Crude oil exploration and production companies in Nigeria now face maximum sanctions of oil well or acreage seizure by the Federal Government for flaring gas in the course of production activities beginning from January 1, 2008.
The Department of Petroleum Resources on Tuesday handed down the threat on the second day of the Stakeholders� Forum on Gas Development in conformity with President Yar�Adua�s declaration on Monday that the December 2008 flare out deadline remained sacrosanct.
Delivering a paper on the regulatory framework for the development of the industry, the Deputy Director, Gas Division, DPR, Mr. Billy Agha, said that the Federal Government would not shift the deadline for gas flare out as advocated by operators.
The Area Manager, Nigeria, Exxon Mobil Corporation, Ms. Kim Bates, who called for the extension of the deadline recently, said issues like insecurity in the Niger Delta, pricing regime and funding for infrastructure development made the January 1, 2008 deadline unrealistic.
She said that nothing much had changed about the gas flaring situation in Nigeria despite incentives given oil companies to flare out. On the contrary, he said that oil companies in Nigeria still flared an average of 2.5billion standard cubic feet of gas per day.
According to him, this translates to $1.2m per day when calculated at the export price of about 90 cents per cubic feet and $8.75m when sold at the domestic market, especially to cement factories that could pay much as $3.5 per unit and $1.875m per day at aggregate market price.
Agha said that the government would no longer accept the excuse that there were no facilities to evacuate associated gas often given by the oil exploration and production companies.
He said government would consider any shut-in crude oil on account of acreage or oil well seizure as a deferred income for the coming generation rather than a loss, to save the environment and the health of the host communities.
Other sanctions to be imposed on the oil companies for gas flaring, besides the seizure of acreages, include closure of oil well and payment of fine for non-disclosure of flare to government.
Besides, provisions of the existing laws and regulations that permit the government to tap gas at flare point free of charge, would also be enforced by empowering interested Nigerians with the technical know-how to carry out such activities.
He said that the operators had deceived the government by diverting incentives given them to flare out associated gas to develop of non-associated gas.
Associated gas is produced and largely flared in Nigeria in the course of crude oil exploration and production activities, whereas non-associated gas entails specific efforts at gas production.
Agha punctured past claims by the Nigerian National Petroleum Corporation that gas flaring had been reduced to about 45 per cent over the last six years from over 70 per cent about eight years ago.
He said that 117 out of 139 crude oil fields in Nigeria still flared at about 80 per cent as at the first quarter of 2007.
Nov292007