Over the next three years, the Nigerian Gas Flare Commercialisation Programme (NGFCP), an ambitious plan to sell over a billion scf of gas currently flared at 178 flare points across the Niger Delta, would cut Nigeria’s CO2 emissions by 13 million tons a year, which could be monetized under an emission carbon sale arrangement, Justice Derefaka, programme manager of NGFCP has said.
In his presentation at the Society of Petroleum Engineers Oloibiri Lecture Series and Energy Forum (SPEOLEF), held in Lagos on April 25, Derefaka said the programme would stimulate action in five areas of critical importance to the Sustainable Development Goals (SDGs) including people, planet, prosperity, peace and partnerships.
Derefaka said the flared gas sale programme is consistent with Nigeria’s commitment to reduce greenhouse gasses (GHGs) under the Paris Climate Change Agreement.
The programme is also designed as an important “climate change action plan” for the nation, allowing Nigeria not only to cut its CO2 emissions but halt a loss of $500million in emission credit value, Derefaka said.
According to data from the World Bank, CO2 emissions from Africa’s biggest oil producer were 96281 in 2014. Nigeria has the world’s 7th biggest gas flares despite a 70% decline in gas flaring over the past decade.
In 2015, around 1,000 MMSCFD of gas was flared in Nigeria, exceeding the 800 MMSCFD utilized for power generation and around 450 MMSCFD used in the domestic industry.
The NGFCP is viewed as a critical signpost in the country’s road map to energy sustainability. It is the first market driven program undertaken on this scale globally giving bidders the flexibility of choosing which flare site(s) to bid for, the flare gas price to offer to the Federal Government (taking into cognisance the NGFCP floor price of US$0.25cents per thousand standard cubic square feet of gas) and the end market gas products as well as the technology to be used.
But it is still untested and fraught with uncertainty despite the huge enthusiasm, investors say. To assuage these concerns, the Federal Government has declared it is ending gas flaring by 2020. Unlike the previous six times this declaration has been made since 1984, this time, it is backed by political will.
In 2016, Nigeria joined the Global Gas Flare Reduction Partnership (GGFR) and the Zero Routine Flaring (ZRF) Initiative and that same year, the Federal Executive Council approved the NGFCP programme.
Nigeria has become signatory country to the United Nations Framework Agreement for Climate Change (UNFCCC) [“Paris Agreement”] with a commitment to make “Intended Nationally Determined Contributions” for the reduction of greenhouse gas emissions (GHGs) and has ratified the UNFCC in May 2017.
In June, the FEC granted approval of the National Gas Policy and even gas flare out arrangement was a component of the Economic Recovery Growth Plan, the signature economic blueprint of the Muhammadu Administration.
Unlike previous declarations to end gas flaring, the NGFCP enjoys not only a political will from the highest echelons of authority in the country; it has provided investors and operators with a commercial motive to end the practice thus improving the chances of success.
“The strategic imperative of the NGFCP is to eliminate gas flaring through technically and commercially sustainable gas utilization projects developed by competent third party investors who will be invited to participate in a competitive and transparent bid process. The commercialisation approach has been considered from legal, technical, economic, commercial and developmental standpoints,” Derefaka said.
The NGFCP expected to see about $3.5 billion worth of inward investments is required to achieve the gas flare commercialization targets by 2020.
