Why Nigeria Cannot End Gas Flaring In 2020 — Experts

Nigeria's flared gas volume recently rose from 244.84 billion Standard Cubic Feet (SCF) in 2016, to 287.59 billion SCF in 2017

Experts have cautioned against undue optimism over the three-point strategy unfolded by the Federal Government to end gas flare by 2020, insisting that elusive strategies and other inherent challenges, would ensure that the desire remains a pipe dream.

Nigeria is one of the world’s top gas flaring nations

The Guardian Nigeria report continues:

To further illustrate their pessimism, they say there is no way the strategy would be achieved, considering lax legislative backing and weak regulatory framework, as well as, low incentives.

Nigeria is one of the world’s top gas flaring nations and the Federal Government has severally promised to harness and market the nation’s gas resources to reduce the negative impact gas flare has on oil-producing communities over the years without success.

But the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, who last Thursday announced a three-point strategy to contain the menace in 2020.

According to experts who queried government’s optimism, even if the challenges were addressed, setting a two-year deadline was a mere political statement and should not have come from a personality who understands how the industry and Nigeria’s political landscape operate.

The strategies announced by Baru, include, non-submission of Field Development Plans (FDPs) to the industry regulator, the Department of Petroleum Resources (DPR), without a viable and executable gas utilization plan; steady reduction of existing flares through a combination of targeted policy interventions in the Gas Master-plan, as well as, re-invigoration of the flare penalty through the 2016 Nigeria Gas Flare Commercialization Programme (NGFCP), and through legislation, that is, place ban on gas flaring via the recent Flare Gas (Prevention of Waste and Pollution) Regulations 2018.

Though the NNPC is key to ending gas flare in the country, considering that the gas being flared basically comes from joint venture activities, which the NNPC holds in trust for the state, President of Nigerian Association for Energy Economics (NAEE), Prof. Wumi Iledare, said incentives and legislative backing as well as infrastructure for ending gas flaring are currently unavailable.

Indeed, since the country still looks forward to the PIGB coming into effect, and the uncertainties that may emerge as the country prepares for a major election, Iledare said 2030, which was earlier set could be more feasible.

“We have the policy; we have the commercial entities that have bought into it, and we have the National Assembly that is trying to pass a law to make sure that there are investments to harness gas for economic growth and development. But it is not possible in two years.

“If it takes years to get the bill together before they can even begin to prepare for the implementation, I think 2020 is just not realistic. Passing the bill that will make the incentives backed by the law may not come before the end of the year. How can you put together, the equipment and the projects that will bring an end to gas flare within one year? The incentives have not started to work and there is no law backing the incentives. So, there must be an act before you can set policies in terms of taxes and royalties,” Iledare said.

Former President, Nigeria Association of Petroleum Explorationists (NAPE), and Chief Executive Officer, Degeconek (Nigeria) Limited, Abiodun Adesanya, corroborated Iledare’s view points, adding that fines attached to gas flaring were not enough deterrent, thereby making it attractive to flare than harness.

Flared gas recently rose from 244.84 billion Standard Cubic Feet (SCF) in 2016, to 287.59 billion SCF in 2017, while gas flare penalty stands at ₦10/Mscf (equivalent to US$0.03).

Adesanya also insisted that DPR lack the capacity to properly monitor the excesses of international oil companies, who continue to flare gas even though the activities have been outlawed in developed communities, where the companies are headquartered.

He urged government to outsource monitoring of the excesses to local communities in the Niger Delta as a way of empowering the region, and getting the people involved and educated on why strict monitoring is necessary.

If gas flaring must stop, Adesanya said, “Government has to be serious; agencies of government have to be committed and other stakeholders in the oil industry must be sincere.”

For the Chairman, International Energy Services (IES) Ltd, Dr Diran Fawibe, it would be commendable if an end is brought to flaring in two years, but oil production may have to stop as well.

Fawibe said: “I am not too optimistic that in two years we can end gas flaring. But if we are prepared to pay the price in terms of cost of infrastructure to monetize the gas, it will be a very welcome development. When you are not flaring and not monetizing gas, and you have to produce gas in association with oil, there lies the main problem. The problem we have had over time has been the infrastructure for gas.”

He added: “Some of the fields where gas is flared in the Niger Delta are small and when you look at the price of laying gas pipeline, it is uneconomic. Some are also joint venture fields and if the NNPC is not contributing, the oil companies won’t feel obliged to pay NNPC’s share of the cost. This constitute a major problem,” Fawibe stated.