Oil & Energy
Oil Firms Still Flaring Gas – NNPC Report
Gas flare figures released in the most recent monthly financial and operational report of the Nigerian National Petroleum Corporation shows that oil companies in Nigeria are still flaring the commodity in large volumes.
Flare gas is essentially associated gas that is produced with oil, as they both come out of the ground. Flare gas pollutes the environment, causing sickness and other environmental hazards, particularly in locations where the International Oil Companies operate in the Niger Delta.
An analysis of NNPC’s latest monthly report for January 2019 showed that as much as 610.07 million standard cubic feet of gas were flared daily by oil companies in the first month of this year.
Although this volume is 119.48mmscfd lower than what the firms flared daily in December 2018, it was far from the Federal Government’s target of zero gas flare in Nigeria.
It also indicated that there was still enough flare gas that should be commercialised, and as such should adequately fit into the plan of the Nigerian Gas Flare Commercialisation Programme.
On the off-take of natural gas, commercialisation and utilisation, the latest NNPC report stated that out of the 244.65 billion standard cubic feet of gas supplied in January 2019, a total of 151.5BCF of gas was commercialised, consisting of 38.03BCF and 113.47BCF for the domestic and export markets respectively.
This translates to a total supply of 1,226.83mmscfd of gas to the domestic market and 3,780.24mmscfd of gas supplied to the export market for the month.
This implies that 61.73 per cent of the average daily gas produced was commercialised while the balance of 38.27 per cent was re-injected, used as upstream fuel gas or flared.
Gas flare rate was 7.52 per cent for the month under review, which was 610.07mmscfd compared with average gas flare rate of 9.76 per cent, i.e. 770.31mmscfd for the period January 2018 to January 2019.
The report noted that total gas supply for the period January 2018 to January 2019 stood at 3,081.17BCF, out of which 468.23BCF and 1,342.99BCF were commercialised for the domestic and export markets respectively.
Gas re-injected, fuel gas and gas flared stood at 1,269.95BCF.
The figures above, therefore, showed that the volume of gas being flared in the oil sector was still high.
Senior government officials told our correspondent that this was why the NGFCP was initiated to help address the issue and possibly end gas flaring. Gas flaring can be solved with cogeneration
They stated that the Federal Government recently received statements of qualification from a total of 240 firms that want to commercialise flared gas in Nigeria.
It was gathered that the interested parties submitted their statements of qualification in response to the request for qualification package of the Nigerian Gas Flare Commercialisation Programme.
This was contained in an email on updates about the NGFCP, which was sent to our correspondent by the Chairman, Ministerial Steering Committee, NGFCP and Group Executive Director, NNPC/Senior Technical Adviser, Refineries, Gas, Power and Downstream Infrastructure to the Minister of State for Petroleum Resources, Rabiu Suleiman.
“NGFCP is very pleased to advise that 240 SOQs (Statements of Qualification) were received. As you are aware, a Proposal Evaluation Committee and an Independent Observer Group were appointed and inaugurated on the 11th of April, 2019 by the Minister of State for Petroleum Resources, Ibe Kachikwu,” Suleiman said.
He added, “The PEC shall evaluate the SOQs submitted by the applicants to determine qualified applicant status in compliance with the design criteria of the request for qualification and also to evaluate the proposals that would be submitted by qualified applicants to determine those bidders that achieve preferred bidder and reserved bidder status.”
Suleiman said the PEC and IOG would begin their work of evaluating the SOQs starting from June 2019, adding that it was expected that the results would become known at the end of the exercise within four weeks.
“The general public and all applicants will be advised thereafter on the names of the candidates adjudged successful who shall be invited to submit their proposal for flare gas utilisation through the request for proposals phase of the NGFCP,” he stated.
The Bill for an act to prohibit gas flaring, encourage commodity utilisation, and provide for penalties and remedies for gas flaring violations has passed its second reading in the House of Representatives.
Sponsored by the Member representing Ikorodu Federal Constituency (APC, Lagos), Babajimi Adegoke Benson, the bill seeks to prohibit the flaring and venting of natural gas, except in strictly regulated circumstances, while encouraging the utilisation of gas resources to foster economic growth and energy generation.
The proposed legislation aims to mitigate the environmental, health, and economic impacts of gas flaring, aligning Nigeria’s oil and gas operations with international climate change commitments.
Offenders, who violate the provisions of the proposed law, would face stringent penalties, including fines of $5 per 1,000 standard cubic feet of gas flared and potential suspension of operations for repeat violations.
Leading debate on the general principles of the bill, Benson said gas flaring has plagued Nigeria for decades, resulting to severe environmental degradation, public health crises, and economic losses while it environmentally, contributes to greenhouse gas emissions, global warming, and acid rain, exacerbating climate challenges.
The lawmaker said public health impacts of the practice are equally dire, as pollutants from gas flaring cause respiratory and cardiovascular diseases, particularly among residents of communities close to flaring sites.
