……. DPR approves 206 firms for gas flare deal
The Federal Government has invoked its takeover rights on international oil companies (IOCs) that flare gas as it grabbed about 880 billion cubic feet of the commodity from firms that have no tenable plans to commercialise the flared gas.
The 880 billion cubic feet, a document of the Department of Petroleum Resources (DPR) showed, is the 11 per cent of the eight trillion cubic feet total volume of associated and non-associated gas produced in the country, which are flared annually.
The Federal Government has also started works on the sale of the gas taken over from the producers to 206 firms approved for gas flare commercialisation deals.
Confirming the takeover as part of the gas commercialisation process, the DPR noted that this step “is the invocation of its rights to takeover flare gas by IOCs that have no tenable plans to commercialise the flared gas.”
From the beginning “206 companies (off-takers) have been approved to buy the gas,” the document read.
These preferred bidders, the document read further, “will have execution of gas commercial agreement with the government through the DPR. This is because the government, not the producers, is now the owner of the gas.”
On LPG development, the DPR stated that 364 licences and approvals were issued in 2018.
“The country has also achieved a 15 per cent rise in the consumption of Liquefied Petroleum Gas (LPG) also known as cooking gas from the year end of 2017 to 2018.
“About 304,000mt consumption in 2015 has now grown to 486,865mt (2018).”
On gas reserves, the document added that Nigeria had 200.79 trillion cubic feet in January 2019.
“This figure is split almost equally between associated and non-associated gas production. The figure stood at 199.09trn cf last year. The target was set for 2020, but was met earlier by 2019,” the DPR said.
The gas production also stands between 7.8trn cf and 8.3trn cf. Forty per cent of this goes into export. Some 3.5trn cf is being taken by NLNG for exports while 17 per cent goes to local market.
“Thirty-one per cent goes into field production and reinjection. Twenty-two per cent of this is due to re-injection.
“Meanwhile, 11 per cent is still being flared,” the document read.
Nigeria abandoned fiscal, legal and commercial frameworks for gas after the discovery of oil in 1958, and this is affecting the country until date.
“It was not until 1969 when first mention was made of gas utilisation policy. In 1989, the NLNG came on board and this helped. Ever since 1989, there is no fundamental change until recently when the 2018 law was passed and signed for increase in penalty and for third party gas flare commercialisation,” the document stated, adding, “despite this, we have kept discovering gas, though associated and lately non-associated means.”
It highlighted the new development in the gas space to include the Nigerian Gas Transportation Network Code, as well as the gas flaring commercialisation programme.
The Nigerian Gas Transportation Network Code, the DPR said, was a contractual framework between the network operator and the network users, serving as an important component of gas business and transactions in the Nigerian domestic gas market.
“The code will ensure fair and non-discriminatory open access to the gas transmission network systems in order to promote competitiveness and drive economic growth in line with goals of the Nigerian Gas Master Plan and the National Gas Policy.
The code is patterned after the United Kingdom Uniform Code (UNC) to entrench transparency in the gas industry. It is also to guarantee fair and non-discriminatory access to the gas network as well as to promote gas trading and deepen domestic gas penetration in-country.
