01 November 2016, Abuja — THE Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, yesterday, disclosed that the federal government will increase the penalty for gas flaring, while it intends to end the practice by 2020.
Speaking during the 10th International Conference and Exhibition of the Nigerian Gas Association, NGA, in Abuja, Kachikwu stated that the hike in penalty would be driven by the National Gas Flare Commercialisation Programme which would commence in the first quarter of 2017, adding that the Federal Government has recently concluded and released a draft national gas policy. Gas flare at Shell Cawthorne Channel, Nembe Creek in Niger Delta.
According to him, gas flaring is still the prevailing practice in the petroleum industry, adding that the stance of the federal government is that the protection of the environment is a more important objective than oil and gas production. He said, “Government is determined to ensure flare-out within the earliest possible time. I know the oil companies have made substantial progress on this, but we are going to be seeking very aggressively for more.
“We are seeking to exit gas flaring by 2020. To achieve this, a number of measures would be introduced: We will be seeking the commercialisation of flared gas for supply to the domestic market. We will be increasing the gas flaring penalty to an appropriate level sufficient to disincentivise the process of gas flaring.”
He, however, stated that the intention is not to raise funds from the penalties, but to protect the environment and bring an end to gas flaring by 2020.
Draft Gas Policy, new oil sector regulator
He explained that the draft gas policy seeks to promote a competitive business environment for both current and new investors; articulate the federal government’s vision for the sector and set policy goals, strategies and implementation plans for its medium to long-term targets for gas to markets development.
Kachikwu also gave hints that the federal government might be considering scrapping the Department of Petroleum Resources, DPR, and the Petroleum Product Pricing Regulatory Authority, PPPRA, adding that the federal government is considering setting up a new Independent Petroleum Regulatory Authority.
According to him, the new Independent Petroleum Regulatory Authority would be empowered by the federal government with sufficient capacity to regulate the petroleum industry.
He said the new agency would take over the duties of the existing petroleum regulatory authority, as well as many responsibilities and would be responsible for the economic, competition, technical, safety, regulation of the gas sector.
The Minister added that the agency would have responsibilities for licensing, investigating, monitoring and would also dispute resolution powers, while remaining an independent regulator.
He said, “The first aspect of our vision for the sector commences with the clarification of the role of the government in the sector. We want the government to remain the policy maker, working through the Ministry of Petroleum Resources, MPR. The government will also regulate the industry, through the new Independent Petroleum Regulatory Authority.
“Government will remain a commercial operator also, and there would be a full legal separation of the upstream from the midstream and the separation of gas infrastructure ownership and operations from gas marketing which had already commenced with the NNPC. We will ensure that NNPC and NGC are legally restrained from acting as a barrier to the private sector growth and expansion.”
In addition, he disclosed that 900 million Standard Cubic Feet (SCF) per day of flared gas would be available commercialization, while he stated that would current efforts at driving gas supply in the country, power generation is estimated to rise to 20,000 megawatts (MW) by 2020.
He, however, lamented Nigeria’s dwindling gas reserves, stating that at current gas production of eight billion SCF per day, Nigeria’s gas will only last for 65 years without additional reserves, while at projected 2025 gas production of 15 billion SCF per day, the country’s gas would only last for 36 years without additional reserves.
$51bn investment expected in gas value chain
Baru noted that $51 billion investment opportunities exist in gas processing & transmission and general infrastructure development, noting that $35.4 billion of the opportunities exist in flare gas commercialization, gas exploration and production, virtual pipeline among others. He added that $16 billion investment opportunities are expected from Free Trade Zones infrastructure development and concessioning, gas transmission pipelines and Liquefied Petroleum Plants among others.
*Michael Eboh – Vanguard