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P&ID $9.6bn: Experts, others react as Addax Petroleum continues to flare gas in OML 123

By Udeme Akpan

THE inability of Process and Industrial Development Limited, P&ID, to execute its controversial gas pipeline project, targeted at harnessing 100 million standard cubic feet of associated gas, offshore Akwa Ibom state for use in the plant, has attracted Addax Petroleum Nigeria Limited, several knocks.

 Addax Petroleum

Addax Petroleum had planned to harness the associated gas, which is flared at its Oil Mining Lease, OML 123, in the process of producing crude oil for delivery to the gas plant, thus assisting to end flaring in the area.

Investigation by Vanguard, yesterday, showed that with the continued flaring at OML 123, Addax Petroleum’s largest licence area, with nine producing oil fields – Adanga, Oron West, North Oron, Ebughu and extensions, Adanga North Horst, Inagha, Kita Marine, Bogi and Mimbo – a development that has displeasure of many experts.

The managing director, Addax Petroleum Nigeria Limited, Mr Yonghong Chen, did not respond to emails, weekend.

But a source in the company, who preferred not to be named because he was not permitted to speak, said: “Gas flaring has continued at OML 123 because we have not yet been able to harness it for various applications.”

Experts

Specifically, the reactions of the experts, were based on the conviction that the flaring has exposed the environment and persons to endless pollution, acid rain, climate change, diseases and low life span since 1998, when Addax Petroleum started operations in Nigeria, after signing two Production Sharing Contracts, PSCs, with the Nigerian National Petroleum Corporation, NNPC.

In an email to Vanguard, yesterday, Professor Wumi Iledare, Ghana National Petroleum Corporation, GNPC Professor & Chair in Petroleum Economics & Management, Institute for Oil and Gas Studies, Cape Coast, Ghana, stated: “The reason to eliminate glaring is to reduce carbon emissions and it is a global climate policy issues apart from its economic implications on the people! Certainly, continuous glaring at OML 123 is a bad business strategy.”

He said: “Unfortunately, going forward, license to produce oil must henceforth be tied to gas development as well. Government is encouraged to move away from OPL and OML to PPL and PML. I think Addax can learn from Seplat on gas development strategy.”

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Iledare added: “I think the Gas policy documents spell the way forward very explicitly. The policy document emphasises growing the domestic gas market without necessarily undermining the export market! There is gas flaring commercialization strategy too! The fiscal bill also has fiscals with emphasis on tax holiday. Certainly, Nigeria has gas but the local gas market is fluid. It will take good incentives to develop the market and it is doable.”

Selection

The founder of P&ID, Michael Quinn, who explained the selection of Addax Petroleum, to supply gas to the failed gas pipeline project, had said: “From information available in the public domain and from our own researches, it was clear that there was more than enough Wet Gas off the coast of Calabar to support a gas stripping and propylene plant operation in the Calabar area processing a Wet Gas throughput of 400 MMSCuFD We also became aware that the Government had initiated the building of a pipeline from OML 123 to Calabar (the Adanga Pipeline).”

“At this stage, we felt that we were in an excellent position to make a persuasive case to the Government to enter into an agreement to implement the Project. The President of Nigeria at that time was the late President Yar’Adua. He was also the Minister of Petroleum Resources, although he later appointed a separate Minister.”

He said: “In summary our proposal was that we would take Wet Gas free of charge from the Government, process it to produce Lean Gas, and return the Lean Gas to the Government free of charge to be fed into the national power grid, with the capacity to generate over 2,000 additional megawatts of electricity for the economy. The idea was for P&ID to generate revenue (and profit) from the NGLs.”

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