President-buhari-led-federal-government-on-the-right-path-to-end-gas-flare-with-its-nigerian-gas-flare-commercialization-programme-ngfcp
September 7, 2020 | News
PRESIDENT BUHARI-LED FEDERAL GOVERNMENT ON THE RIGHT PATH TO END GAS FLARE WITH ITS NIGERIAN GAS FLARE COMMERCIALIZATION PROGRAMME (NGFCP)
President Muhammadu Buhari (Left) Dr. Emmanuel Ibe Kachikwu (Right)
Justice Derefaka, Program Manager Nigerian Gas Flare Commercialization Programme (NGFCP)
It has been noted severally that Gas flaring not only wastes valuable energy, which can be used to transform the nation’s electricity problems, but it also has significant detrimental effects on the environment and the overall economy. For instance, the implication of gas flaring on human health are all related to the exposure of those hazardous air pollutants emitted during incomplete combustion of gas flare. These pollutants are associated with a variety of adverse health impacts, including cancer, neurological, reproductive and developmental effects. These are some of the things those in the Niger Delta region are daily exposed and subjected to, but no one is talking about that. These difficulties and problems faced by local communities from gas flares are a sufficient justification for ending gas flaring practice. Fines by defaulting companies should be so exorbitant so as to deter them while the gas can be processed and produced into cooking/domestic gas. The time to stop is now and the place to stop is here in Nigeria.
On the cost implications of gas flaring to the Nigeria economy. Available data shows that oil and gas companies operating in Nigeria burn over $3.5 to $5 billion yearly from the over 257 flow stations in the Niger Delta. Specifically, the country flared about 17.15 per cent of the 95,471 metric tonnes of gas produced in June 2015 alone, according to data from Nigerian National Petroleum Corporation (NNPC). Organization of Petroleum Exporting Countries (OPEC) stated in its 2015 Statistical Report that Nigeria produced 86,325.2 million standard cubic meters of gas and flared 10,736.8 million standard cubic meters in 2014. Also, NNPC disclosed that Nigeria lost up to $868.8 million, about N173.76 billion to gas flaring in 2014. NNPC, in its Annual Statistical Bulletin (ASB) for 2014, stated that oil and gas firms in the country flared 289.6 billion standard cubic feet (SCF) of gas, representing 11.47 per cent of the total gas produced in the country in 2015.
Seriously, these figures and estimates of what Nigeria is losing as a result of the gas being flared daily and not utilized, is more than enough to make any purpose-driven government to promptly take proactive steps to reverse and address the situation in the interest of the Nigerian economy and the common citizenry. We have decided to paint the above picture to give everyone an idea of what the President Buhari-led administration is trying to achieve and end, with its Nigerian Gas Flare Commercialization Programme (NGFCP). The Federal Government under President Muhammadu Buhari, has, through the Federal Ministry of Petroleum Resources under the management of the Honourable Minister of State, Dr. Ibe Kachukwu, come up with policies aimed at reducing gas flaring by 2020 through the NGFCP initiative, which it approved in 2016. Then last year, President Muhammadu Buhari issued the Flare Gas (Prevention of Waste and Pollution) Regulations of 2018.
According to recent online reports, the Regulations focus on the reduction of the environmental and social impacts of gas flaring, prevention of waste of natural gas resources and creation of social and economic benefits from gas flare capture. The Regulations aim to incentivize the commercialization of flare gas because of the zero-royalty regime. On other hand, it discourages continued gas flaring through the imposition of a new flaring fee regime. The Regulations underpin NGFCP’s implementation, which involves a bidding process. Speakers at a recent two-day workshop in Lagos believe that if properly implemented and enforced, the subsidiary legislation will erase the historical narrative of Nigeria’s associated gas wastage.
The workshop’s theme was: Taking advantage of the Flare Gas (Prevention of Waste and Pollution) Regulation 2018. It was organised by George Etomi & Partners in collaboration with Syncrest Energy Limited and the Federal Ministry of Petroleum Resources. Lawyers, in-house counsel, industry players, investors, representatives of the ministry and regulatory bodies in the oil and gas sector were all in attendance. And the Key issues focused on include: to unravelled insights into the nitty-gritty of the flare gas regulatory environment. Issues such as gas monetization strategies, gas dynamics in sub-Sahara Africa and other regional markets, the NGFCP, the transnational and commercial structures, project bankability, among others, were discussed.
According to the said reports also, the NGFCP Programme Manager, Mr. Justice Derefaka spoke of the importance of eliminating gas flare. In his words: “Flare gas is a waste of natural resources. Only 12.5 million out of 180 million people have access to electricity.” He said the NGFCP is designed to eliminate routine and non-routine gas flaring through gas utilization projects which are technically and commercially sustainable.
