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Nigeria threatens oil firms to end gas flaring by 2008 or be shut down
Department of Petroleum Resources (DPR) threatened to shut down
producing fields should they fail to meet the official deadline to end
routine gas flaring by end-2008. However, oil producing firms say it had
become difficult to meet the deadline.
If the oilfields are shut, the nation's output would plunge and drag
down national foreign exchange income, cut down overall national revenue
and drastically reduce the country's gross domestic product (GDP). The
petroleum industry contributes about 95 % of the nation's foreign
exchange income, 90 % of total fiscal revenue and accounts for about 40
% of the GDP.
Government had set a target for gas flare down by next year as part of
its efforts to stop resource waste and monetize gas through internal
utilization and export, warning oil producing companies of hefty
penalties to be paid if they did not meet the deadline. But, the oil
producing firms insist that the deadline has become unrealistic due to
the prevailing security situation in the Niger Delta area, low
infrastructure base, poor response to joint venture funding and rising
cost of materials.
With the 2008 deadline closing in and the oil firms far from achieving
the target, the issue became a hot debate between industry regulators
and operators at this year's conference of the Society of Petroleum
Engineers (SPE), in Abuja.
DPR director, Tony Chukueke, restated government's resolve to implement
the flare down agenda by the second half of 2008, and warns companies of
severe penalties.
The DPR director who was represented at the session by Biodun Ibikunle,
said, "Government's directive on this stands and you have been told
categorically that come 2008, gas flaring must cease and failure to do
that government might be forced to take some drastic steps." He
maintained that the issue of gas flaring did not start in the past three
years but from the inception of the Nigerian oil industry.
According to him, the Nigerian Petroleum Act 1969 specifies that five
years after the start of production, the companies should come up with
feasible means for utilization of produced gas.
"So, gas flaring is a violation of the law," he said. Citing the Gas
Injection Act of 1979, Chukuk also pointed out that the law was put in
place for the purpose of utilizing the gas, arguing that it was also
frustrated by the operators on the allegation of lack of funding.
However, in his own presentation, Afren Energy Resources, chief
executive officer, Egbert Imomoh, who spoke on behalf of operators' said
the facilities and infrastructure required to achieve the flare down
objective were critically lacking in the operating environment. He made
clear that the major challenge facing the industry was how to go about
it so that gas flares could be out on schedule, even as he pointed at
the security situation in the Niger Delta.
"It is not realistic," Imomoh emphasized while stressing that government
should discuss with all operators and agree on what was realistic and
achievable in the face of new challenges.
In calling for a review of the flare down directive, he suggested that
both parties should engage in negotiation with exemptions granted to
those that have no access to facilities. He further warned that clamping
down on joint venture companies because they did not meet the gas flare
down deadline could be disastrous to the economy.
Chairman of Emerald Energy Resources Emmanuel Egbogah, who threw his
weight behind the industry, said responsible management would always
involve continuous engagement between those it manage and those that
manages them. He suggested that stakeholders should meet to re-fine-tune
the deadline on gas flare down, adding that if any genuine reason for
some extension consideration the operators should be obliged.
