Government steps up sale of crude, gas assets with 96 flare sites
With a recent offer for its 57 marginal oil fields to investors after 17 years gathering momentum, the Federal Government, through the Department of Petroleum Resources (DPR) has said plans are underway to commercialise its 96 gas flare points in a bid to generate revenue and ensure domestic consumption of gas.
With unstable oil prices, the Federal Government has continued to explore measures to generate revenue, including sourcing for loans from multilateral agencies to finance its 2020 budget.
According to the DPR, the move was part of plans to reduce gas flaring in the country and in line with the first phase of the National Gas Flare Commercialisation Programme (NGFCP).
Besides, the agency addressed concerns about its marginal oil field bid rounds, stating that fields that are under litigation were not included in the 57 fields being offered to investors.
DPR Director, Auwalu Sarki, had earlier this year, told journalists and bidders that the agency has identified 45 out of 178 gas flaring sites in the country, with no less than 200 companies indicating interests to take over the flare points.
Sarki during an online interactive session with the media yesterday, said that though flared gas had maintain a stable profile in the country in the last three years, the take-over of the gas flare points by investors will further reduce the amount of gas flared and increase domestic utilisation.
With proven natural gas reserves now 203.16trillion cubic feet (tcf) and crude oil reserves now 36.89 billion barrels (bb) as at January 1, 2020, Sarki said the department has set new targets of 210tcf by 2025 and 220tcf by 2030 for its gas reserves, going by new discoveries.
Sarki noted that the COVID-19 pandemic had caused a set-back for the agency in allocating the flare sites as investors could not access the sites due to the lockdown measures and movement restrictions across the states.
In identifying and commercialising flared gas, Sarki explained that the DPR accounts for gas by deploying production meters, fiscal meters and allocation meters.
According to him, the fiscal meters help us to monetise the gas produced or flared, while the allocation meters help to measure the utilisation of the produced gas.
He noted that gas is being flared on routine and non-routine level. To him, routine gas flaring incurs cost while the non-routine flaring does not attract costs, except it exceeds the acceptable level and allowable volume by government.
“We use the meters to measure the level of flares recorded in the system. DPR enforces meter of about 3% accuracy level, as well as deploy strategies of measurement frequency, data reconciliation and on-site revalidation.
“To ensure gas flaring is properly managed and regulations enforced, the DPR monitors field locations, collates and revalidates flare reports as well as balances and accounts for produced gas. We make sure all the provisions of the Flare Gas regulations of 2018 are adhered with.
“There has been a stable profile of flare volumes between 2017 and 2019, while a new flare payment regime, in relation to the Flare Gas regulations is strictly enforced. Thermal images are not being used due to inconsistencies in the accuracy factor. Using the volume from the technical allowables as well as the metering process, helps us to monitor flared gas.
“With government’s gas -to-people policy, gas flaring is being discouraged and utilisation is being encouraged domestically. The 10 per cent being flared now will reduce further with the gas flare commercialisation scheme.
We need a lot of enablers to aid the growth and utilisation in the oil and gas sector. We have set up the Alternative Dispute Resolution (ADR) platform to ensure that conflicts are resolved timely without recourse to the courts”, he added.
On the move for bid rounds for marginal fields before the Petroleum Industry Bill (PIB) is signed, Sarki said the country has existing legislations, in terms of petroleum Act among others, adding that “the bid round is not a field block round. The non-passage of the PIB has insignificant impact and would not affect the outcome of the bid rounds.
“The marginal bids would be competitive. There are no price tags for the oil fields. The offer and bid price will determine the competitiveness. The investors will price the fields themselves. Selling them will help both investors and government”.
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