“These projects would be developed by competent third-party investors who are being invited to participate in a competitive and transparent bid process, the first stage of which commenced in January 2019.“The NGFCP hopes to attract investment of about $ 3Billion USD, creating over 300, 000 direct and indirect jobs and reducing CO2 emissions by over 20, 000 MT yearly,” he said. The NGFCP Programme Manager observed that there are over 16, 000 flare sites in 90 countries globally many of which are in Nigeria. He said about 145 to 150 Billion Cubic Meters of gas is flared per year globally, enough to produce 750 billion kwh of power, which is more than the annual power consumption in the entire African continent.
He noted that over US10billion in revenue at $2 per MMBtu is lost yearly and over 600,000 people die of air pollution as a result of flare gas, which can be akin to wiping an entire community like Polaku Community in Bayelsa State and Iwhrekan Community in Ughelli South, Delta State. Giving an overview of the gas industry, Principal Consultant with Wycliffe Advisory & Consulting, Mrs Abimbola Olufore, said gas was crucial to the economy. In her words: “With respect to commercialization of gas, there is a nexus of gas with virtually all sectors of the economy, from the power sector to the healthcare sector, the agriculture sector and the textile industry,” she said. The seasoned consultant underscored the importance of factoring non-technical as well as resource bearing host community risk issues into the risk matrix during the gas flare project development process, in order to ensure they are well addressed.
We strongly believe this is a very worthy venture that should be encouraged by all stakeholders in the industry and the relevant Federal Government authorities, to see that it becomes a reality. All that we are urging the President Muhammadu Buhari-led administration, is that its NGFCP initiative should not end up on paper or in the book shelves like we have witnessed with past administrations. But rather, President Buhari, as the sitting President, as well as the Honourable Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, should ensure that its ongoing Gas Flare Commercialization, which will liberalize the development of the nation’s gas sector, actually becomes a ‘reality’. And like we have advised before now, the Federal Government of Nigeria should ensure that not even its agencies like the Department of Petroleum Resources (DPR), should stand as a bottleneck to the prompt realization of this objective as intended by the Federal Ministry of Petroleum Resources. In other words, the Federal Government should invest all that is required on this neglected aspect of the nation’s gas sector to make a reality, as planned within the next three years.
Zik Gbemre.
We Mobilize Others to Fight for Individual Causes as if Those Were Our Causes
President Muhammadu Buhari (Left) Dr. Emmanuel Ibe Kachikwu (Right)
Justice Derefaka, Program Manager Nigerian Gas Flare Commercialization Programme (NGFCP)
It has been noted severally that Gas flaring not only wastes valuable energy, which can be used to transform the nation’s electricity problems, but it also has significant detrimental effects on the environment and the overall economy. For instance, the implication of gas flaring on human health are all related to the exposure of those hazardous air pollutants emitted during incomplete combustion of gas flare. These pollutants are associated with a variety of adverse health impacts, including cancer, neurological, reproductive and developmental effects. These are some of the things those in the Niger Delta region are daily exposed and subjected to, but no one is talking about that. These difficulties and problems faced by local communities from gas flares are a sufficient justification for ending gas flaring practice. Fines by defaulting companies should be so exorbitant so as to deter them while the gas can be processed and produced into cooking/domestic gas. The time to stop is now and the place to stop is here in Nigeria.
On the cost implications of gas flaring to the Nigeria economy. Available data shows that oil and gas companies operating in Nigeria burn over $3.5 to $5 billion yearly from the over 257 flow stations in the Niger Delta. Specifically, the country flared about 17.15 per cent of the 95,471 metric tonnes of gas produced in June 2015 alone, according to data from Nigerian National Petroleum Corporation (NNPC). Organization of Petroleum Exporting Countries (OPEC) stated in its 2015 Statistical Report that Nigeria produced 86,325.2 million standard cubic meters of gas and flared 10,736.8 million standard cubic meters in 2014. Also, NNPC disclosed that Nigeria lost up to $868.8 million, about N173.76 billion to gas flaring in 2014. NNPC, in its Annual Statistical Bulletin (ASB) for 2014, stated that oil and gas firms in the country flared 289.6 billion standard cubic feet (SCF) of gas, representing 11.47 per cent of the total gas produced in the country in 2015.
