Abstract
Nigeria is an oil and gas producing country but sadly its gas sector had suffered serious setback in terms of development and utilisation. Although, the crude oil sector is nearing maturity, the gas sector is still in its infancy due to some past regulatory mistakes. As a result of low gas utilization and past development policies, gas flaring became the bane of the petroleum industry in Nigeria for over five decades and this is with no end in sight. Amidst, the abundant natural gas reserves, the country was considered one of the worst gas flaring nations after Russia. Past policies and legal regimes to reduce gas flaring were rather episodic and unrealistic due to several reasons notably: policy instability, lack of cooperation by the International Oil Corporations (IOCs) and the lack of political will by the Federal Government. Gas flaring in Nigeria contributes to both economic waste as well as a huge environmental challenge in the oil and gas producing communities. It was against this background that the Federal Government recently announced measures for the utilisation of flared gas from the Niger Delta region. The objective is to make hitherto gas flared to be commercially utilised thereby reducing their environmental footprint. The significance of this paper is to examine the efficacy of these inchoate government policies and their fit for purpose. The paper found that any such measure must be backed up with enforcement mechanism with attractive terms for new entrants into the gas sector development in Nigeria. Keywords: Gas Sector, Gas Development, Utilisation, Flaring, and Nigeria. DOI: 10.7176/JLPG/96-15 Publication date: April 30 th 2020
Highlights
The Federal Government of Nigeria established Gas flaring Commercialisation Policy to promote gas utilisation, domestic consumption and exports of gas. (Nigeran gas commercialisation policy 2019)
Nigeria’s current gas production is in the region of 8.5 billion standard cubic feet per day (BSCFD), with volume of about 3.7 bscfd, representing 43 percent of total gas production been exported, while 2.7 bscfd-32 percent of total gas production is used in the upstream for gas re-injection and gas – lift. 1.5bscfd-18 percent of the total gas production is used domestically for power generation and industries, leaving the balance of 0.6bscfd representing seven percent of total gas production, currently being flared at fields in the Niger Delta region of the country
It is owned by four shareholders, namely, the Federal Government of Nigeria, represented by Nigerian National Petroleum Corporation (49%); Shell (25.6%); Total Gaz Electricite Holdings France (15%) and Eni (10.4%),with wholly– owned subsidiaries; Bonny Gas Transport (BGT) Limited and NLNG Ship Management Limited (NSML)( NLNG 2019).This project entails liquefying the natural gas that would have been flared and stores in vessels as liquid natural gas
Summary
The Federal Government of Nigeria established Gas flaring Commercialisation Policy to promote gas utilisation, domestic consumption and exports of gas. (Nigeran gas commercialisation policy 2019). NNPC and its Joint vventure partners have embarked on several gas utilization projects, which include the following: 1) Escravos Gas Project: The Escravos Gas Project was established for the purpose of solving the incessant flares and waste of natural gas in Nigeria It was a joint project among Chevron Nigeria Limited (CNL) (75% share and the Nigerian National Petroleum Company (NNPC) (25% share) constructed the 33,000 barrel per day (bpd) Escravos Gas-to-Liquids (EGTL) plant in Escravos site, Delta state, Nigeria. Was launched by the Minister of State for Petroleum Resources (“Minister”) on December 13, 2016, and designed as a strategy to implement the policy objective of the federal government by eliminating gas flaring through technically and commercially sustainable gas utilization projects developed by competent third party investors who will be invited to participate in a competitive and transparent bid process. There must be consideration for third -party access on a non-discriminatory basis to the Operators facilities
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