Nigeria abandons zero gas flare agenda

Jan 07, 2010 01:00 AM

The Federal Government may have abandoned the policy to end gas flare, as the 2010 budget did not include the strategies to end the gas flare in the Niger Delta region.
This emerged as the industry experts, lamented that the flames have burned for half a century, while darkness still prevails in the Niger Delta. Nigeria flares millions of tons of greenhouse gasses each year, which would have been used to generate electricity.

They pointed out that at night the orange glow from flares fuelled by the waste natural gas from crude production was the only lights visible across vast stretches of Nigeria's oil region, where many settlements are starved of power.
They suggested that harnessing the gas from the flares, along with that from bounteous gas fields to fire the country's power stations, most of which stand idle for lack of fuel. With the Federal Government offering to buy gas at what it said was a fraction of the production cost, oil companies were reluctant to invest billions of dollars in pipelines and other infrastructure.

The Niger Delta's flares, according to experts, served as a reminder of a difficult task, stressing that last year Nigeria, which boasts sub-Saharan Africa's biggest energy industry and is the fifth biggest crude supplier to the United States of America, flared 15 bn cm of gas, more than any other country apart from Russia and about one tenth of the global total, according to US defence department data.
At the same time, 150 mm Nigerians share roughly as much electricity as the three mm inhabitants of Wales, adding that businesses had been hamstrung while the Niger Delta's chimneys gave off millions of tons of greenhouse gasses each year without producing a single watt of power.

The experts agreed that the power crisis was the single biggest barrier between Nigeria and increased prosperity. The Federal Government had vowed to boost capacity, slowly raising the tariff it offered to gas suppliers and opening up the market to private power providers.
Western oil companies including ExxonMobil, Chevron, Agip and Shell disclosed that they had reduced flaring but continued to burn off about a quarter of Nigeria's annual gas output despite incurring fines. Frustrated with the slow progress of its "gas master plan", the Federal Government in June, last year, according to these industry experts, signed a $ 2.5 bn production joint venture with Gazprom in the hope the Russian giant will accelerate supply to the domestic market.

The National Assembly, has been working on a bill that, if approved, would force oil companies to pay the "international market price" for any gas flared after the end of next year, plus an extra 50 % to affected communities. Other measures might prevent lucrative gas exports until domestic demand is met.
Apart from generating extra revenue for the government of $ 500 mm $ 2.5 bn annually, dousing the flares would also address one of the many grievances that lie behind years of unrest in the Niger Delta.

The flame beside Akalaolu, a village at the end of one of the Niger Delta's rutted roads, has burned since 1974, when Chief Saturday Olimini, now an elder of "around 49", was a teenager.
"Since then we are suffering," the chief says. "Our women have been miscarrying. Men, small and big, we urinate with blood. Our fish ponds have been polluted; there is no clean water to drink."

The operator, Agip, said none of its employees at the site presented such symptoms. The Italian energy group provided Akalaolu's villagers with electricity they could not expect from the national grid. While the technology to capture flared gas is straightforward, the commercial mechanism, it was gathered, was vexed.
Shell, which supplied about 70 % of Nigeria's domestic gas, says it has spent $ 3 bn gathering gas from flares since 2000 and would need to spend the same again to finish the task. But funding from its joint venture partner, the cash-strapped state oil company, sources said, was often not forthcoming, pointing out that most of the reduction had been due to production cutbacks the company blames on militant attacks.

Another avenue the government had been promoting, according to them, was the United Nation's clean development mechanism, which allows green projects to earn extra revenue from the sale of carbon credits to polluters in industrialised countries. Seven projects under the scheme are already forecast to make Nigeria responsible for one third of Africa's emissions reductions under the scheme by 2012, mostly from curbing flaring.
Insiders said few big investors, green or otherwise, were likely to be lured into Nigeria's power sector until there is a functioning market.

"The tariff is the absolute, fundamental problem," says Bart Nnaji, chairman and chief executive of private provider Geometric Power, whose $ 400 mm power facility in the delta city of Aba agreed a gas contract with a group of oil companies only after it offered to pay a price far higher than the government tariff.
Many activists had dismissed thecommercial arguments of oil groups that regularly make tens of billions of dollars in profits annually. They noted that the first deadline for ending flaring came and went in 1984, 26 years after oil production began. The most recent passed last New Year's Eve.

Some suspected the flares would only be extinguished once the oil runs out -- or once green technologies render hydrocarbons redundant. The process, it was learnt, had become a legacy of production techniques dating from before the widespread use of natural gas for energy.
Today, rich nations have all but ceased flaring. Instead the gas is used or re-injected into the ground. In the developing world, however, flaring remains common, in spite of the harm to communities living near the chimneys.

The World Bank, which in 2002 began a drive to curb flaring, says the gas burned away each year equates to 30 % of the European Union's gas usage.
The gas flared in Africa would, if harnessed, fuel half its energy consumption.

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