Justice Derefaka, who was recently re-appointed the Programme Manager of the Nigerian Gas Flare Commercialisation Programme, in this interview speaks on effort by Nigeria to achieve its self-imposed target of ending gas flare by 2020. Chineme Okafor presents the excerpts:
With your re-appointment as the Program Manager (PM) of the Nigerian Gas Flare Commercialisation Programme (NGFCP), are there going to be new approaches to the program’s implementation?
Yes, there will be some slight, if you like minor modifications as to how we intend to run the programme going forward. The rationality for the modification is principally hinged on the Minister of State, Petroleum Resources, Chief Timipre Sylva’s ‘Next Level Strategic Retreat’ with directors and heads of agencies of the ministry on the 26th September, 2019, At the workshop, the minister unveiled the roadmap of the ministry for the next four years. He also sought and received the commitment of priority areas – one of which is the completion of the Nigerian Gas Flare Commercialization Programme (NGFCP).
And, this is predicated on the fact that flared gas could be harnessed to stimulate economic growth, drive investments and provide jobs in oil producing communities and indeed for Nigerians through the utilisation of widely available innovative technologies. Simply put, we are modifying the implementation process of the NGFCP, at least for the first auction round in what we tagged ‘a strategy refresh, optimisation and reformation of the implementation process of the NGFCP’.
So have you ceded the gas fields to preferred investors?
No, we have not yet awarded the flare sites to preferred bidders and/or Permit Holders (PH). As you know, the NGFCP is a high-profile programme – the largest of its kind anywhere in the world, and so we are taking our time to ensure world class delivery with the support of our development partners – the United States Agency for International Development (USAID) through the Power Africa Transactions and Reforms Programme (PATRP), the World Bank Group (WBG) through the Global Gas Flaring Reduction Partnership (GGFR) and the United Kingdom government through their Department for International Development – Facility for Oil Sector Transparency and Reform in Nigeria (DFID-FOSTER) Unit.
You will recall that over 850 interested parties registered their interest in the NGFCP while 238 applicants submitted Statement of Qualification (SOQs) in response to the Request for Qualification (RfQ) published by the ministry through the NGFCP Programme Management Office (PMO). A total of 238 SOQ documents were evaluated and adjudged either a ‘pass’ or ‘fail’ status. Following a rigorous exercise conducted in line with established protocol, 205 applicants emerged successful – attaining a ‘pass status’ and tagged Qualified Applicants – QAs, while the remaining 33 applicants did not meet the minimum requirements and thus attained fail status.
In August 2019, all qualified applicants were invited to attend a workshop in Abuja. At that workshop, the future process of the NGFCP auction was presented and discussed. This was a well-attended event and many points raised by qualified applicants have been taken on board by the NGFCP. All qualified applicants will be eligible to participate in the Request for Proposals (RfP) process which will be issued shortly. We have not yet awarded the flare sites to preferred bidders or PH because there has been a slight delay in the issuance of the RfP owing, principally, to the need to check on the quantities of flare gas that can be made available in the auction. We are hopeful that there will be significant quantities of gas from many flare sites. The RfP document is ready, the suite of commercial documents are close to ready, and the NGFCP portal is being reinforced to handle the significant traffic that is expected from the 205 qualified applicants.
Nigeria voluntarily chose 2020 to end gas flare, is that target still possible?
I have said this severally and I will repeat again. The policy position of the federal government of Nigeria is that gas flaring is unacceptable, and the government has initiated a number of actions to reaffirm its commitment to ending the practice of gas flaring in our oil fields. Specifically, the government has ratified the Paris Climate Change Agreement and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030 whilst committing to a national flare-out target by the year 2020.
So, to respond to your question, yes, we are still within target. The reason is this, unlike other oil and gas projects, we are not looking to constructing long stretch of pipelines for the gas flare out programme. Although pipelines present the most viable option for transporting gas, working with our development partners, we have scrubbed over 40 scalable, containerised, skid mounted/barge type ‘plug and play’ proven technologies in commercial applications, virtual pipeline and compressed natural gas trucks that would be deployed for the NGFCP. All these technologies could be deployed rapidly to site, low footprint, quick and easy tie-in to existing flare lines, simple operation, minimal moving parts and even minimal site preparations. But also have in mind that not all the 178 flare sites that will be taken in 2020. The good thing is that we know that harnessing gas from the top 50 flare points would reduce volume of flared gas by 80 per cent, premised gas flare locations and volumes as the baseline.
There’s a bit of skepticism that the NGFCP will address this perennial gas flare and why is it taking so long to finalise?
