Tuesday, November 11, 2008

Stopping Gas Flaring

Recently, the Department of Petroleum Resources (DPR) was reported as saying there would be no extension of the December 2008 deadline for the cessation of gas flaring in Nigeria. And that the desire of the International Oil Companies to have the deadline extended to 2013 would not be granted.
About the same time, but in a softer tone, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Mr. Abubakar Yar’Adua said Nigeria needed concerted efforts of all stakeholders to achieve zero flares. He noted that apart from the environmental pollution from the flares the country loses about $2.5 million annually in opportunity cost, which is what the nation would gain from the economic use of the flared gas.
Before the NNPC and DPR spoke, the Senate Committee on Gas had vowed not to again, shift the date to end gas flaring in Nigeria. The committee also warned that at the end of December this year, being the agreed date to end gas flaring, every defaulter will be subjected to all the prescribed penalties, including shutting-in (closing down) of their wells.
This is not the first time gas flaring will make so much emotive headlines in the country. For too long, the issue has continued to consume national attention and resources, and suggesting lack of discretion on the part of government. But it does seem clearly that government wants to eat its cake and have it.
The oil majors have, for the umpteenth time asked for more time within which they will stop gas flaring, but for every target agreed the goal post is shifted.
Although the date mutually agreed by the oil companies and the lawmakers is December 31, this year, the oil companies are yet seeking a shift in the deadline to year 2013, on the ground that the December 31 deadline is no longer feasible.
The oil companies have argued that contrary to the belief of some people the flares are not like candle lights that can be blown off. Gas is naturally produced with the crude oil, the country’s cash cow. To put good use to the flared gas it must be collected at every flowstation and exported in gas pipelines over kilometres of land and water to where it can be used. Unlike now when new gas production facilities have in-built technology to gather gas, most of the old facilities do not have them so there has to be fresh investment in gas-gathering plants. According to the oil majors, these are capital-intensive projects with long gestation periods that do not only need timely funding, but uninterrupted execution. They readily point to the insecurity in the Niger Delta and its effects on project execution.
But the counter question is at what cost should such excuses be accepted? As pointed out by Yar’ Adua, gas flaring is injurious to human being and the environment. Although details of its direct and indirect effect on mankind, such as through acid rain may still be contestable, many of its negative effects are obvious.
Also, today we live in a world with growing concern for global warming, which effects are being felt all over the world, Nigeria inclusive. Nigeria is one of the largest gas flaring nations in the world.
Understandably, the oil companies have been blamed for the continuous gas flaring in the country. They have been accused of disobeying the laws of the land just because they have the resources to pay the imposed penalty, and choosing out of selfishness, to ignore the environmental and health hazards associated with gas flaring. As people will continue to argue, what is the practice in other countries of the world? Are oil producing companies flaring gas as they do in Nigeria?
However, we think at the bottom line of this lingering issue is the Federal Government’s indecision largely informed by the desire to eat its cake and have it. It is obvious that enforcing government’s deadline will mean oil production shut-in and oil revenue loss. And as the Senate and state agencies continue to issue threats over the deadline, the true question to ask is whether the Federal Government, in the face of dwindling crude oil revenue that is threatening the 2009 budget has the political will to enforce the deadline.
We think the government should bite the bullet now and save the energy and other resources wasted in debating the issue. One thing is sure. It cannot eat its cake and have it. Neither can it walk both sides of the street at the same time.