By Olasunkanmi Akoni

Lagos State, with an estimated population of about 23 million people is one of the richest states in Nigeria. It is one state that has the financial wherewithal to call the bluff of the Federal Government allocation and still survive. And when such a state then strikes oil in its domain and joins the league of oil producing states in the country, it could be said, as former head of state General Yakubu Gowon was reportedly quoted as saying, that the problem of Lagos state is not money but how to spend it.

Discovery of oil

Sometime in 2011, the Lagos state government under Mr Babatunde Fashola, confirmed the discovery of crude oil in commercial quantities, in Badagry Division of the state. The confirmation came following discovery of oil by Afren Plc and its partner, Lekoil Limited, which announced significant oil discovery offshore Dahomey Basin in Lagos. In separate announcements, the partners said they discovered a significant light oil accumulation based on the results of drilling and wire line logs from a high impact Ogo-1 well, located on the Oil Prospecting License, OPL 310 offshore Nigeria.

Lagos has therefore become the 11th oil producing state in Nigeria, a club Anambra State joined recently. The other oil producing states are Akwa Ibom, Bayelsa, Rivers, Delta, Ondo, Abia, Imo, Edo and Cross River. The discovery is expected to also boost the economy of Lagos, which currently generates about N29 billion internally every month. Geological studies indicate that the Dahomey Basin is a combination of inland/coastal/offshore basin that cuts across some West African countries including Nigeria as well as Southeastern Ghana, Togo and the Republic of Benin.

Following the discovery of oil, the State Government established Ibile Oil and Gas Corporation, an indigenous firm to manage oil related issues to ensure that the state remains in the business of oil and gas in the country.

The Lagos State House of Assembly later passed a bill on 12th of May, 2013 establishing Ibile Oil and Gas Corporation, which was subsequently signed into law on June 11 2013 by Governor Babatunde Fashola authorizing the state government to invest and engage in Oil and Gas activities in the state.

The bill has 28 Sections dealing with functions and objectives of the Corporation. Section 2 (g) of the Bill empowers the Corporation to invest in downstream oil and gas activities including gas processing businesses; petroleum products retailing, gas retailing, gas pipelines deployment, acquisition of petroleum products tank farms and other distribution facilities.

The bill states that the Managing Director shall advise the Board in relation to the performance of the functions of the Corporation and shall make proposal to the Board on any matter relating to the activities of the Corporation.

Ibile Oil is to Lagos, what Owena is to Ondo State as well as what Delta Oil is to Delta State. Every state has such agency. So through Ibile Oil, Lagos can also start partnering and participating in all the aspects of oil and gas activities-on-stream, mid-stream and downstream.

FG okays exploration

The Federal Government on Wednesday, August 17, announced the approval of four of the five Aje Oil wells, discovered in Lagos State and disclosed plans to commence disbursement of 13 per cent derivation fund to the state as an oil producing state

Chairman, Indices and Disbursement Committee of the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, Alhaji Aliyu Mohammed, disclosed this during a courtesy visit to Governor Akinwunmi Ambode in Alausa, Ikeja. The visit of RMFAC was sequel to a letter sent by Governor Ambode to President Muhammadu Buhari a few months ago, seeking the inclusion of Lagos on the list of oil producing states to qualify it for payment of 13 per cent derivation fund.

Mohammed noted that the request of the governor prompted the setting up of an Inter-Agency Technical Committee, comprising RMAFC, DPR, Office of the Surveyor-General of the Federation and the National Boundary Commission, to determine the location of Aje Oil Wells. He explained that the committee’s visit to Lagos was aimed at verifying crude oil and gas production from Aje Oil Wells for the purpose of disbursement of the 13 per cent derivation fund to the state, in line with the constitution of the Federal Republic of Nigeria.

“Aje Oil wells 1, 2, 4 and 5 fall within the 200 miles Isobath-a line on a map that connects all points that have same depth below water surface, and, therefore, should be attributed to Lagos State. But Aje 3 cannot be claimed by the state,” he said.

Explaining why Lagos lost the oil well, Mohammed said due to “the purpose of derivation as spelt out under section 162 (2) of the 1999 constitution and the provisions in Allocation of Revenue (Abolition of Dichotomy in the application of derivation) Act 2004, Aje 3 oil well falls beyond the 200 miles isobaths and, therefore, cannot be legitimately attributed to Lagos State.”

Consequently, he said the commission and members of the Inter-Agency Committee had to embark on the working visit to the oil wells to conclude the process, adding that the visit would promote national unity as well as the socio-economic development of Lagos State and Nigeria. Mohammed said: “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.”

It will benefit Nigeria — Ambode

In his response, Governor Ambode noted that it was significant for the Nigerian economy that Lagos emerged as the first oil producing state outside the Niger Delta basin. The governor described the visit as the final hurdle left for the state to join the league of oil producing states in the country. “We are very glad to receive this delegation. We also want to thank the Federal Government, especially President Buhari, for making this to happen very promptly.

“Within a span of about 60 days we wrote our letter, and even before we wrote the letter, this technical committee was set up. It gladdens me to say that the institution works and is working for the good of Nigeria,” he said. While alluding to the fact that the feat in Lagos had kick-started the path to diversification of oil production in Nigeria, Governor Ambode urged other states in the federation to begin to activate the mineral deposits in their domain to boost their Internally Generated Revenue, IGR. He said: “It would also give us revenue independence in a manner that there would be equal growth among states.”

The state Commissioner for Energy and Mineral Resources, Engr. Taofiq Tijani, in his reaction to the discovery of oil in Lagos said this would enhance the oil reserve of the nation as well as boost the economy of the state. He assured that Lagos would be a bigger business hub with the development of oil and gas as more employment opportunities would be created.