Nigeria’s anti-flaring, spillage laws: How the FG fires water bullets
…millions at risk in the Niger Delta
Benchmarking Nigeria’s major economic sector requires stringent laws that could drive investment in renewables and protect lives from pollution. The Federal Government, however, appears to be romancing the oil companies at the detriment of the populace.
Tersoo Agber
With an estimated 192 trillion cubic feet of natural gas reserves, Nigeria is one of the top ten countries with the largest gas reserves in the world. If well harnessed and monetized, the country could be raking in billions of dollars in addition to oil revenue.
Roughly over 50 per cent of gas deposits are found in the nation’s crude oil around the Niger Delta region. Once lifted with oil, the gas must either be extracted as an alternative source of energy or flared off as a by-product. Oil drillers in the country would rather avoid the cost of producing and refining gas; hence their preference for crude exports.
Globally, about 200 billion cubic metres of gas is flared annually. Nigeria is said to be the 7th largest gas flaring country in the world with over 17 billion cubic metres of flared gas annually with attendant environmental hazards and health problems, according to the revelations of the Senior Technical Adviser to the Minister of State for Petroleum Resources, Gbite Adeniji.
In his presentation titled: ‘Roadmap to end Routine Gas Flaring by 2020’, which he presented at the second West African International Petroleum Exhibition and Conference held recently in Lagos, Nigeria, Gbite mentioned some of the hazards to include emission of greenhouse gases such as methane and carbon dioxide that contribute to climate change, release of particles that cause acidic rain and other acute health problems such as leukaemia , aplastic anaemia, asthma, bronchitis, premature mortality, among others.
Millions of Nigerians are vulnerable to health hazards caused by gas emissions as a result of flaring, but the most vulnerable and endangered region is the Niger Delta, where the largest deposits of gas and oil reserves are found.
The United Nations Environmental Programme (UNEP) reported in 2016 that the region was one of the most polluted areas inhabited by humans on earth. Coupled with oil spillage, the report disclosed that there was high concentration of hydrocarbon and benzene, two carcinogens that exposed the people of Ogoniland and environs to perpetual lack of portable drinking water.
It also found from water samples that hydrocarbon was over 1000 times above the WHO-recommended standard for drinking water. This was said to have permeated over 122 square kilometres, covering more than 220 locations densely or sparsely populated.
Among other recommendations, UNEP highlighted the threat of pollution to lives in that region and called on the Federal Government to initiate measures for cleanup, which would take at least 30 years with an initial capital commitment of $1 billion to be paid by oil companies indicted for causing the enormous damage and the FG.
One of the major oil companies found guilty of pollution was the Royal Dutch Shell, which was the first to discover oil in the region in 1956. Other culpable foreign oil companies include Chevron, ExxonMobil, Shell Petroleum Development Corporation (SPDC), Total, Eniagip, Addax Petroleum, Conoco Phillips, Petrobras, Statoil hydro and many others.
Laws without hands
In attempts to combat the corrosive effects of pollution resulting from gas flaring and oil spillage, there have been several pronouncements and assents to bills that seek to curtail excesses of oil companies in the country. But the flippant attitudes being exhibited by the companies have rather unveiled a lack of seriousness on the part of the government.
For instance, the Petroleum Act of 1969 remains the primary law regulating oil and gas exploration activities in Nigeria. The Petroleum (Drilling and Production) Act 1979, made pursuant to the Petroleum Act, provides that the licensee or lessee of an Oil Mining Licence (OML) shall, not later than five years after the commencement of production, submit to the Minister of Petroleum Resources, a feasibility study, programme or proposals that it may have for the utilisation of any natural gas that has been discovered in the relevant area.
Unfortunately, this provision of the law hasn’t been adhered to by the companies and there hasn’t been any penalty for defaulters. Another grey area in the law is that oil companies have the permission to flare gas for a period of five years before submitting the feasibility report. With these and other shortcomings, a concrete step to regulate gas flaring in Nigeria was reached in 1979 with the enactment of the Associated Gas Re-Injection Act.
How has the AGRIA fared? The act became the first anti-gas flaring regulatory framework in Nigeria with the primary intent and purpose of phasing out gas flaring in Nigeria. It was the statutory response to the environmental impacts of gas flare, fashioned out to compel every company producing oil and gas in Nigeria to submit preliminary programme for gas re-injections and detail plans for implementation of gas re-injection.
