Gas expansion programme and massive employment opportunities, By Jide Ayobolu


Minister of State for Petroleum Resources, Chief Timipre Sylva, says the implementation of the National Gas Expansion Programme (NGEP) will create 12 million direct and indirect jobs across the country.

A statement issued by Mr Justice Derefaka, Technical Adviser on Gas Business and Policy Implementation to the Minister, said Sylva made the assertion at the recently concluded Ministerial Mandate Performance Scorecard Review Session. Sylva said:” In terms of impact, the NGEP will create over 12 million direct and indirect jobs and human capacity development nationwide. “I, hereby declare NGEP as the flagship programme of the ministry based on the outstanding work the committee is doing.

“I have surrendered my vehicles to the NGEP to convert all to dual fuel with use of either Auto Liquefied Petroleum Gas (LPG) or Auto Condensed Natural Gas (CNG).

“And on that premise, I now have the moral standing to direct that all Chief Executive Officers and their able lieutenants do the same by converting all their official vehicles to run on autogas.”

According to him, this will demonstrate to the Nigerian people that the government meant it when it declared this year “The Year of Gas”. He said other programmes initiated to boost gas usage in the country include the Nigeria Gas Flare Commercialisation Programme (NGFCP) and flag off of the National Gas Transportation Network Code (NGTNC).

Sylva said it also includes the ongoing Marginal Field Bid Round, flag off of the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline and Committee on Gas Sector-Wide Review of the Domestic Gas Pricing Framework.

“These programmes and activities are geared towards achieving the mandate handed to us by Mr President. “It is therefore my earnest hope that we will carefully drive these programmes and activities to a logical conclusion,” he said. Also, Dr Abner Ishaku, Technical Adviser, Downstream to the Petroleum Minister, said the promotion of gas as replacement fuel will also save the nation the much-needed Forex expended on imported fuels. Ishaku noted that it would provide alternatives to Premium Motor Spirit, Automotive Gas Oil and Dual Purpose Kerosene for Nigerians.

On his part, Derefaka said the initiatives were geared towards making Nigeria the hub of gas production and utilisation on the African continent, in addition to optimising the nation’s enormous gas potential.

Derefaka said: “The world is gradually turning away from crude oil to gas to drive their economies. Our collective efforts should be putting all machineries in place to make gas a critical catalyst to our economic development.

“The approach should include the diversification of our economy, efficient management of revenues, commitment to local value addition in the gas industry.

“In the long run, a sustained decline in the price of oil may not be a bad thing for Nigeria as this may push us to diversify our economy using gas and away from dependence on oil.”

Derefaka, who is also the programme Manager, NGFCP said Nigeria needs to use gas and invest in critical sectors of our economies such as education, health, infrastructure and agriculture.

According to him, this will provide a solid base for industrialisation, local value addition, economic development and sustainable growth.

Derefaka said gas has a leading role as a key enabler to the diversification and growth of Nigeria’s broader economy through adequate power generation, provision of feedstock for value-adding manufacturing, and increased government revenue from LNG.

The NGFCP is designed as the strategy to implement the policy objectives of the FGN for the elimination of gas flares with potentially enormous multiplier and development outcomes for Nigeria.

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The objective 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. It is a unique and historic opportunity to attract major investment in economically viable gas flare capture projects whilst permanently addressing a 60-year environmental problem in Nigeria.

Previous efforts by the FGN to curb incidences of gas flaring have yielded little fruit. The gas-flaring charges imposed by the Associated Gas Reinjection Act (AGRA) on oil-producing companies are comparably negligible.

To compound this issue, the Tax Appeal Tribunal has held that levies paid for flaring gas under the AGRA are tax-deductible.

The implication is that oil-producing companies can flare as much gas as they want to, and deduct the levies they pay for flaring this gas from their taxable income. To stem the tide of significant economic losses arising from gas flaring and the attendant environmental damage, the FGN introduced the NGFCP.

Under the NGFCP, the FGN shall exercise its ownership rights of all gas flared in Nigeria. Paragraph 35(b)(i) of the 1st Schedule to the Petroleum Act CAP P10, LFN 2004 provides that the Minister of Petroleum may, in the public interest, impose terms and conditions applying to any natural gas discovered, including the right of the FGN to take any associated gas that would have been flared either free of cost at the flare or at an agreed cost. To this end, the FGN shall, under the NGFCP, grant licences to third parties (i.e. licensees) to access and collect such gas on behalf of the FGN from the flare points of oil-producing companies.

The licensees will then be required to use the necessary technology to set up the facilities for the delivery and collection of gas at the flare points. Under the NGFCP, all identified gas flare points are part of the programme and compliance with the programme will be a licence condition for the award and renewal of all Oil Mining Leases and Marginal Fields.

Nigeria flares 17.2 billion m3 of natural gas per year in conjunction with the exploration of crude oil in the Niger Delta. This high level of gas flaring is equal to approximately one-quarter of the current power consumption of the African continent.

Even though we have grown to be fairly dependent on oil and it has become the centre of current industrial development and economic activities, we rarely consider how oil exploration and exploitation processes create environmental, health, and social problems in local communities near oil-producing fields.

The Nigerian government has not enforced environmental regulations effectively because of the overlapping and conflicting jurisdiction of separate governmental agencies governing petroleum and the environment as well as because of non-transparent governance mechanisms. Neither the Federal Environmental Protection Agency (FEPA) nor the Department of Petroleum Resources (DPR) has implemented anti-flaring policies for natural gas waste from oil production, nor have they monitored the emissions to ensure compliance. The Federal Environmental Protection Agency (FEPA) has had the authority to issue standards for water, air and land pollution and has had the authority to make regulations for the oil industry. However, in some cases, their regulations conflict with the Department of Petroleum Resources (DPR)’s regulations started in 1991 for oil exploration.

From an economic perspective, the Nigerian government’s main interest in the oil industry is to maximize its monetary profits from oil production. Oil companies find it more economically expedient to flare the natural gas and pay the insignificant fine than to re-inject the gas back into the oil wells.

Additionally, because there is an insufficient energy market especially in rural areas, oil companies do not see an economic incentive to collect the gas.

From a social perspective, the oil-producing communities have experienced severe marginalization and neglect. The environment and human health have frequently been a secondary consideration for oil companies and the Nigerian government.

However, although there may be reasons for the continuous gas flaring, there are many strong arguments suggesting that it should be stopped.

Corporations’ accountability to the people and environment surrounding them imply that oil companies should be required to re-inject the gas, to recover it, or to shut down any extraction facilities in which the gas flaring is occurring. Because of this massive oil exploration in the Niger Delta, the ramifications for human health, local culture, indigenous self-determination, and the environment are severe.

Gas flaring contributes to climate change, which has serious implications for both Nigeria and the rest of the world. The burning of fossil fuel, mainly coal, oil and gas-greenhouse gases-has led to warming up the world and is projected to get much, much worse during the course of the 21st century according to the intergovernmental panel on climate change (IPCC).

This scientific body was set up in 1988 by the UN and the World Meteorological Organization to consider climate change. Climate change is particularly serious for developing countries, and Africa as a continent is regarded as highly vulnerable with limited ability to adapt. Gas flaring contributes to climate change by the emission of carbon dioxide, the main greenhouse gas. Venting of the gas without burning, a practice for which flaring seems often to be treated as a synonym, releases methane, the second main greenhouse gas. Together these gases make up about 80% of global warming to date.

Jide Ajobolu is a Lagos-based public affairs analyst

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