oil companies, is also a major oil producer. It currently produces about 2.3 million barrels daily but it has diversified aggressively into agriculture. Every year, Brazil earns a cool $300 billion from agriculture. Nigeria, which produces slightly more oil than Brazil daily, now earns about $100 billion from oil annually and virtually nothing from agriculture.
Well, the hard truth is that by 2015 when the United States would have stopped importing oil from Nigeria altogether, 14 other African countries would have joined the ranks of oil producers to complicate the glut. If our leaders do not start giving a damn immediately, many governors may soon not be able to run their government houses. I know this flagrant fact may still not move our leaders to action.
American Drones For Niger, Burkina Faso
There has been an agreement between the governments of Niger Republic and the United States for the Americans to set up a base for drones in their country. Burkina Faso already has a similar agreement with the United States. The drones are expected to keep an eye on, and target, terrorists and Tuareg rebels that now litter countries like Mali, Niger, Chad, Algeria, Libya and of course, Nigeria. The drones may be successful in targeting high-profile terrorists but, as the experience in Afghanistan and Pakistan has shown, drones do not eliminate terrorists altogether.
But there's even a bigger concern and danger. These drones are notoriously imprecise in spite of what the Americans say of them; and if the lessons of drone activities in Afghanistan and Pakistan are a lead, then, the civilian casualties to be expected could make the collateral damage currently being experienced in Borno and Yobe states a child's play.
I hope the leaders of Mali, Niger, Chad, Burkina Faso and Nigeria - where the spying glasses of these drones will be concentrated - have given a thought to this very serious issue.