Welcome by the NGFCP Ministerial Steering Committee
Welcome and thank you for visiting the website of the Nigerian Gas Flare Commercialisation Programme (NGFCP). The policy position of the Federal Government of Nigeria (FGN) is that gas flaring is unacceptable. In this regard, the FGN has initiated a number of actions to reaffirm its commitment to ending the practice of gas flaring in our oil fields. Specifically, the FGN has ratified the Paris Climate Change Agreement, and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030 whilst committing to a national flare-out target by year 2020.
Furthermore, in recognition that flared gas could be harnessed to stimulate economic growth, drive investments and provide jobs in oil producing communities and indeed for Nigerians through the utilization of widely available innovative technologies, the Federal Executive Council (Nigeria’s cabinet) has approved the Nigerian Gas Flare Commercialisation Programme (“NGFCP”). This programme was launched by the Minister of State for Petroleum Resources (“Minister”) on December 13, 2016.
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. 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.
The NGFCP is a special program jointly developed by the Ministry of Petroleum Resources (MPR), the Department of Petroleum Resources (DPR) and the Nigerian National Petroleum Corporation (NNPC). It is managed from the Office of the Honorable Minister of State for Petroleum Resources, Ministry of Petroleum Resources (MPR), Federal Capital Territory (FCT) Abuja, Nigeria through a Steering Committee. It is established to implement the National Gas Policy commitments for stricter regulation on flaring and to provide a pathway to ultimate flare-out.
The Nigerian Oil & Gas Industry ‘‘7Big Wins’’
With 192 tcf of gas reserves, Nigeria has the ninth largest gas reserves in the world. Large quantities of associated gas are produced with crude oil, and a significant quantity is unutilized as approximately 330 Bscf (~19%) is flared annually, making Nigeria the 7th largest emitter of flared gas globally. Paradoxically, the country suffers from an acute energy crisis due, to a large extent, to the inability of the gas sector to meet domestic demand for power generation and other gas utilization projects. This has severely constrained the country’s economic development.
Over the years, poor regulation enforcement and poor oil field practices have led to environmental, health, social and security problems in the Niger Delta region and for Nigeria. Gas flare reduction is amongst the suite of solutions in the FGN’s programs for improving these factors. As part of the “7 Big Wins” the MPR has identified reduction of gas flaring as one of the specific targets under its goals for a ‘‘Gas Revolution”. To this end, a wide range of stakeholders was consulted in the development of the NGFCP.
National Gas Policy – Approved by FEC, June, 2017
Nigeria is the seventh largest gas flaring nation in the world, with over 170 flare sites that flare ~330 bscf of natural gas each year, losing billions of dollars’ worth of economic potential in the process. The NGFCP seeks to reverse this trend by ending gas flaring by 2020.
There is strong political will to achieve this. In 2017, the FGN ratified the Paris Climate Change Agreement, which included gas flaring reduction as a key national greenhouse gas emissions mitigation in the Nationally Determined Contributions (NDCs) and also endorsed the Global Gas Flaring Reduction Partnership’s Zero Routine Flaring Reduction by 2030 Initiative.
The volume of gas flared in Nigeria is substantial, and could otherwise power millions of Nigerian homes as well as industrial areas with electricity access. Apart from the socio-economic value of otherwise using flare gas, flaring has been proven to have serious consequences on environmental health and social impacts in local communities in the Niger Delta and beyond. These include respiratory illnesses, acid rain and corrosion of roofs, amongst others. The potential alternative uses for flare gas, alongside the need to curb negative environmental, social and economic impacts of gas flaring, have made a national strategy for gas flare commercialization urgent and necessary.
From 2005 to 2014, there has been an approximately 70% decrease in total flare volumes nationally (NNPC Statistical Bulletin 2014; EIA Country Overview: Nigeria, 2015). This puts the average annual gas flare reduction rate at 8%, at which rate it will be impossible to achieve the FGN’s target of zero flaring by 2020. The NGFCP has thus been created to implement an action plan that will rapidly attract and accelerate investments in gas flare reduction projects.
Preliminary groundwork prior to launching the NGFCP included diverse case studies and economic analysis of various flare gas utilisation options for the country.
Major highlights from the economic analysis include:
- Harnessing gas from the top 50 flare points would reduce flare gas volumes by 80%, given 2015 gas flare locations and volumes as the baseline;
- Over 170 flare sites collectively flare about 330 bscf of gas produced per year;
- The majority of the gas flaring locations (about 65% of them) are onshore;
- At least 80% of gas from the flaring locations can be viably utilised; and
- About US$ 3.5 billion worth of investments is required to achieve the gas flare commercialisation targets by 2020.
The analysis also shows that the NGFCP will deliver significant social and economic benefits to host communities in gas-rich regions of the Niger Delta, to investors and to the national economy. Benefits would include:
- Curbing pollution in local communities;
- Providing households with clean energy, particularly LPG (cooking gas);
- Job creation, particularly in small and medium scale businesses;
- Increasing electric power generation potential through gas-to-power; and
- Alleviating social unrest.
The Framework for Achieving Zero Gas Flaring by 2020
To mobilize funds and investments to implement flare down projects, the NGFCP is centred on a framework designed to achieve zero gas flaring in Nigeria by 2020. This framework includes four components:
- An open, fair and transparent bidding process
- Opportunity for third party bidders to purchase, if successful in the auction, gas at a price of their choosing with the security of title from the FGN
- Improved flare gas monitoring and flare payment enforcement
- Build the Federal Government’s capabilities and engagement with partners
The goal of the NGFCP is to create a bankable, world class investment product. A structure has been devised to provide project bankability for the Flare Gas Buyers, which is essential to the success of the Programme.
The NGFCP strategy is underpinned by the MPR’s outlook for the energy sector and the need to adapt to substantial changes in the world around and in Nigeria, and especially the way business is done in Nigeria. The world and Nigeria need more and cleaner energy. Nigeria plans to play a positive role in such an energy transition, because it makes social, environmental and commercial sense. Prudent management and delivery of the NGFCP and other portfolios in the MPR will thus strengthen our focus and help Nigeria play a greater role in the long-term transition to a lower-carbon world.
The NGFCP is an opportunity for Federal and State governments, industry and local communities to work together to resolve a serious environmental problem stemming from upstream hydrocarbon production in Nigeria. A co-created, co-owned and shared long-term view of the opportunity to resolve this problem and alignment of interests and efforts from all parties involved is essential. No doubt the program will prove to be a win – win for all involved, and the benefits should be jointly claimed.
Harnessing Nigeria's Flare Gas For Sustainable Value & Wealth Creation.NGFCP