Gas Flare
By Ejiofor Alike
Efforts by the Federal Government to end gas flare by utilising associated gas from oil fields for power generation, thereby ending decades of environmental pollution in the Niger Delta have suffered setbacks, THISDAY has learnt.
This development followed the refusal of some oil companies operating in the country to grant 13 private investors access to 180 major gas flare sites identified around onshore fields in the oil-rich region.
As efforts to end flare suffers setbacks, the World Bank estimates that Nigeria loses $2.5billion yearly to gas flare, apart from the attendant destruction of the environment, through greenhouse gas emission.
Worried over the failure of oil companies to meet the deadlines, the Federal Government pre-qualified 13 third-party investors to execute accelerated gas development projects on major flare points.
The programme, originally scheduled to commence in January 2011, was envisaged to eliminate flare by building gas processing plants for Liquefied Petroleum Gas (LPG), and lean gas for power generation, as well as fertiliser and chemical plants.
The administration of late President Umaru Musa Yar’Adua had directed the IOCs to allow the 13 third party investors access to the oil fields, flow stations or well heads to obtain gas that would have otherwise been flared.
THISDAY gathered that the agreement was actually signed in August 2009 but opposition by the IOCs forced the government to delay the public announcement until January 2010.
The agreement provides that the investors will strip the gas of liquids to be used as feedstock for petrochemical industry, domestic and auto LPG and the dry gas used for power generation.
Some of the participating companies include: Colechurch, Global Energy Refining, Ibeto Group of Companies, Octopol, Petrolog Nigeria Limited, Process and Industrial Development Nigeria Limited (P&ID) and Tricity.
Others include: Turan oil - Seven Energy Consortium, Westcom, Gerfin and Remington.
The government opted for a third party intervention in the elimination of gas flare, following the failure of the oil companies to meet the various deadlines set by the government.
The deadline for the elimination of gas flare had been shifted several times from the January 1, 1984 date provided in the Associated Gas Re-injection Act No. 99 of 1979 Cap. A25, Laws of the Federation of Nigeria, which was later amended to December 31, 2008.
But a source close to the private investors told THISDAY at the weekend that the oil companies have refused to release the flare sites on the excuse that they have their own plans for elimination of flare.
“The government directed the IOCs to liaise with the13 companies to identify the major flare sites in the Niger Delta. After their initial opposition, the IOCs played along and 180 major flare sites were identified. However, the oil companies have convinced the current administration that they could eliminate flare without the involvement of a third party. So, the 13 pre-qualified firms have been denied access to these sites, even when some of the consortia have raised up to $4billion through international loan syndication for the gas projects,” he said.
However, a top official of the Ministry of Petroleum told THISDAY that following the protest by the oil companies, the Minister of Petroleum, Mrs. Diezani Alison-Madueke, has set up a committee to look into the gas projects.
He noted that the 13 investors have also contributed to the delay in the take-off of the projects, due to in-fighting over allocation of flare sites.
“Some of the 13 investors feel that they have greater financial and technical capacity than others and should be allocated more sites. The oil companies have also raised their concern. The committee is still looking at the proposals,” he said.
THISDAY could not ascertain the identities of members of the committee, but it was gathered that the oil companies have shunned the committee because the members are said to be junior officials of the ministry.