FG eyes $1bn annual revenue from gas flare commercialisation

The Federal Government is targeting a revenue of $1bn annually and a total of 300,000 direct and indirect jobs from the commercialisation of flared gas.

According to the government, 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.

In a document on Nigerian Gas Flare Commercialisation Programme that was made available to our correspondent in Abuja by the NGFCP Programme Manager at the Federal Ministry of Petroleum Resources, Justice Derefaka, it was stated that the Federal Executive Council approved the NGFCP as the mechanism for implementing Nigeria’s commitment to eliminate routine gas flaring.

The government stated that the recently gazetted Flare Gas (Prevention of Waste and Pollution) Regulations 2018 is the legal basis for the implementation of the NGFCP and the payment regime (penalties) for gas flaring.

It stated that the regulation adopts the polluter pays principle, similar to a carbon tax, adding that “results of work done to trigger up to 85 projects that will utilise flared gas, generate approximately 300,000 direct and indirect jobs and annual revenue generation/Gross Domestic Product impact estimated at $1bn/annum are also highlighted.”

The NGFCP is developed by the FMPR, Nigerian National Petroleum Corporation, Department of Petroleum Resources and the implementation team of the NGFCP comprised advisor teams from the World Bank and USAID under the leadership of a ministerial steering committee that reports to the Minister of State for Petroleum Resources.

In the document, Derefaka explained that global energy demand would nearly double by 2050 and noted that most of the increase would come from the world’s emerging economies as a result of population growth and improved standards of living.

He said the NGFCP would play an important role in meeting this energy challenge by harnessing Nigeria’s flare gas for sustainable value and wealth creation.

Nigeria has the ninth largest gas reserves in the world, with proven reserves of 199 trillion cubic feet. However, a significant volume of associated gas is currently being flared.

Gas flaring is a waste of scarce natural resource and fuel, and also contributes to climate change. In 2017, Nigeria ranked 7th place in the league of gas flare nations with approximately 888 million standard cubic feet per day from over 178 flare sites out of the more than 16,000 flare sites in 90 countries globally.

Derefaka, however, stated that the first bid round for the flare gas commercialisation programme had been announced, as the government was currently inviting parties interested in participating in the NGFCP to register and apply for the issuance of the Request for Qualification package.

“This will lead to the submission of statements of qualification by interested parties for participation in the programme,” he said.

He noted that the auction presents an opportunity for domestic and international developers alike to participate in the largest market driven flare gas monetisation programme undertaken on this scale globally.

Derefaka said bidders would have the flexibility of choosing which flare site or sites to bid for, determine the gas price, and their end use market or gas product, as well as the technology to be deployed.

“Successful bidders will be granted title to the flare gas site through a gas sales/supply agreement with the Federal Government,” he said.

Findings showed that gas utilisation in Nigeria commenced in 1963 with gas sales by Shell Petroleum Development Company of Nigeria to industrial users in Aba.

In its bid to create value for associated gas, which was routinely being flared by producers, the government initiated several projects to increase gas utilisation in the country from the mid-1960s to the late 1990s.

These projects included gas supply to thermal power plants in Delta State, Port Harcourt refinery in Rivers State, Power Holding Company of Nigeria Sapele and Delta Steel Aladja.

Others were Nigerian Fertiliser Company, Ajaokuta Steel Complex, Egbin Thermal Power Station and the Aluminium Smelting Company of Nigeria in Ikot Abasi.

Oil and gas producers were also encouraged to utilise the produced associated gas for gas-lift, fuel for production operations and re-injection into the reservoir for conservation and reservoir pressure maintenance.

Accordingly, of the 4.74 billion standard cubic feet per day of associated gas AG produced in 2015, about 4.26bscf/d representing nearly 90 per cent was utilised either by consumption or re-injection back into the reservoir.

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