According to him, economically, flaring results in the waste of a valuable resource that could otherwise be harnessed for energy generation or exported to generate revenue.
Benson insisted that the bill was designed to address those issues while bringing Nigeria in line with global standards such as the Paris Agreement on climate change.
“The bill provides for a comprehensive prohibition of gas flaring except in emergencies or when explicitly authorised by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
“Operators are required to submit and implement Gas Utilisation Plans, detailing how gas that would otherwise be flared will be captured, processed, or commercialised.
“Offenders, who violate these provisions, face stringent penalties, including fines of $5 per 1,000 standard cubic feet of gas flared and potential suspension of operations for repeat violations. Furthermore, the Bill ensures that communities affected by gas flaring are entitled to compensation and environmental restoration, creating a mechanism for redress.
“Transparency and accountability are integral to the enforcement framework of this Bill. Operators must submit regular reports on gas flaring incidents, which will be audited and made publicly available by the NUPRC. This approach ensures public oversight and stakeholder engagement, fostering trust and compliance.
“Nigeria’s adoption of this Bill positions the country to emulate such success, ensuring a balance between environmental stewardship and economic development.
“The implementation of this Bill will be overseen by the Nigerian Upstream Petroleum Regulatory Commission, which will monitor compliance through regular audits, enforce penalties, and facilitate gas utilisation projects in collaboration with operators and development partners.
“The Anti-Gas Flaring (Prohibition and Enforcement) Bill, 2024, is a timely and necessary response to one of Nigeria’s most pressing environmental challenges. Its provisions are both practical and forward-looking, addressing immediate concerns while laying the groundwork for a sustainable future.
“I urge all Honourable Members to support the Second Reading of this Bill as a demonstration of our collective commitment to environmental protection, public health and economic progress”, he added.
###
Oil major, Shell, has restated its commitment to the development of Nigerian companies through contract awards and scaling up of expertise.
Managing Director, Shell Nigeria Exploration and Production Company ((SNEPCO) Limited, Ron Adams, made the remark while speaking at the Opening Ceremony of the 13th edition of the Practical Nigerian Content forum held in Yenagoa, Bayelsa State, with the theme “Deepening the Next Frontier for Nigerian Content Implementation”.
Represented by the Manager, Business Opportunity, SNEPCO’s Bonga South-West Aparo Project, Olaposi Fadahunsi, he said several benefitting companies had taken advantage of the patronage to expand their operations and improve their expertise and financial strength.
Adams said, “Shell companies execute a large proportion of their activities through contracts with third parties, and Nigeria-registered companies have been key beneficiaries of this policy aimed at powering Nigeria’s progress”.
He emphasized that Shell companies in Nigeria also continued to develop indigenous manpower through scholarship programmes with over 3,772 undergraduate and 109 Niger Delta post graduate scholarships since 2016.
“As we speak, beneficiaries of the 13th edition of the Niger Delta Post Graduate Scholarship awards are pursuing their studies in the United Kingdom. The employability rate of the scheme is high with over 98% of the graduates who won the awards securing employment in the oil and gas industry, academia and Information Technology, among other sectors, within one year of completing their studies”.
He commended the Nigeria Content Development and Monitoring Board (NCDMB) for ensuring compliance with the Nigerian Content Act saying “Nigerian content will continue to be an important part of Shell operations”.
The four-day conference hosted by the Nigerian Content Development and Monitoring Board (NCDMB) and participating companies reviewed progress on the development of Nigerian content pertaining to the implementation of the Nigerian Oil and Gas Industry Development (NOGICD) Act since it was enacted in 2010.
Shell companies in Nigeria are among the more than 700 oil and gas entities that participated in the forum with a strong message of support for Nigerian companies, having awarded contracts worth $1.98 billion to the businesses in 2023 in continuing effort to develop Nigerian content in the oil and gas industry.
The Nigerian National Petroleum Company Limited (NNPCL) has sold the first cargo of Port-Harcourt low sulfur straight run fuel oil (LSSR) to Dubai-based Gulf Transport & Trading Limited (GTT).
The company is expected to load the cargo in the coming days onboard the Wonder Star MR1 ship, signalling the commencement of operations at the plant and the exportation of petroleum products.
The ship would load 15,000 metric tons of the product, which translates to about 13.6 million litres.
Although the volume coming from the NNPC into the global market is still small, the development has the potential to impact the Very Low Sulphur Fuel Oil (VLSFO) benchmarks in the future, while changing the market realities for Atlantic Basin exporters into Nigeria and other regions.
The sulfur content of the export by NNPC stands at 0.26 per cent per wt and a 0.918 g/ml density at 15°C, according to Kpler, a data and analysis company.
The cargo was reportedly sold at an $8.50/t discount to the NWE 0.5 per cent benchmark on a Free on Board (FOB) basis.
Kpler reported that the development would help displace imports from traditional suppliers in Africa and Europe, as Nigeria’s falling clean product (CPP) imports are already decreasing, dragging imports into the wider West Africa region lower as well.