(Refiled with correct date in dateline)
* Ban on flaring associated gas faces tough challenges
* Campaigners doubt deadline is realistic
* Oil companies say can only trap gas if there’s a market
By Tim Cocks
LAGOS, May 28 (Reuters) – Nigeria’s newly drafted oil bill,
which is now close to being finalised, mandates that oil firms
must stop flaring gas by the end of this year, and that if they
don’t they can be fined.
Africa’s top oil producer has long pledged but failed to end
flaring, and although officials say it has fallen in the past
decade, Nigeria remains the world’s second biggest burner of gas
associated with crude oil production after Russia. Many see the
new target date to end flaring as unrealistic.
“Natural gas shall not be flared or vented after 31st
December, 2012, in any oil and gas production operation, block
or field, onshore or offshore, or gas facility,” except under
exceptional and temporary circumstances, says a new draft of the
long-awaited Petroleum Industry Bill (PIB).
“Any licensee who flares or vents gas without the permission
of the Minister in (special) circumstances … shall be liable
to pay a fine which shall not be less than the value of gas.”
Nigeria flared some 30 billion standard cubic feet of gas in
January, according to the latest figures from the state oil
firm, published by the national news agency. That is equivalent
to a third of the annual consumption of an industrialised
country like the United Kingdom.
Of that, ExxonMobil topped the list, flaring 9.85
billion cubic feet out of 38.64 billion produced, while Chevron
flared 8.25 billion cubic feet out of 19.23 billion.
Leading operator Shell, which runs Nigeria’s
liquefied natural gas (LNG) plant, flared 5.44 billion cubic
feet, a relatively small part of the 76.4 billion it produced.
All have been criticised by environmental groups, but the
oil majors retort that they would be happy to trap all of the
gas if the government provided them with a market for it.
SHOW ME THE MONEY
The bright orange flares that light up the night sky over
the swampy Niger Delta, home of Africa’s biggest energy
industry, have long been a major complaint of its inhabitants.
The global ramifications are also damaging.
The World Bank estimates that 5 trillion cubic feet of gas
was flared globally last year, releasing 360 million metric tons
of carbon dioxide (CO2) into the atmosphere, equal to France’s
total emissions or 70 million cars’ worth.
Most campaigners admit this bill’s deadline is unrealistic.
“We are almost in June and the bill still has a distance to
go before it becomes law. I do not therefore see the goal to be
achievable within the stated time frame,” said Letum Mitee,
president of the Movement for the Survival of Ogoni people,
whose homeland is where oil was first discovered in Nigeria.
Oil companies say trapping associated gas is not profitable
enough without a market. Global gas prices are at record lows
and though Nigeria desperately needs it for electricity, its
power sector is not organised enough to make much use of it.
“Harnessing gas is only half of the story; gas needs
customers as well,” Shell says on its Nigeria website.
“To encourage further investment and to boost the supply of
gas to domestic consumers, Nigeria needs a comprehensive and
flexible gas infrastructure that allows for distribution.”
More radical campaigners urge stopping the flaring anyway.
“Where there’s no infrastructure to convert the wasted gas
into power, production of crude … can simply be shut down,”
said Nnimmo Bassey of Friends of the Earth, Nigeria.
That seems highly unlikely from a government dependent on
oil for 95 percent of its revenues. The oil companies warn they
would have to turn off the oil taps for a bit just to stop the
flaring, but no Nigerian official has dared suggest they do.
(Additional reporting by Austin Ekeinde in Port Harcourt;
editing by James Jukwey)