I know right? We have heard that severally from pundits. So here is the thing, the NGFCP has suffered delays, and it is important that there be no further delays that will damage Nigeria’s reputation on the environmental front, threaten the success of the NGFCP, and be a disservice to the people of the Niger Delta, and their economic development. Like I mentioned earlier, we are wrapping up a strategy refresh, that is, a revision to the NGFCP administrative process, including bringing all NGFCP activities under single oversight, will assist in adherence to a planned timeline by ensuring that there are no unavoidable delays. Plus, we have communicated to all QAs who are eligible to participate in the RfP process to progress with obtaining their unique identity, sign the confidentiality agreement and submit same to the Department of Petroleum Resources (DPR), make payment for the data prying fee so that once we issue the RfP, we will hit the button for all QAs to be issued with the data access permit by DPR for free.
Recently, you were reported to have held talks with some Americans about the NGFCP and its promises, did you come up with any credible commitment from them?
By my assessment, I think it was a good outing. And many thanks to the Deputy Assistant Secretary, Middle East and Africa of the US Commercial Service in Nigeria that requested that the NGFCP be explained fully at a three-day business forum in Houston, Texas. The dynamic forum gathered together global leaders across the oil and gas, renewable energy, electricity infrastructure, engineering, construction and transportation sectors. And I had the opportunity to hold one-on-one meetings with the US companies and government officials to present opportunities in Nigeria to the US suppliers and project prime contractors looking to grow their business.
I also participated in a special roundtable session, ‘Trade Talks-Projects and Deals Forecasts in Sub-Saharan Africa,’ during which I presented concrete opportunities for which I was seeking participation from US companies. And in the end, the US had indicated interest and sought to know more about the gas flare commercialisation process being packaged by Nigeria. So, we have in our database over 100 US companies – investors, project financiers and technology providers, that have indicated interest to attend the NGFCP bidders’ conference planned for 2020. The NGFCP bidders’ conference was designed for qualified applicants, upstream producers, technology providers, off-takers and financial institutions. It is designed to address all questions raised outside the programme’s Frequently Asked Questions (FAQs) and to facilitate business-to-business (B2B) discussions amongst participants.
The International Oil Companies (IOCs) in Nigeria, are they committed to the NGFCP – what roles do they have in the program anyway?
The IOCs under the aegis of the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG) are on the same page with the federal government of Nigeria regarding the NGFCP. It will interest you to know that both the OPTS and IPPG members have to establish a midstream entity to participate in the NGFCP and bid for their flares hence complying with the NGFCP regulations, that is, the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 approved by Mr. President on the 5th July 2019 to underpin the implementation of the NGFCP. In terms of roles, apart from submitting accurate and investment grade flare data to the DPR, the OPTS and IPPG are aware of multiple requirements to provide data to DPR on their reserves, operations, through legislation and regulation. The regulations also require producers to provide flare gas data as requested by DPR and to DPR within 30 days.
Additionally, the transactional structure of the commercial agreements gives further insight on the role of the producers, that is, the federal government of Nigeria has title and sells flare gas through the Gas Sales Agreement (GSA), the producer produces flare gas and delivers it to Flare Gas Buyer (FGB or permit holder) through a connection agreement. Then the FGB has no guarantees related to gas supply through connection agreement, but this can be provided, to the extent that FGB purchases guaranteed flare gas, through a Deliver or Pay Agreement (DoPA). The three commercial agreements provide a transaction that is bankable. The fourth commercial agreement – Milestone Development Agreement (MDA) – contains obligations that encourage FGB to maintain a project schedule and with possible sanctions for failure.
I’ll like to know how much conversation you’ve had with communities where the gas fields are located and are they part of the NGFCP schedule, and how?
We have actually engaged the communities and still have further plans to continue the interface. Engagement with the host communities is a continuous process. Recall in April this year, at press conference, the NGFCP Ministerial Steering Committee (SteerCo) activated the 2nd phase of community engagement tagged “Nationwide Public Awareness and Niger Delta Community Awareness and Sensitisation/Participation Plan (CASP) for the NGFCP. The CASP is to serve as the NGFCP ‘reach and sustainability’ development initiatives for the nation and Niger Delta stakeholders to have an opportunity to participate in shaping gas flare investment programs.
The NGFCP CASP is particularly relevant for the country and in particular in a high-density Niger Delta setting where disturbances related to construction activities are inevitable. The NGFCP sees information disclosure and public awareness as essential for maintaining community and public support and mitigating grievances during this period and that the Niger Delta stakeholder communities are to be made fully aware of the intent, design, schedule, impacts, and overall benefits of the gas flare projects. These are the narrative that gives credence to the need to create adequate awareness and sensitisation of the key objectives of the programme.
As part of our messaging to the communities, we have also intimated them that any flare gas utilisation projects under the NGFCP will be required to create a Community Development Fund (CDF). This will fund a Community Development Plan (CDP) which will be defined by each project and its related local community, ensuring that local communities directly benefit from the NGFCP.