May 10, 2019

Why Nigeria cannot end gas flaring in 2020

Why Nigeria cannot end gas flaring in 2020

Gas flaring

By Michael Eboh

Fears are rife that Nigeria may not accomplish the much touted stoppage of gas flaring by 2020, which is just seven months away.

Gas flaring

Sweetcrude gathered that the government has not shown any clear-cut strategy, as there is loose legislative backing, weak regulatory framework, as well as low incentives for investors in the gas sub-sector. Specifically, delay in passing the petroleum industry governance bill, PIGB, which has been in the works for more than 14 years, has not helped matters. Though the 9th National Assembly passed the PIGB at the twilight of its tenure, there are fears that President Muhammadu Buhari might not assent to it.

Also, experts are of the opinion that though the Nigerian National Petroleum Corporation, NNPC is pivotal to end gas flare, owing to the fact that flared gas comes from joint venture operations, which NNPC holds on trust for Nigeria, there are no infrastructure on ground to stem the scourge of gas flaring. Professor Wumi Iledare, President of the Nigerian Association for Energy Economics, NAEE, believes that it is impossible to end gas flaring n Nigeria by 2020. He said, “The government is joking. Just like vision 2010 and 2020, we can move towards accomplishing that goal. The United Nations is looking at 2030 for zero gas flare. We are the ones trying to accelerate it. “It is a good idea, but you need to have stages, milestones. You cannot just wake up in two years and say what we have been trying to do in 40 years, would just have to end like that.” According to Iledare, to truly achieve zero gas flare, the Federal Government must subsidise the infrastructure needed to capture, produce and transport the commodity. “If government wants gas sector to be developed, then it must subsidise the infrastructure that is required to develop the sector. The government has 60 per cent stake in most of the oil assets, which means that for every infrastructure that is required to be able to continue to produce, you must produce $60 for every $100 required. “Those are the complex issues. Beyond what we see, every gas project , include the Nigerian Liquefied Natural Gas, NLNG, has a form of subsidy, either in terms of tax break, or gas project expenditures are deducted before calculating Petroleum Profit Tax, PPT.” He explained that since the country still looks forward to the PIGB coming into effect, 2030, could be more feasible.

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Also speaking on the issue, the Chief Executive Officer Degeconek Nigeria Limited, and former President, Nigeria Association of Petroleum Explorationists (NAPE), Abiodun Adesanya, said that fines for gas flaring is not punitive enough to deter companies from doing so. Flared gas increased from 244.84 billion Standard Cubic Feet (SCF) in 2016, to 287.59 billion SCF in 2017, while penalty for gas flared remains N10/Mscf (equivalent to $0.03). “Government has to be serious; agencies of government have to be committed and other stakeholders in the oil industry must be sincere,” Adesanya stated.

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Meanwhile, it is believed that Nigeria would need minimum of $3.5 billion investments to end the practice of gas flaring at oil fields in the Niger Delta by 2020, The Programme Manager of the Nigerian Gas Flare Commercialisation Programme (NGFCP), Mr. Justice Derefaka, who stated this, explained that the amount is expected to brought in by investors willing to participate in the NGFCP, which according to him, has immense benefits.