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NIGERIAN CRUDE OIL AND GAS.
How to stop the burning chimneys in the Niger Delta
The many questions that agitated the minds of Nigerians on gas flaring in
the oil and gas industry since 1958 before the relevant committees of the
Senate embarked on the investigation of change in flare-out dead line were:
Why the incessant change in dates or deadlines for gas flare-out in Nigeria?
Why has the Nigerian government allowed so much wastage of funds and
resources through gas flaring?
Why have the International Oil Companies (IOCs) and the federal government
of Nigeria not been able to convert associated gas for domestic consumption?
And when is it feasible to have zero flares in the oil and gas industry?
These were the major questions asked by the three committees of the Senate;
The Committee on Gas, Environment and Ecology and Petroleum-Upstream when
they were called for investigation recently.
Gas flaring started in Nigeria with oil production as associated gas is a
natural by-product of oil production. The refineries in the country were
designed to flare gas while crude oil is refined.
Nigerians were not conscious of the damage to lives and the environment as
they enjoyed the boom from oil. Lately, it became necessary to talk about
the environment. In year 2000, a deadline of 2004 was fixed for stoppage of
gas flaring in Nigeria. Even as a terminal year was arrived at, no conscious
efforts were made towards realizing the target. By 2007, a new date was
fixed for total flare-out. It was said that on January 1, 2008, all oil and
gas companies would stop gas flaring in the country. By January 1, 2008, a
new deadline was rumored and the IOCs quickly accepted the new rumored date
of December 31, 2008.
Senator Osita Izunaso, Senate Committee Chairman on Gas, one of the
conveners of the meeting wanted to know the circumstances surrounding the
incessant shift of deadline of gas flare-out. Gas as a commodity is highly
invaluable in domestic consumption and in industries to power their machines
in the absence of the national grid whose problem has become hydra headed.
The majority of Nigerians depend on fire wood and charcoal got from burning
trees for domestic cooking gas that could have been converted for such
purposes, but are flared.
It is said that Nigeria flares 2.5 mm cf of gas per day. The gains of
converting this volume of gas to domestic and industrial use can only be
imagined. Nigeria is ranked 7th in gas flaring in the world with Russia
taking the lead while countries like Saudi Arabia achieved zero flaring a
long time ago.
While the federal law makers were looking for ways of compelling the
International Oil Companies (IOCs) to stop gas flaring, minister of state
for energy (Gas), Emmanuel Odusina, could not agree less, but told the panel
that stopping gas flaring was capital intensive, and that Nigeria's gas was
not localized, so it would need a robust infrastructural outlay to harness
the gas for other uses.
He also noted that while the NNPC, DPR and the ministry agreed on the
terminal date of 2008, the IOCs had proposed 2015. The minister agreed that
if a proper deadline is arrived at, an implementation time table would be
given to the oil companies to comply with for the realization of the goal.
Director of Department of Petroleum Resources, DPR, Anthony Chukwueke said
while oil could be kept in tankers and even moved around easily, gas needed
to be preserved or piped to the end users, and that these processes add to
the cost of the product. He said the department had tried to discourage
flaring over the years, but that it had not been effective. A price of N
50,000 for a cubic foot of flared gas was imposed; the amount was increased
to $ 10. While DPR was charging this meager amount, the actual value of gas
(flared) per cf was $ 80, according to the DPR Director.
In the absence of infrastructure to convert associated gas into usable
products, it was more profitable to flare and pay the fire than worry
themselves with putting in place infrastructure.
The director also noted that the infrastructure needed would cost the
government and the IOCs up to $ 20 mm to establish. He equally disclosed
that even the federal government has not put down their part of the fund to
put established infrastructure. For the oil companies, he said, it is strictly
business and as long as the federal government is not committed to enforcing
a deadline and establish infrastructure to convert associated gas, the
situation will not change.
However, the Group Managing Director, GMD, of Nigeria National Petroleum
Company, NNPC Engr. Abubakar Lawal Yar'Adua disclosed that if the
infrastructure is established by 2009, 98 % flare-out could be achieved,
however, that the real issue is funding and infrastructure. He said the
federal government had given the NNPC the go ahead to source for funds
towards putting the infrastructure in place. The federal government will not
go it alone; they will collaborate with the IOCs.
Meanwhile, as the controversy in deadlines lingers, Lawrence Ajibade who
represented the environment and housing minister, made it clear that all the
dates canvassed were wrong as it was his ministry that called a
stakeholders- including oil companies meeting in the Abuja Sheraton Hotel on
9th and 10th August 2004, where all concerned agreed to the deadline of July
31st, 2008. The Nigerian government through the ministry of environment and
housing had fixed the terminal date for flares in the country that is July
31st, 2008.
About few months from now, it would have been incumbent on all concerned,
especially the IOCs to respect the date, more so when they were part and
parcel of the decision to have the flare deadline. Though, the pronouncement
was made, nothing was done to make it enforceable. It was not properly
gazetted nor communicated in any official manner.
The legislature was not carried out with major stakeholders on this matter.
They could have passed a resolution which, in the absence of all other legal
instruments, would become enforceable.
From the look of things, not even the Nigerian government meant what they
said. They were not prepared for flare-out as the GMD of NNPC has stated
that they were yet to establish infrastructure, just like the Nigerian
government was yet to provide her counterpart funding towards the flare-out
infrastructure. Though Engr. Yar'Adua has disclosed that the sum of $ 5 bn
has been raised from the capital market for this purpose, he did not say if
the said amount was all the federal government needed to provide and what
percentage of the total amount that was.
All said and done, what is important is the infrastructure. When it's
provided, the citizenry will benefit tremendously, especially with regards
to domestic consumption, industrial utilization to put industries back on
line and it will also save the environment.
The other side of the coin is the issue of the environment which is even far
more important than the money the Nigerian government is losing through the
flares. Flaring the gas into the atmosphere destroys the environment. The
ozone layer depletion which is responsible for global warming and climate
change with its dangerous consequences on human life, agriculture, sea level
etc. will be minimized if gas flaring is stopped.
Senate Committee Chairman on Environment and Ecology, Senator Grace Bent did
not mince words in urging the immediate stoppage of flares. She said the
Nigerian government would not tolerate flares after the agreed deadline and
that the government would not hesitate to shut down wells that are hazardous
to lives and the environment, not minding the fines the oil and gas
companies pay for flaring.
The Niger Delta environment, to say the least, has been exposed to dangerous
consequences of flaring since 1958. The once lush forest is almost
completely gone due to acid rain, corrugated sheets used for roofing have
given way, the one time area known for its fish now depend on imported
frozen fish and spillage has either killed or poisoned the aquatic life of
the area.
Crop yield has reduced to the barest minimum as the land can no longer
sustain cultivation after several years of environmental degradation and
spillage which in most times are not reclaimed, leaving the hazardous
materials to equally pollute the water which the rural populace depend on
for drinking.
All said and done, a quick flare-out is the desire of all stakeholders.
