Gas Flaring: Petroleum Ministry, DPR Propose Deadline Extension

Gas Flaring: Petroleum Ministry, DPR Propose Deadline Extension

…As Chief Executives Shun Reps Invitation

Chief Executives of oil industries in the country Tuesday failed to honour an invitation to a public hearing jointly organized by the House of R e p r e s e n t a t i v e s ' Committees on Gas Resources and Justice opting rather to send their subordinates whom the lawmakers consider as incapable. Condemning what he termed as insensitivity of the multi-nationals to the plight of Nigerians, Emeka Ikedioha, the Chief Whip of the House of Representatives urged the officers present to "take words to your bosses that this House is not happy with them".

He frowned at a situation where he said members of the public in the oil sector criticize lawmakers for not promulgating enabling laws for the oil sector, adding "but whenever we invite you to come and interact with us so that these laws would be made, you do not honour our invitations. But this interaction is necessary for your operations", he added. Similarly, the Honourable Minister of State, Petroleum Resources, Odein Ajuomogobia registering the angst of his ministry over the activities of the oil chief executives, disclosed that even his ministry's invitation to them to meet over the proposed bill before meeting the lawmakers proved abortive.

The public hearing is on the proposed Amendment to the Associated Gas Re-injection Act No.99 of 1979. CAP A 25 Laws of the Federation of Nigeria" which seeks to review the issues and challenges surrounding the optimal utilization of associated gas (AG) from crude oil production in Nigeria. It also seeks to look at the vexatious issue of gas flaring in the various fields of oil production in the Niger Delta and offshore Nigeria. The Act was promulgated in 1979 and aimed at encouraging gas re-injection and bringing to an end the uncontrolled flaring of the associated gas from oil production fields in Nigeria.

But Tuesday's session with stakeholders witnessed the absence of key officials of multi-national oil companies invited as the Shell Petroleum Development Company (SPDC) sent only a General Manager in the company to represent them. Other multi-national oil companies who sent in their low-ranking officials include Total, Exon Mobil, Chevron, Nigeria Agip Oil Company (NAOC), Nigeria LNG Limited, Brass LNG and the Nigerian National Petroleum Corporation (NNPC) represented by Prof. Yinka Omerogbe, a director. Meanwhile, both the Ministry of Petroleum Resources and the Directorate of Petroleum Resources (DPR) agreed yesterday that the imposition of fines and penalties against multi-national oil companies who are still flaring gas in the country as against the 2008 deadline had failed to bring a lasting solution to the problem.

Ajuomogobia presenting the position of his ministry said Nigeria would never achieve a zero gas flaring until such a period when projects and infrastructures requiring the use of associated gas in the country are put in place. According to him, President Yar'Adua is determined to achieve this before the end of his administration even as he proposed the removal of penalties on gas flaring and the extension of the deadline to 2010. The DPR speaking in agreement that imposition of penalties have failed to be the solution "as these oil companies are willing to pay", stated that the amendment must be such that would strengthen the act and arm it with the enabling will to effectively control gas flaring and bring about the optimal utilization of associated gas.

Accordingly, DPR proposed a review of the temporary gas flaring penalty for any gas flaring "in excess of approved gas volumes during precommissioning and commissioning operations, equipment maintenance and operation upset to not less than $3.50 per 1000scf of gas flared". It added that "any operator involved in routine or continuous gas flaring shall be liable to pay a fine that shall be determined by the prevailing international gas market price, such fines shall not be counted as part of cost in the case of production sharing contract or joint venture". On posting of incorrect gas flared volumes, DPR said the act should impose a penalty of $100,000 on the operator in addition to the operator paying the international gas market price for the difference in declared volumes.

Forcados Shipments: Shell Declares Force Majeure

The Anglo Duct Oil Company, the Shell P e t r o l e u m Development Company of Nigeria (SPDC) has declared a force Majeure on its Forcados Oil Shipments. This is coming on the heels of the hard explosion that rocked the Trans Escravos oil pipelines last week, while sounding it loud and clear that the Bonny shipment will also remain affected by the situation. Speaking to journalists on the matter, the media manager of Shell Companies in Nigeria, Mr. Tony Okonedo stated categorically that the Force Majeure was actually declared on loading from the Forcaos terminal beginning from March 7, stressing that it is likely to affect the deliveries for the months of March and April respectively.

Niger Delta STANDARD check reveals that output from the Forcados terminal hovers around 100,000 to 120,000 barrels per day, from the installed capacity of 380,000 barrels per day. Okonedo attributed the incident to willful damage, saying, "Crude containments and recovery measures have been initiated preparatory to clean up and repairs. Initial investigation indicates that the development is attributable to willful damage".

Continuing, Okonedo said, "A number of facilities have been shut-in to minimize potential damage to the environment. But we do not wish to engage in speculation regarding affected output so as not to preempt outcome of ongoing investigation". The spokesman for Shell, Mr. Precious Okolobo, when contacted on phone confirmed the development, noting that the company was still investigating to determine the extent of damage and if possible to unravel the identity of those behind the incident. It would be recalled that last week Shell confirmed that there had been explosion on its 24-inch Trans Escravos Pipeline (TEP) in Delta State.

The incident, according to sources, was first reported by the company's surveillance personnel on February 28, 2009. The affected portion of the pipeline runs between an Ijaw community of Yokri in Ogulagha Kingdom and Ogidigben in an Itsekiri community in Warri South West LGA of the state. Niger Delta STANDARD gathered that the development has shut down crude oil supply to the North and South Bank operations of the SPDC joint venture including the crude supply to the Forcados Terminal. Earlier, the Shell Company gathered that the Trans Escravos Pipeline was blown up by suspected armed bandits who are allegedly working for illegal oil bunkering barons in the area.