Russian energy giant Gazprom has signed an agreement with a Nigerian firm to analyse three oil blocks in northern Nigeria for possible exploration, a senior company official said on Wednesday.

The Russian firm signed a memorandum of understanding with the New Nigeria Development Company (NNDC), a venture owned by Nigeria’s 19 northern states, to study two oil blocks in the Chad Basin and one in Benue Trough.

The deal is one of many ventures Gazprom plans to pursue in Africa’s largest oil and gas producer. The company is expected soon to sign a $2.5 billion gas exploration agreement with state oil firm NNPC.

“Gazprom is fairly new in Nigeria, but we’ve been having discussions with them for nearly a year. They have a good track record,” Frederick Durlong, NNDC’s executive director for business development, told Reuters.

Gazprom was one of 15 companies picked by Nigeria’s government this month to be core investors in the exploration and production of its natural gas reserves, the world’s seventh largest.

Virtually all of the OPEC member’s oil and gas production comes from Nigeria’s southern Niger Delta, but oil majors have started to look more closely at the north’s potential.

“In the past when oil prices were at $20, there was no incentive for oil majors to explore for oil here. When they came it was under government pressure and they did minimal work,” Durlong said.

“There are reasonable grounds for us to believe there is oil and gas here.”

NNDC owns a total of four oil blocks in northern Nigeria, obtaining them through the 2005 bid round.

Royal Dutch Shell and U.S. major Chevron conducted some initial exploration surveys in two blocks and deemed the wells as marginal for oil and gas, Durlong said.

If oil and gas is found, NNDC intends to sell the natural resources to the domestic market.

“The priority for us is to use the oil and gas for domestic and regional consumption,” Durlong said.

(Reuters)