Nigeria’s politics of gas flaring

Sep 13, 2005 02:00 AM

by Mr Gbemre

It is now obvious that the Federal Government and oil multinationals, two key allocators of values in the all important Nigerian oil/gas industry are insincere about the imperative of a cleaner environment with a final full-stop to routine gas flaring in the operating environment.
All that dilly-dally and noisemaking by both stakeholders over a deadline on ending flaring is all a hypocritical ploy to buy as much time as they wish to produce crude oil with flaring in the face of intense global pressures on producers to do the business at zero discharge of hydrocarbon into the environment.

In what has become the politics of gas flaring in Nigeria, many would have forgotten that far back 1985 was initially promoted as feasible to end gas flaring. With impunity, it was shifted to 2004. The reality that 2004 was just a mockery of the campaign prompted a drive towards 2008.
Two years in the march to 2008, the Federal Government and the multinationals have eaten their words already. At the moment, there seems to have been a restraint by stakeholders on projecting the next April fools day on ending flaring.

Between both key stakeholders, this failure to keep the frequently postponed deadlines on flaring have not, in anyway, demeaned their pleasure in flaunting what could well now be regarded as imaginary action plan on the subject of flaring in the pages of newspapers, radio/TV, seminars and workshop. These failed promises have also become the pillars for judging to what extent key stakeholders have fooled the people on the campaign of gas flares -- out in Nigeria.
Indeed, given the limited Nigerian market for gas at the level producers flare, the task of putting off flaring is daunting. It could however be argued that the Nigerian gas market is not as limited as stakeholders paint it.

What has been the problem is a gas market that is vast but requires being equipped to be able to activate it for viability. Put in practical terms, aside export opportunities, several companies, corporate bodies and individuals in Nigeria are in the waiting to buy substantial volume of refined gas to power their companies, industries, factories, machines, cars and domestic cooking if its supply is as easy as piping it to user points.
That means the product is available, much of it raw, and one half of the market -- the buyer is ready and willing, but the other half -- the seller lacks the basic tools, including processing plants, storage and distribution lines to attract the buyer.

It is like the GSM business. Long before the first network provider came into the market, Nigeria had a vast latent market for handsets comparable to only a few in the world. But none of the millions of handset users found interest in owning one because the market lacked lines and networks which underscores the point of equipping the market to activate it.
Soon as stakeholders like MTN and V-Mobile (formerly Econet) stepped up, the ripe handset market exploded with sellers and manufacturers smiling tothe banks daily. This is where we are with gas utilization in Nigeria.

Given the capital intensiveness of making sense of it all, the Federal Government and the multinationals meant right when they tacitly shared responsibilities of leading the zero flares campaign. As less active stakeholders queued behind the big two to meet the establishment expectations, the multinationals who have often judged taking giant stakes in the Nigerian downstream petroleum sector as unattractive, basically left the government to handle that aspect of the bargain all by itself.
For the primary upstream role of gathering and conserving the natural gas, associated or non-associated, the multinationals reserved the challenge through systems upgrade and essential development of new structures in partnership with Federal Government through the Nigerian National Petroleum Corporation (NNPC).

The interaction between both parties informed various programmes of action now influencing the ever-failing projected deadlines on putting out the flares as both stakeholders wilfully shy away from taking the vanguard to the promised land.
To meet its commitment to the challenge, government a couple of decades back, took off with the Nigerian Gas Company (NGC), under the NNPC group. NGC was established to animate and regulate the domestic gas market with overflow to neighbouring West African states. The NGC mission was to be achieved by establishing adequate reservoirs, conducive for gas re-injection/storage, processing plants and a network of supply and distribution pipelines across its projected market space with the Nigeria Liquefied Natural Gas Company (NLNG) in Bonny.

Coming on its heels is to target the export frontiers. Sourcing the abundant natural gas reserve including the much being flared, the NGC challenge required it to develop domestic distribution and supply network of processed gas to points where users, corporate and individuals had easy access.
If NGC had kept its mandate, it would also, by now, have gatheredthe technical and material competence to make it regularly available, cheaper and more environmentally friendly gas fuel for industries, power generation, compressed natural gas for vehicles, and the popular liquefied petroleum gas (LPG) for domestic cooking and lots more.

