FG to start commercialization of gas flared

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…commence Pre-Qualification and evaluation of over 254 companies

By Kayode Ajayi

Following the federal government moves to utilize 80 per cent of gas being flared in other to prevent air pollution in the oil producing communities due to a report that Nigeria accounts for 40 per cent of all gas flared in Africa.

The Department of Petroleum Resources (DPR) commenced the evaluation of Statement of Qualification (SOQ) of over 254 companies who had showed interest in Nigerian Gas Flare Commercialisation Programme (NGFCP).

The Director of DPR, Mordecai Baba Ladan, who was represented by his Deputy, Mr. Olusanya Bajomo, the Deputy Director, Gas Monitoring and Regulation, said at the opening ceremony of the pre-qualification exercise in Lagos on Monday the committees setup was meant to evaluate those companies that had indicated interest to participate in the gas flare commercialization which was an initiative of the former Minister of Petroleum Rersources,  Ibe Kachikwu.

Other committee members include the Proposal Evaluation Committee (PEC), International Observer Group (IOG), representatives of the Nigerian Extractive Industry Transparency Initiative (NEITI), NNPC, DPR and Ministry of Petroleum Resources (MPR).

Bajomo explained that about 850 companies that earlier showed interest when the advert was first placed out dropped intrest since the applications fee attracts 1,000 dollars (N360,000) and other processing documentation, he stated that this was done to know those who are really serious.

He said the DPR has currently sourced for  almost 178 flare gas points within and across the oil producing states, he confirmed  that this was part of the President Muhammadu Buhari and former minister of State for Petroleum Resources agenda in the last administration to drastically minimize gas flare to zero level in Nigeria come 2020.

According to him, “Today, we are commencing the evaluation of statement of qualifications for the Nigerian Gas Flare Commercialization Programme, following the advertisement that was placed seeking for interested parties who are willing to work with Federal Government by extracting away the flared gas.

“We are ready to create document for the interested parties, the documents is to ascertain that those companies that have showed interest and submitted their statement of qualification in response to the advert placed in 2018 are evaluated, which after the evaluation, the successful shortlisted companies will proceed to the next phase of the exercise.

Bajomo also said the Nigerian Gas Commercialization Programme, which is part of government’s campaign flagship programme will create opportunity to take away flared gas going by the provision of Petroleum Act, and will also authorized gas commercialization through third party companies to promote investment draw people who are qualified technically, who have the capability and experience to work in Niger Delta to promote and support gas flare to market. Meanwhile, we are currently doing some form of preparatory evaluation process that will enable us screen and collate the list of companies that are qualify to the next stage,” he said.

To support  Bajomo, Mr. Oluwole Ogunsola, the Deputy Manager, Gas Production and Monitoring Unit, in a statement said, “Federal Government through the DPR and other stakeholders are interested in incredible companies with technical capacity and financial capability to be able to take flare gas to market and that is why we are accommodating more parties at this time.

“However, there are no limitations to the number of firms that could undertake the programme. But importantly, you will discover this as you go along, however, some party will be dropped eventually, it’s like a funnel, it would go narrower until we get to the key companies that will be able to take the flared gas to market. So, government is not constraining it so that will get the best out of the process.

“Based on the provision of the law on paragraph 35B of the Petroleum Act, First Schedule, stipulated that government has the right on the flared gas, so government has invoked that right by means of deregulation of the flared gas and Prevention of Waste and Pollution Regulation of 2018, signed by Mr President and minister of State, Petroleum Resources, which came into effect July 2018

”By that regulation, government owns the flared gas and the producer has not title to the flared gas, government can now allocate it to competent companies that can take it to market place, so, its government right.

“However, the programme was to make the operators to be able to make this work, so there are mechanism, well designed to protect the operators, such that if the guarantee a certain volume to third party offtaker, they can even get some fees in term of connection agreement and be saved from penalty of flaring.

Ogunsola add that, “We are designing a programme that will intensify the scheme. First, the regulation has increased the flared penalty, if you are producing 4,500 barrel on OML you pay 50 cent on flare, if you are doing over 10,000 barrel you pay 2 dollars, that’s already incentive to them to make it happen.”