Seriously, these figures and estimates of what Nigeria is losing as a result of the gas being flared daily and not utilized, is more than enough to make any purpose-driven government to promptly take proactive steps to reverse and address the situation in the interest of the Nigerian economy and the common citizenry. We have decided to paint the above picture to give everyone an idea of what the President Buhari-led administration is trying to achieve and end, with its Nigerian Gas Flare Commercialization Programme (NGFCP). The Federal Government under President Muhammadu Buhari, has, through the Federal Ministry of Petroleum Resources under the management of the Honourable Minister of State, Dr. Ibe Kachukwu, come up with policies aimed at reducing gas flaring by 2020 through the NGFCP initiative, which it approved in 2016. Then last year, President Muhammadu Buhari issued the Flare Gas (Prevention of Waste and Pollution) Regulations of 2018.
According to recent online reports, the Regulations focus on the reduction of the environmental and social impacts of gas flaring, prevention of waste of natural gas resources and creation of social and economic benefits from gas flare capture. The Regulations aim to incentivize the commercialization of flare gas because of the zero-royalty regime. On other hand, it discourages continued gas flaring through the imposition of a new flaring fee regime. The Regulations underpin NGFCP’s implementation, which involves a bidding process. Speakers at a recent two-day workshop in Lagos believe that if properly implemented and enforced, the subsidiary legislation will erase the historical narrative of Nigeria’s associated gas wastage.
The workshop’s theme was: Taking advantage of the Flare Gas (Prevention of Waste and Pollution) Regulation 2018. It was organised by George Etomi & Partners in collaboration with Syncrest Energy Limited and the Federal Ministry of Petroleum Resources. Lawyers, in-house counsel, industry players, investors, representatives of the ministry and regulatory bodies in the oil and gas sector were all in attendance. And the Key issues focused on include: to unravelled insights into the nitty-gritty of the flare gas regulatory environment. Issues such as gas monetization strategies, gas dynamics in sub-Sahara Africa and other regional markets, the NGFCP, the transnational and commercial structures, project bankability, among others, were discussed.
According to the said reports also, the NGFCP Programme Manager, Mr. Justice Derefaka spoke of the importance of eliminating gas flare. In his words: “Flare gas is a waste of natural resources. Only 12.5 million out of 180 million people have access to electricity.” He said the NGFCP is designed to eliminate routine and non-routine gas flaring through gas utilization projects which are technically and commercially sustainable.
“These projects would be developed by competent third-party investors who are being invited to participate in a competitive and transparent bid process, the first stage of which commenced in January 2019.“The NGFCP hopes to attract investment of about $ 3Billion USD, creating over 300, 000 direct and indirect jobs and reducing CO2 emissions by over 20, 000 MT yearly,” he said. The NGFCP Programme Manager observed that there are over 16, 000 flare sites in 90 countries globally many of which are in Nigeria. He said about 145 to 150 Billion Cubic Meters of gas is flared per year globally, enough to produce 750 billion kwh of power, which is more than the annual power consumption in the entire African continent.
He noted that over US10billion in revenue at $2 per MMBtu is lost yearly and over 600,000 people die of air pollution as a result of flare gas, which can be akin to wiping an entire community like Polaku Community in Bayelsa State and Iwhrekan Community in Ughelli South, Delta State. Giving an overview of the gas industry, Principal Consultant with Wycliffe Advisory & Consulting, Mrs Abimbola Olufore, said gas was crucial to the economy. In her words: “With respect to commercialization of gas, there is a nexus of gas with virtually all sectors of the economy, from the power sector to the healthcare sector, the agriculture sector and the textile industry,” she said. The seasoned consultant underscored the importance of factoring non-technical as well as resource bearing host community risk issues into the risk matrix during the gas flare project development process, in order to ensure they are well addressed.
We strongly believe this is a very worthy venture that should be encouraged by all stakeholders in the industry and the relevant Federal Government authorities, to see that it becomes a reality. All that we are urging the President Muhammadu Buhari-led administration, is that its NGFCP initiative should not end up on paper or in the book shelves like we have witnessed with past administrations. But rather, President Buhari, as the sitting President, as well as the Honourable Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, should ensure that its ongoing Gas Flare Commercialization, which will liberalize the development of the nation’s gas sector, actually becomes a ‘reality’. And like we have advised before now, the Federal Government of Nigeria should ensure that not even its agencies like the Department of Petroleum Resources (DPR), should stand as a bottleneck to the prompt realization of this objective as intended by the Federal Ministry of Petroleum Resources. In other words, the Federal Government should invest all that is required on this neglected aspect of the nation’s gas sector to make a reality, as planned within the next three years.
Zik Gbemre.
We Mobilize Others to Fight for Individual Causes as if Those Were Our Causes