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1969 Petroleum Act empowers FG to take flared gas from IOCs for free—Derefaka

The Program Manager, Nigeria Gas Flare Commercialisation Programme (NGFCP), Office of the Minister of State for Petroleum Resources, Mr Justice Derefaka has opened up on the enabling legal framework upon which the Federal Government is relying on to assume sole right in the commercialisation of flared gases in the course of oil exploration.

Speaking on a national Television programmme, Nigeria Today on NTA weekend, he cited relevant provision of the 1969 Petroleum Act which gave the sole right of gas commercialization to the Federal Government.

According to him, “We are looking at exercising our right in the Petroleum Act of 1969 in Section 9 and 11and in particular, paragraph 35b, where the federal government made it clear that they would take this flare gas from the International Oil Companies (IOCs) without payment of royalties and give it to competent third parties that will have the technology and of course the financial power to come up with innovative gas utilisation projects and convert this flare gas instead of wasting it.”

“Now, the strategic idea is to convert it to what we call flare gas to market products like LNG, LPG, fertiliser, urea, methanol and the likes of it to further create jobs and expand the revenue base of the nation’s oil and gas sector for the economy,” Derefaka averred.

Continuing, the NGFCP boss, who recently returned from Texas, United States of America (USA), where he spoke to the massive gathering of US key investors in gas development on the viability of investing in Nigeria’s gas flare commercialization, revealed that “We have more gas than crude oil in this country and as I rightly mentioned, we have proven reserve that is about 202 trillion cubic feet of gas and of course unproven is about 603 cubic feet of gas which we have more in abundance than crude oil.”

“Now what the NGFCP is seeking to achieve is that when oil and gas operators go to look for crude oil, there is gas that comes with the crude oil which is called associated gas.

Gas Flare 77
Gas flaring away fortunes

He explained that “It is this gas that the oil and gas company for some reasons, possibly because they don’t have the economies of scale, do not have a use for it on site or they don’t have technology for reinjection and they have to flare. Failure to flare, for some reasons, will cause over pressure and of course explosion.

“However, there is a regulation in this country that says that gas flaring is not acceptable. But if you must flare, you may get a penalty which was until last year, fifth of July was around 0.03 cent per dollar cubic feet of gas.

Derefaka accordingly, made it clear that “Mr President of course to give teeth to the Nigerian gas flare commercialisation programme to bite when we bark, is that he came up with a new regulation called the flare gas prevention and pollution regulations 2018 to implement the Nigerian gas flare commercialisation policy. So in a nut shell, what the NGFCP is seeking to achieve is to convert this hitherto wasted flare gas to wealth.”

Business Hilights recalls that going by the records, Nigeria have around 202 trillion cubic feet of proven gas reserve and only 25% of this reserve have been produced and developed for the nation.

gas flaring
Gas flaring sites in Niger Delta
gas flaring in N Delta
Gas flaring in parts of Niger Delta

Nigeria is also ranked ninth on the list of countries with natural gas in the world. On the continent, we are the highest as we are told. And yet upon this figure, we are still the highest among the gas flares countries globally.

Latest activities of the NGFCP showed that the federal government has made it a priority to unlock and harness the potential of its gas resources and support sustainable economic growth and diversification. More importantly is federal government commitment to a national flare out target by the next year, 2020.

Facts and figures on ground further indicate that this development has given rise to Nigerian gas flare commercialisation programme that will add value to the gas resources for wealth creation by harnessing Nigeria’s gas to transit from the era of air pollution to revenue and job creation.