By all standards and as at yesterday, Lagos is now an oil producing state.
A consortium of six oil production and exploration companies worked for over 25 years to make it happen. The oil production is taking place in Aje Field. Yinka Folawiyo Petroleum Company Limited, New Age Exploration Nigeria Limited, EER Nigeria Limited, Pan Petroleum (Panoro Energy) Aje Limited and PR Oil & Gas Nigeria Limited.
Aje Field has a production capacity of 40,000 barrels of oil per day plus a storage capacity of 750,000 barrels. Aje Field is located OML 113 in the western part of Nigeria in the Dahomey Basin.
While this positive development might not excite a typical outsider for reasons not detached from the falling price of crude and Nigeria’s touted move from oil dependency; the production of oil in Lagos is one of the best thing to happen to the state.
Lagos’ economy though diversified, has no oil in it. The state depended so much on tax that it earns over 60% of total tax revenue collected in the country. Mixing oil tax and levies to the basket makes the state’s revenue robust and sustainable.
Dangote Industries’ refinery is currently under construction in Lekki Lagos. By default, crude from Lagos oil fields will easily reach the refinery faster than any other source. The two companies can reduce their cost of sales and production to make more profit.
The production of oil in Lagos will also generate jobs through linked investments. The possibility of modular refineries springing up in Lagos coastal region is viable if the production of crude is assured.
However, authorities must be very watchful so that we do not have another Gulf of Mexico spillage tragedy. All safety measures must be put in place to prevent any leakage and eruption.