Hector Igbikiowubo
4 November 2008
Federal Government has insisted on the end of year deadline given to multinational oil and gas exploration and production companies operating in Nigeria to stop gas flaring or risk losing their oil fields.
The government has already imposed a fine of $3.50/million cubic feet of gas flared by the companies.
Alfred Ohiam, an official of the Department of Petroleum Resources (DPR) responsible for superintending the domestic oil and gas industry submitted at a gas conference in Abuja at the weekend, adding "December 31, 2008 remains the date to end gas flaring, we cannot continue to shift the date."
He noted that further penalties were needed, "the DPR is presently working on plans to enforce the current flare out date," he said.
"Many IOCs believe that once their lease expires they can come forward for renewal, but the government has a right to take the block and give it to other investors for them to develop the gas," he said. There should be equal access to gas for investors," he said.
The country's oil industry regulators and multinational oil companies had mounted a campaign to get the government to shift the deadline for zero gas flare to 2013, Ohiam said. excuses for their continued gas flaring, Ohiam said.
"Government needs to exercise more power to ensure that we achieve gas flare out."
Last week, lawmakers in the country also insisted on the end of year flare out deadline and were already considering sanctions on companies that failed to meet the date.
The previous deadline of January 1, 2008 was breached by companies who said that lack of funds, an undeveloped domestic gas market and unrest in the oil producing Niger Delta region, delayed completion of projects meant to utilize gas and eliminate flares.
Nigeria's ranked as holding the world's seventh largest gas reserves with proven reserves at about 187 trillion cubic feet.
However, official statistics showed that the country flares about 30% of its current daily gas production of 4 billion cubic feet, losing $2.5 billion every year in revenue.
Most oil and gas exploration and production activities are conducted under a joint venture agreement with the government through the Nigerian National Petroleum Corporation (NNPC) in which the Federal Government maintains an average 60 per cent equity.
Investigations also indicates that there are several gas gathering schemes between these multinational operating companies and the government which has been slowed down owing to funding challenges.
For instance, the multi billion dollar Shell operated joint venture gas gathering scheme has been slowed down owing to a shortfall in funding put at $3 billion.
An industry operator who spoke with the Vanguard insisting on anonymity pointed out that the talk about stoppage of exploration and production activities over default in meeting the 2008 end to gas flaring target amounted to grand-standing.
"How can you talk about stopping exploration and production work when you are in fact responsible for the circumstances leading up to the default in the first place. I think government operatives should endeavour to get serious because when they carry on the way they, it reduces the Nigerian state to a laughing stock among our foreign partners," the operator said.
However, flaring remains a major source of environmental pollution in the Niger Delta.
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