Expects additional $100m yearly income
THE Federal Government has concluded plans to sell 50 gas-flaring clusters in the Niger Delta, under the Nigerian Gas Flare Commercialisation Programme, NGFCP, thus generating $1 billion as revenue.
The programme, which is in line with the Petroleum Industry Act, PIA, would also generate between $80 million and $100 million per annum from sales of flared gas, in addition to tax revenues.
The NGFCP is also targeted at significantly reducing gas flaring, while creating many multiplier effects, especially jobs creation, technology transfer and energy transition.
Checks by Vanguard showed that NGFCP dated back to 2016 when it was conceptualized by the Ministry of Petroleum Resources for implementation in 2018 and 2019 through the defunct Department of Petroleum Resources, DPR.
Past challenges
It showed that the programme encountered some challenges, including administrative bottlenecks, prolonged effects of the COVID-19 pandemic and its impact on the global oil and gas industry which adversely affected the previous bid process.
These and other factors culminated in the elongation of the previous bid process and, as such the production profile and flare forecast data upon which the earlier programme was based, became questionable and could not support credible proposals or projects.
It showed that with the emergence of the PIA and Nigerian Upstream Petroleum Regulatory Commission, NUPRC, fresh efforts were made to restructure and relaunch the programme in August 2022, ensuring end-to-end value was established.
The Chief Executive, NUPRC, Gbenga Komolafe, who confirmed these in a telephone interview with Vanguard, weekend, said: “When talking about flared gas commercialisation, it is important to think in aggregate value to the economy from the programme, rather than just revenues.
”The key objective of the NGFCP is to eliminate routine gas flaring through third-party investments. Thus, the programme offers the opportunity to the investing public to create value from the gas that is being flared, while the commission also delivers on its mandate to stop routine gas flaring.
“Think of the multiplier effect of the NGFCP on the economy, including job creation, direct and indirect, creation of cottage industry and other economic activities around flaring communities, improved health, and social economic well-being in producing areas, enhanced social license to operate, to mention but a few.
“When considered holistically, the total GDP impact of implementing the NGFCP could be over one billion US dollars.
“We expect additional sources of revenue for the government from taxes collected from new ventures created and modest revenues from the fees charged during the auction process. It is, however, anticipated that the commission will generate between $80 million and $100 million per annum from sales of flared gas, in addition to tax revenues.
New measures
Already, he said the commission had taken new measures, including a clear road map, to cause a transformational change in the regulatory business environment, assessment of legacy programmes and initiatives of the defunct DPR, before launching the programme on September 30, 2022.
He said: “Following its inauguration in August 2022, the NGFCP team indeed hit the ground running and we are confident that an accelerated implementation will be realized as intended. It is noteworthy though, that the Commission also engaged the investment communities in a pre-bidders’ conference on October 19 to feel the pulse of the market and gauge the expectations of interested parties.
“We have fed the valuable inputs received from the international conference into the programme to ensure the successful and seamless actualization of our objectives. In response to the market, the commission extended the Statement of Qualification, SOQ, submission deadline to November 28, 2022, to enable wider participation by various interest groups in the opportunities afforded by this first-of-its-kind auction round.
“The commission is committed to a transparent and fair bid process that would achieve award and project implementation to end flares at the earliest practicable timelines. Moreover, the bidding process is competitive, thus we cannot guarantee that every bidder will have a flare site allotted to them after the bid process.
“Regarding the duration, the commission is focused on accelerated delivery because of lessons learnt. The earlier the process concludes, and flare gas buyers can develop their projects, the better.
“However, as a business enabler, we allow the market to speak to us, we evaluate the concerns, and challenges of investors and are prepared to optimise the timelines to guarantee programme success and value to investors.
‘The recent one month extension to the Request for Qualification, RFQ, process is a clear testament to that fact.
More impact on Nigeria’s economy
Commenting on more impact of the programme, he said: “The NGFCP will have a tremendous positive impact on Nigerians and the global industry as the first-of-its-kind flare auction where access to flare gas at several flare sites will be granted to third parties for commercialisation.
”Some of the potential impacts of the programme include reduction of environmental pollution and deleterious health implications from gas flaring; elimination of resource wastage due to burning of natural gas by producers; creation of gas products with economic value by the investors; and increase of economic activities and job creation in the Niger Delta.
”Others are creation of additional sources of tax revenue for the government; freedom to operate in host communities and associated benefits of knock-on impact on improved security in producing areas; potential to export competencies in flare auction to other jurisdictions; creation of thousands of direct and indirect jobs; and improvement in the perception of Nigeria in the global climate change discourse.”
Impact of PIA
Komolafe, who noted that the execution of the project would not have been possible without the PIA, said: “Be assured that the PIA and its enhanced legal and regulatory enablers have addressed the bottlenecks that hitherto impeded the expeditious implementation of the Programme. We are therefore poised to deliver the NGFCP.”
Nigeria should focus more on gas —AEC, expert
In its latest report, The State of African Energy 2023 Outlook, obtained by Vanguard, the African Energy Chamber, AEC, maintained that with its over 200 trillion standard cubic feet of gas reserves, the world was looking up to Nigeria to harness its gas not only for domestic consumption but also export to other nations, especially as the European Union ban on Russia was expected to come into effect on December 5, 2022.“However, commenting on the NGFCP, the National President, of the Oil and Gas Service Providers Association of Nigeria, Mazi Colman Obasi, said: “Nigeria has an adequate endowment to play at the domestic and global space.
”What we need is just the right environment, policies and incentives to attract and retain competent and experienced personnel that have the capacity to deploy suitable technologies.”
(VANGUARD)
