Nigeria’s Obasanjo takes hard-line stance on gas flare deadline

Jul 21, 2005 02:00 AM

Amid complaints of lack of fund by multinational oil producing companies to prosecute gas recovery projects, President Olusegun Obasanjo has warned that the 2008 deadline to end gas flaring from oil fields dotting the Niger Delta region strays.
Although the president did not spell out the sanctions for oil firms that fail to meet the ultimatum when he met with the chief executives of the operating companies, Obasanjo, according to his aides, was however, categorical that the zero flare deadline must be met.

The hard line posture of the president on the subject has now thrown the companies into panic, sending them back to the drawing board their various gas utilization projects. Nigeria, according to World Bank estimates, is currently losing on the average more than $ 2.5 bn (N 332.5 bn) annually to gas flaring. At about 57 % of the daily production of over 2 bn cf, the volume of flared gas is said to be capable of generating up to 6 GW of electric power annually.
Minister of State for Petroleum, Dr Edmund Daukoru disclosed that Obasanjo's position on the gas flaring issue was borne out of three reasons, which are the need to redeem his administration's pledge to the Nigerian public, the need to make available more gas for power generation and to meet the government's target of earning substantial revenue from gas.

Daukoru said he has been handed a directive by the president to ensure that the oil industry meets the flare out deadline of 2008 "because there are environmental implications and there are global commitments that we have made."
"The target is absolutely feasible. We have looked at the numbers and Mr President has met with the chief executives of a number of the operators and he has made the point. He is not bulging on 2008 and so 2008 shall be," said Daukoru. "That is on one side, gas itself is needed for power generation. There is a very serious impact on domestic development potential and that is in the area of power generation. We are currently seeing tightness in the availability of gas to satisfy all the projects that are on the drawing board.”

"All of a sudden, with the advent of a large number of power programmes as part of the top gear initiative of Mr President, the question now is prioritising gas development," he said, adding that a number of oil companies have lately submitted to his office, various strategies they would be adopting to meet the presidential directive on gas.
According to Daukoru, French firm Total has sought permission to hire two drilling rigs from China and Brazil that will be dedicated solely to gas exploration.
"Although some companies have come back to say they have this problem or the other, but it is a matter of maintaining the resolve because the opportunities for using gas are really immense and it will be unthinkable that there will be gas left to be flared when we need it, it will be an act of neglect if that were to happen," the minister said.

The multinational oil companies who account for more than 90 % of Nigeria's oiland gas output in joint venture with the Federal Government through the Nigerian National Petroleum Corporation (NNPC), have cited poor funding particularly from the government's side, as causing delay in executing gas utilization projects. This recently led to reports that the 2008 deadline would not be met by some of the companies including Shell Petroleum Development Company (SPDC), which is targeting 2009.
NNPC Group Managing Director, Engineer Funsho Kupolokun also confirmed that Elf Petroleum Nigeria (a subsidiary of Total), has agreed to provide alternative fund for the Amenam/Kpono Gas Exploration Project (AKOGEP) phase 2, which will produce about 350 mm boe.

Kupolokun said that a Natural Gas Team has been raised by the joint venture partners to tackle the gas issue, with a target date of first quarter of 2007.
"We are also jointly working on projects to supply gas to the recently approved seven Niger Delta Power Plants (NDPP) to be sited in various locations in the Niger Delta. In additionto these, we are also required to supply gas to four other NEPA Power generation projects at Omotosho, Papalanto, Geregu and Alaoji," said Kupolokun. "We are therefore challenged to find, produce and supply natural gas at reasonable cost and within the limited time schedule," he added.

Nigeria is a member of the a World Bank-led group named Global Gas Flaring Reduction Public-Private Partnership (GGFR), which has as its objective, that of eliminating gas flaring. Other members of this public-private partnership currently include BP, Chevron, ENI, ExxonMobil, Norsk Hydro, Royal Dutch Shell, Statoil, and Total and the governments or national oil companies of Algeria, Angola, Cameroon, Canada, Chad, Ecuador, Equatorial Guinea, Indonesia, Norway, The United Kingdom and the United States.
Also, the Federal Government hopes to generate as much as $ 12 bn from gas by 2012, raising contribution from the energy sector-driven initiatives of up to 60 % towards doubling of the nation's GDP over the next 10 years.

Source: This Day
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