Six years after, Nigeria awards 49 gas flare sites to 42 investors

Almost seven years after developing the Nigerian Gas Flare Commercialisation Programme (NGFCP), the Federal Government, yesterday, announced that 49 flare sites have been awarded to 42 investors.

The aim of the programme is to save the environment and reduce impacts of routine gas flaring on people living in the oil-rich Niger Delta region while monetising resources.

The Guardian had reported that Nigerian National Petroleum Company Limited (NNPCL), Shell, ExxonMobil, Chevron, Total and other oil companies operating in the country flared about $3.9 billion (about N3 trillion) worth of gas in the last four years, amid growing environmental concerns and revenue leakages in the nation’s petroleum industry.

Failing repeatedly on its target of zero gas flaring, Nigeria – with a reserve of over 209 trillion standard cubic feet – has often been flagged by the global community as a country that’s notorious for the environmental hazard.

Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in a statement, yesterday, said the 42 companies were selected in a keenly contested bid.

It said 38 of the companies were awarded flare sites for standalone single flare site development, while four were awarded nine sites to be developed as clusters.

The move, according to NUPRC, was in furtherance of its mandate in Section seven (e) and Section 105 (two) of the Petroleum Industry Act (PIA), 2021.

NUPRC, in the third quarter of 2022, restructured the NGFCP and re-launched the programme to align with provisions of the PIA, as well as reflect prevailing economic and operational realities.

The commission said the significant success recorded in the NGFCP bid process was due to a series of focused engagements with relevant stakeholders, including domestic investors, international development agencies, oil and gas producers, technology providers and financial institutions during intervening months.

“The engagements by the commission were to galvanise and sustain interest in the programme, attract investments, and stimulate participation by local and foreign entities,” said NUPRC boss, Gbenga Komolafe.

About 300 companies had applied for the flare sites when Request for Qualification (RFQ) was issued in the fourth quarter of 2022. The programme was re-launched after the PIA came into effect.

Evaluation of the Statements of Qualification (SOQs) led to the selection of 139 applicants, after the commission issued a Request for Proposal (RFP) to enable qualified applicants to put together their respective proposals. Eighty-eight entities, comprising individual companies and consortiums, responded to the RFP and submitted 137 proposals, each containing technical, commercial and financial documentation for one or more of the 49 sites, for either standalone or cluster development.

Some companies were also awarded Reserve Bidders status for corresponding flare sites, in case the Preferred Bidders failed to meet terms and conditions contained in the RFP.

The 42 winners will now individually proceed to execute the Suite of Commercial Agreements with relevant parties, and effect payment of prescribed award fees, to enable granting of permit by the commission.

NUPRC said KPMG, a global network of professional firms, has been approved to partner with the commission in implementation of the award, to ensure successful outcome of the gas flare-out commercialisation process.

Recall that after approval by the Federal Executive Council, the gas commercialisation programme was launched by the Ministry of Petroleum Resources on December 13, 2016, but remained dormant for seven years.

In 2021, the Department of Petroleum Resources (DPR), now NUPRC, said 45 out of 178 gas flaring sites in the country had been identified for award to successful bidders.

The Federal Government had shortlisted 200 bidders from 800 bids to compete for the 45 flare sites, noting that other sites would come on board.