Posted by By Mike Oduniyi on
Federal Government may wave the 2008 deadline set for oil producing companies to end flaring in oil fields across Niger Delta.
Federal Government may wave the 2008 deadline set for oil producing companies to end flaring in oil fields across Niger Delta.
Although government had not stated any penalty for default, the deadline set in 2001 was in line with its policy to monetise the country's huge gas resources and curb environmental problems in the region.
Special Adviser on Petroleum and Energy, Dr. Edmund Daukoru dropped the hint about a possible change of the deadline. He said the date was to guide oil companies in putting in place various gas utilisation projects geared towards the zero flare target.
"The 2008 deadline was just a pragmatic date in which we wanted to see as many projects geared towards ending gas flaring from oil fields".
Daukoru said with some projects nearing completion and others just initiated, Nigeria might progress from "excess gas to shortage of gas."
"By the time all these projects are completed by the end of 2008, I can assure you that we will even face shortage of gas because of the rate of utilisation".
Nigeria has the 8th largest natural gas reserves in the world at about 185 trillion cubic feet. However, oil producers currently flare over 40 percent of the 2.7 billion cubic meters of gas produced along with crude oil, with potential revenue loss amounting to $ 2.5 billion annually.
THISDAY checks revealed that the Nigerian National Petroleum Corporation (NNPC) has directed oil producers to supply details of gas reserves and production. "We want to really have an inventory of bankable gas resources and also how far utilisation has gone," said an NNPC source.
He added that a number of programmes including independent power plants, LNG projects, the West African Gas Pipeline, the Trans Saharan Gas Pipeline, as well as another project on gas to liquid, are already under-way.
Gas flaring has remained a vexed issue particularly in the oil-producing but poverty-stricken Niger Delta, where devastating effects on humans, flora and fauna exists.
Doubts over the ability of oil firms to meet the zero flare deadline came to fore last year, when companies highlighted cuts in joint venture budget by the Federal Government.
Last week, Shell Petroleum Development Company (SPDC), operator of the joint venture involving the NNPC and two other oil majors, Elf and Agip, said it would not be able to end gas flaring from the fields until the end of 2009.
The oil company said funding constraints, particularly contributions from the NNPC to cover its 55 percent equity in the joint venture, was responsible for the delay in completing the various gas gathering projects earmarked to meet the target.
It also listed community problems and contractors' default for the slow down on the execution of the projects.
Shell said the original target of 2008 was predicated on the joint venture programme being fully embarked upon to deliver the required associated gas gathering projects. It added that this was not achieved, as the company received $4 billion less than the agreed budgetary expenditure between 1996 and 2004.
The company could only complete five of the planned projects at Soku, Odidi, Obigbo, Belema and EA node. These generated a combined supply of 430 million scf/d of associated gas and contributed to a 33 percent reduction in the volume of gas flared from the joint venture operations.
The Joint Venture partners have already spent $2 billion over the last five years to develop major associated gas gathering (AGG) projects. The gas collected from fields scattered across the Niger Delta, Shell stated, was supplied to the Nigeria LNG Limited and to the National Electric Power Authority (NEPA) for power generation.