If the NGC has met half its set objectives complementing the NLNG, flaring would have hit a near zero level. But for this long, NGC could only achieve its goals on paper. Before long, wilful negligence and hijacking of funds caused NGC to abandon its vital gas compressor stations built with millions of dollars, confining itself to the inconsequential monitoring of some obsolete pipelines transporting processed gas from Shell Petroleum Development Company (SPDC) Gas Plants to the Egbin Power Plant.
Only recently, SPDC hired and refurbished the NGC abandoned compressor Station facilities on a ten year lease agreement. In the strict sense of business, the NGC is, like the national refineries, a failed bargain, and insolvent, perhaps if it operates independent of the mother NNPC.

The insincerity of the Federal Government towards meeting the downstream gas development challenge has in part presented the cheap excuses the multinationals hold tenaciously to abandon the upstream responsibility of putting out the flares in the fields. Today, they keep flaring with impunity.
Consider how SPDC, the obvious upstream pacesetter, has defaulted on the flares-out campaign. They came up years back with the Odidi Associated Gas Gathering (AGG). Not so long after, the Land Associated Gas Gathering (AGG),and Otumara Integrated Oil and Gas Project (IOGP) were proposed.

Considered extremely expedient for the industry, these proposals met accelerated approval from relevant regulator DPR, and Federal Munty of Environment (FME). Against this fair play, SPDC has long abandoned these remedial projects, the added excuse being that federal government failed to meet its counterpart funding of the Joint Venture serving the projects.
Collectively, if all of these projects were executed to meet operational goals, besides their economic importance, the chief benefit would have rewarded the operating space with a cleaner environment, pushing routine gas flaring towards zero discharge of hydrocarbon in the atmosphere.

While SPDC lived with the convenience of the excuses, she found freedom to pour mind blowing resources into developing very attractive new exploration and production frontiers deep off shore. Ironically, in maintaining its offshore interests, SPDC accepted a sole funding pact with Federal Government under a production sharing contract.
Today, SPDC offshore probes have produced two world beaters: the EA field powered by the Sea Eagle and the Bonga Field to be driven by the monstrosity called the Bonga Vessel. The ulterior agenda for these intrigues is that Shell is clinically running away from the living environment in the land/swamp fields because of growing pressure to improve social investments in the ;host communities. Much has been said about this before.

The point of a recall is to emphasize that it is evil to abandon planned projects meant to phase out the environmentally hazardous gas flaring while more than enough resources to remedy the situation are diverted to self serving profiteering projects.
The bottom line is that Federal Government and the multinationals are in a marriage of convenience to perpetually derail the flares out campaign because they are no losers in the bargain, not in strict business sense of it because meeting a flares out campaign would significantly improve their earnings in the long run. On a very moral note, flares or no flares, both key stakeholders continue to enjoy business in comfortable returns on investment as oil prices hovers firmly within hyper-highs.

The helpless loser remains the operating space, and in particular the immediate living environment that suffers the danger of unrestrained flaring. Now is the time to say we have had one shift in projection, too many.
It is time to deviate from the business as usual attitude. Federal Government and its agencies cannot fix the rules and be the one to break them. Government must stop giving the multinationals continued leverage to flare gas. For a business that firmly preaches global practices and standards, the Nigerian oil and gas market is too vast and mature to make the exception while others abide by flares but.

Between Government and the multinationals, a final, realistic timetable within which all remedial and developmental plans, including those abandoned projects toward zero flares must be implemented. Such new spirit emphasizes that state government and big scale entrepreneurs cannot act spectators in the bargain. They must significantly complement the process by developing gas utilization opportunities in their areas.
The State government, much like the federal government, cannot sweet-talk the desired investors into their domain of energy supply remains critically expensive and irregular. An activated gas market with cheaper gas driving companies, factories, transportation and homes would present an attractive atmosphere for the redundant investors.

Above all, we want cleaner Exploration & Production (EP) environment.
We deserve gas flares out. We could not have made too much noise of it.

Mr Gbemre is National Co-ordinator, Niger Delta Peace Coalition.

Source: Vanguard
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