Cash call deficit threatens govt’s zero-gas-flare agenda

INDICATIONS have emerged that the zero gas flare agenda of the Federal Government may not be actualized in the foreseeable future afterall, as fund paucity has threatened the strategic gas gathering projects.

  Indeed, some of the joint venture partners in the country, including Shell, Chevron, Total, NOAC and ExxonMobil have continuously lamented funding challenges.

     A recent document obtained from Shell indicated that, “joint venture funding challenges have resulted in delays to some gas gathering projects. Two of these projects, which were expected to gather an additional 35 per cent associated gas between 2014 and 2015 are likely to be delayed,”

   It however stated that, “despite the challenges, the overall trend in flaring reduction is positive and we have a work plan in place to drive further reductions. SPDC will continue to work closely with its joint venture partners and other stakeholders to minimize delays to the key projects on which further flare reduction depends.”

    The oil multinational said it has reduced flaring volume from its facilities by about 75 per cent between 2003 and 2012 and flaring intensity (the amount of gas flared per barrel of oil produced) by around 60 per cent over the same period.

   Some oil and gas operators also lamented the cash call challenges in Lagos recently during a symposium to celebrate the oil industry guru, Chief Festus Marinho. They described the situation as critical to the growth of the nation’s oil and gas industry.

   Indeed, the Chief Executive Officer, Seplat Petroleum, Austin Avuru, estimated the unpaid cash call by the NNPC at  about $5 billion.

  He said: “The NNPC is today, a net-destroyer of value in the oil and gas sector. Taking a look at developments in the oil and gas sector, the about $5 billion unpaid cash call, among others, will make one to ask if the NNPC is really adding value to the sector and to the Nigerian economy” he queried.

 However, a recent report from the corporation showed that Nigeria lost about $1b illion (N170 billion) the big chunk of the gas flared by the oil companies from January to September 2014.

   According to the data, about 296 billion standard cubic feet of natural gas was flared in the nine-month period.

   With natural gas price now about $3.30 per 1,000 scf, 296 billion scf of gas amounts to about $1billion.

  The international oil companies and indigenous players flared a total of 43.7 billion scf in January (19.17 per cent of total production), 50.1 billion scf in February (23.20 per cent of production) and 38.3 billion scf in March (17.77 per cent of output).

   In April, 22.3 billion scf of gas was flared; 19.7 billion scf in May and 23 billion scf was wasted in June. In July, 29.1 billion scf was flared; 39.1 billion scf in August; and 29.5 billion in September, the NNPC data showed.

Nigeria is Africa’s top oil producer and largest holder of natural gas reserves with about 187 trillion cubic feet (tcf) of proven gas reserves and 600 tcf of unproven gas reserves. Low investment in gas infrastructure over the years has continued to hamper the development of the huge natural gas reserves in the country for domestic consumption.