FG to Shut Oil Fields Flaring Gas By 2008
By Chika Amanze-Nwachuku and Fidelia Okwuonu, 07.05.2007
The Federal government may have concluded plans to close down oil fields flaring associated natural gas at the expiration of the 2008 deadline for gas flaring in the country.
THISDAY reliably learnt that government’s decision to shut the affected oil fields and impose stiffer penalties on erring oil firms after the expiration of the 2008 deadline followed the rising cases of insecurity in the Niger Delta region where the communities often protested environmental degradation.
Operating firms, it was learnt, were said to have been interested in only gathering gas for export from offshore facilities and have abandoned investments in gas gathering projects needed to boost power generation and domestic utilisation on the excuse of unrests.
Multinational oil companies operating in Nigeria, led by Shell Petroleum Development Company (SPDC), had called on the federal government to extend the flaring deadline to 2010 due to the inability of the Nigerian National Petroleum Corporation (NNPC) to fund its equity in the Joint Venture (JV) operations which contributes about 95 per cent of the nation’s daily crude oil production capacity of 2.6 million barrels per day (mbpd).
But reacting to the said moves, Mr. Abiodun Ibikunle, deputy director, Department of Petroleum Resources (DPR) explained that the closure of oil fields flaring associated gas by 2008 would not affect federal government’s revenue generation from crude oil sales.
Ibikunle, who spoke at yesterday’s monthly technical meeting of the Nigerian Asso-ciation of Petroleum Explo-rationists (NAPE), argued that the negative effect of the federal government’s stiffer penalty on erring firms would not be as much as the amount of revenue loss as a result of the shut-in of 700,000 barrels per day (bpd) of crude oil production due to unrests in the Niger Delta.
According to him, “even though they have genuine challenges for negotiating postponement in the outage date for gas flaring, the federal government can go a step further to impose stiffer penalty if we can absorb the shock of 700,000bpd loss”.
On his part, Mr. Steven King, Exploration Manager, BG Exploration and Production Nigeria Limited noted that gas flaring could be stopped next year as planned, if the government was committed to promptly implement the policy.
In his words ìin the 50s and 60s oil firms operating in the† United States had preferred flaring of natural gas and makes gas have less value until the government takes a strong position to increase utilization for industrial, commercial and power generation. Now, natural gas has the same value with oil in the US as the preferred choice of fuel.
“BG sees a great future for gas in Nigeria, which can benefit from the technological advances made elsewhere in the world. All the parts of the supply chain need to be in place to get the gas from the well head to the consumer.
This is precisely where BG has placed itself in the market. Nigeria will hopefully form an integral part of our Atlantic Basin strategy”, he said, adding that Nigeria desires to generate as much revenue from gas as oil can be achieved and BG intends to be part of this "dash for gas".
