$1.4 billion lost to gas flaring yearly

The federal government said on Tuesday that over $1.4 billion is lost yearly through gas flaring, yet flaring may continue in the country beyond 2010.

The Minister of Petroleum, Odein Ajumogobia, said on Tuesday at the House of Representatives, that though it expects oil companies to stop flaring by 2010, it could only resort to its usual penalties and other deterrent measures if this target was missed.

"There will be no more flares," he said, referring to efforts to amend the Associated Gas Re-injection Act of 1979. "We believe that with the infrastructure to be put in place, we will meet the 2010 deadline."

The Gas Act that was formulated by the administration of former President Shehu Shagari to compel oil groups to find ways of re-injecting gases has not achieved much.

Companies do not abide by it and the House wants it amended to what its chairman, Committee on Gas, Igo Aguma, called a "more realistic law."

Mr. Ajumogobia said the government was attempting to de-emphasise the penalty option, since oil companies in the country are more willing to pay the fines, and continue with the practice.

"The penalties do not really help, so we are not placing much interest in that," the minister said. In place of this, the Ministry is sourcing for investors who will lay out the technical infrastructure that could use up the gas produced during oil activities.

"The country presently flares about two billion cubic feet of gas per day, and our domestic need alone - mostly for power - is about three billion cubic feet daily," the minister said.

"By 2011,the demand would have risen to five billion cubic feet per day. So the question is not if we have the ability to consume the gases flared."

The Ministry, through the Department of Petroleum Resources (DPR) listed its suggested version of the Gas Act amendments, to include fines on defaulting companies after 2010 at the rate of $3.50 per 1000 standard cubic feet (scf) for temporary flaring; $1 million for same quantity in the event of a continued flaring; emergency flaring due to equipment failure will be fined $500,000 for the same volume if the breakdown is not reported within 24 hours.

On the level of attainment of the infrastructural development, which will involve capturing gases from their flare sites across the Niger Delta, transporting them to re-injection plants and the final processing, Mr. Ajumogobia and the DPR representative, Innocent Etotok, could not give exact details.

The process of following up activities related to gas flaring in the country has been bugged by a combination of lack of determination by the government and an unclear deal with the oil multinationals.

If the amendment gets through, companies that declare false gas volumes, will pay $100,000 fine, in addition to paying the international market price for the volume it failed to declare.