May 19, 2016

Abimbola Laoye- Petroleum Industry Bill (P.I.B), Movement For The Eradication Of Gas Flaring In Nigeria



 
Credit - www.guardian.ng
Nigeria is one of Africa’s top oil producers 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[1]. This translates to the fact that Nigeria possesses huge resources, sufficient to cover both domestic and international demand alike.  However Nigeria’s potential and ability to harness and exploit the use of gas in its energy sector is crippled many factors including (and not surprisingly) political bureaucracy.[2]


Gas flaring is the burning of natural gas produced in the process of exploration and extraction of crude oil from the ground for the purpose of disposal of gases that are not useful (waste gas) or because it is difficult and uneconomical to store and/or transport. Unfortunately however, Nigeria flares 17.2 billion m3 of natural useful and waste gas alike per year which is equivalent to approximately one quarter of the current power consumption of the African continent.[3]

Factors responsible for gas flaring include among others:
1.     Fiscal uncertainties
2.     Poor Energy market
3.     Lack of infrastructure
4.     Unenforceable Anti flaring laws and regulations

EFFECTS OF GAS FLARING
Gas flaring has been established as the number one culprit for global warming according to the Intergovernmental Panel on Climate Change (IPCC)[4].  Climate change also exposes us to various health hazards ranging from cancer, respiratory problems, food poisoning to mental disorders caused either directly or and indirectly arising from living close to gas flaring sites. Gas flaring has also been proved to be directly connected to the death of the agricultural sector due to chronic atmospheric contaminants which acidify the soil and atmosphere. The impact of pollution caused by gas flaring has spiralled into a vicious and poisonous cycle which has a catastrophic ripple effect on the economy including loss of funds and poor quality of life.[5]

PUTTING AN END TO GAS FLARING IN NIGERIA.
Besides the visible decay on the atmosphere and agriculture in the oil and gas rich regions  and on a national level, the issue of the obvious and avoidable large scale wastage must also be tackled.

Attempts at curbing or/and putting a final stop to gas flaring in Nigeria have been frustrated by the Oil Companies who simply ignore the appeals of the federal government on the issue.[6] It is therefore trite to say that the efforts of past government regimes in putting an end to gas flaring has been dubbed futile. It is also evident that what is needed is not a change in laws, or mere huffs and puffs, but a change in approach and attitude of the Federal Government and oil companies in order to achieve better results as follows:[7]

1.     Accountability: Oil companies must be held accountable for the amount of gas flared. In order to achieve this, a proposal has been made for the adoption of “a satellite based tracking system” which will monitor the amount of flared gas to among other things put a commensurate cost to the revenue loss arising from flared gas and estimate fines due to be paid by operators. The tracking system is also supposed to be able to calculate the amount of unpaid fines by facility owners[8].

 In addition, the Petroleum Industry Bill (PIB)(2012), which has been in the works for a number of years, seeks to address the issue of gas flaring. In particular,  the Bill provides for gas flaring measurement, as well as a specified number of days for which a permit would be issued to an applicant company to flare gas, and the requirement for a gas flaring plan to be submitted by all oil and gas operating companies. 

On another note there is a recommendation that every oil company must be required to identify and outline the measures it has put in place to ensure that environmental damage from gas flaring is minimal. Such policies have been adopted in the Netherlands and Norway which have gas-flaring policies which force oil companies to cater for the environment where they carry out exploration and exploitation of oil and gas. Such policies will directly impact on the gas flaring by oil companies and possibly put an end to gas flaring. [9]

1.     Passage and enforcement of regulatory laws: The passage of the Petroleum Industry Bill (PIB) has been pending for a long time. Although the PIB is far from being the perfected to put an end to gas flaring in Nigeria, it is definitely a step in the right direction.

The only exceptions to the gas flaring rule as stated in the PIB that may be granted by the Minister of Petroleum Resources for a period not longer than 100 days include cases of start-up operations in an oil field, equipment failure, shut down, safety flaring or due to inability of gas customer to off-take[10]

Although the PIB permits gas flaring in the limited circumstances as stated above, the PIB will discourage gas flaring by imposing stiffer penalties, and encouraging investments for utilising or re-injecting gas.  The PIB will also put into effect modern petroleum legal framework and align operation of the Nigerian gas sector to international best practices and also enhance transparency in the sector.[11] The PIB is also focused on putting in place effective measures to ensure that the laws on gas flaring are properly implemented such that the law will not simply ignored with impunity.[12]

 CONCLUSION.
The Nigerian oil and gas are sufficient to cover both domestic demand and exports. The optimum exploitation of every last drop of oil and gas resources can be achieved although the process may be slow, it is not impossible. The passage of the PIB will be a step in the right direction on the journey to end gas flaring; not just for to curb economic loss, but also to put an end to the massive destruction of the land and its people.

The time to stop is long overdue. However putting an end to gas flaring in Nigeria has proven to be more difficult than anticipated by the Nigerian government. This difficulty can be said to be prolonged by the lack of political will to put an end to gas flaring. What is required is not the mere passage or upgrade in laws but a change in focus and attitude of the upstream sector and the government.


By: Abimbola Laoye 
       Managing Partner, H.B Balogun & Co., 





References 
[1]     Femi Asu; Nigeria loses N170bn to gas flaring; http://www.punchng.com/business/business-economy/nigeria-loses-n170bn-to-gas-flaring/
[2]     ibid
[3]     GAS Flaring: The Nigerian Experience; http://www.nigerianobservernews.com/2015/01/10/gas-flaring-nigerian-experience/#sthash.jYIjCfU7.62dWfp3a.dpbs
[4]     ibid
[5]     ibid
[6] By Ifeanyi Izeze; New PIB’s Dec 2012 Deadline: Why Permit Gas Flaring At All?;  http://saharareporters.com/2012/07/24/new-pib%E2%80%99s-dec-2012-deadline-why-permit-gas-flaring-all-ifeanyi-izeze
[7] Olaseni Durojaiye; Changing Approach to Campaign against Gas Flaring in Nigeria; http://www.thisdaylive.com/articles/changing-approach-to-campaign-against-gas-flaring-in-nigeria/209502/
[8]   ibid
[9]   Aderonke Adejugbe and Bayo Onamade; Nigeria: Gas Flaring In Nigeria: Challenges & Investment Opportunities;http://www.mondaq.com/Nigeria/x/331578/Oil+Gas+Electricity/Gas+Flaring+In+Nigeria+Challenges+Investment+Opportunities
[10]  By Ifeanyi Izeze; op cit
[11]  Emeka Ugwuanyiop cit
[12] Aderonke Adejugbe and Bayo Onamade; op cit

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