Section 1 of the Act states thus; ‘Notwithstanding the provisions of Regulation 42 of the Petroleum (Drilling and Production) Regulations made under the Petroleum Act, every company producing oil and gas in Nigeria shall, not later than 1 April, 1980, submit to the Minister a preliminary programme for(a) schemes for the viable utilisation of all associated gas produced from a field or groups of fields;(b) project or projects to re-inject all gas produced in association with oil but not utilised in an industrial project’.
The Act placed a duty on oil companies to submit detailed programmes and plans for implementation of gas re-injection not later than 1 October, 1980.
Under the same Act, no company engaged in the production of oil or gas shall, after 1 January, 1984, flare gas produced in association with oil without the permission in writing of the Minister. The Minister is vested with the power to issue certificates to an oil company to continue to flare gas if such a company pays the sum prescribed by the Minister. Invariably, the law has always provided for application for permits to be granted by the Minister provided the applicant pays the amount prescribed by the Minister, without providing for strict measures to ensure its effectiveness.
Notably, the bill, which was intended to prohibit gas flaring as a measure for environmental protection, was contradicted by the permission given to oil companies to continue flaring gas on the payment of minimal fees.
The Petroleum Industry Bill
After many years of working, overhauling the legislative framework of the oil and gas industry in Nigeria, the Nigerian government made a significant legislative effort to combat the menace of gas flaring in Nigeria through the Petroleum Industry Bill in 2012.
The Bill seeks to consolidate all existing oil and gas in the country into one piece of legislation by addressing certain fundamental issues as the dichotomy between oil and gas regimes; progressive acreage management, among others.
The PIB is an Act that provides for the establishment of legal, fiscal and regulatory framework for the Petroleum industry in Nigeria and for other related matters. Part 1 of the Act lists a number of objectives which include the creation of conducive business environment for petroleum operations, enhancement of exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people, creation of an efficient and effective regulatory agency, among many others.
Of particular interest is the provision of Part 1, Section 1, Subsection j, which enumerates another objective of the Act as being to ‘protect health, safety and the environment in the course of petroleum operations; for the benefit of the Nigerian people.
Regrettably, this provision is a contradiction to what is obtainable in the sense that it still offers no protection on the health of citizens in vulnerable locations where gas flaring persists.
A comparison of the PIB and the Associated Gas Re-Injection Act of 1979 reveals a similarity between the two legislations, as the PIB does not out rightly prohibit gas flaring in Nigeria. Rather, the Bill makes provision for the payment of penalties for gas flaring violations, a mere replication of the earlier Acts. Specifically, Section 201of the Bill stipulates that the ‘lessee shall pay such gas flaring penalties as the Minister may determine from time to time’.
There is also an added obligation on the part of the lessee to install all such measurement equipment as ordered by the inspectorate to properly measure the amount of gas being flared.
Although the above regulations have contributed to the drastic reduction of the proportion of natural gas flared which was 90-99% prior to 1980, it is worth mentioning that the provision of Section 201, which arrogates to the Minister the sole responsibility of determining the penalties for violations, is too open-ended and subject to the whims and caprices of the Minister.
In a country where corruption is endemic, the power so granted to the Minister is likely to be abused. Perhaps, this accounts for the too many corruption cases leveled against past ministers of the sector.
NGFCP, the newly-born old baby
After many failed laws, the government appears not to have learnt some lessons. In December, 2016, the Minister of State for Petroleum, Emmanuel Ibe Kachukwu, launched the Nigeria Gas Flare Commercialisation Programme (NGFCP) with a mandate to achieve zero gas flaring in Nigeria by 2020.
Two years down the line, the NGFCP appears more like a toothless bulldog. Outlining its roadmap at WAIPEC, Chairman, Ministerial Steering Committee on NGFCP, Gbite Adeniji, said harnessing gas from the top 50 flare points would drastically reduce volume of flared gas by 80 per cent. The same amount can be utilized in alternative energy sources.
However, the NGFCP requires $3.5 billion worth of investment to achieve its mandate by 2020. But two years after, no serious prospects have been made public; at least not to the knowledge of Business Eye Magazine.
The NGFCP may have been hoodwinked to believe it can actually end a common practice, which has seen the oil companies and the Federal Government in romantic relationship, such that if threatened, might end up in chaos.
Lamentations from the Niger Delta – the sulphuric effects of gas flaring
In recent times, communities in Rivers and Bayelsa States have experienced earth tremors. Yenagoa, capital of Bayelsa, and Oboburu in Egiland,Ogba kingdom in Ogba/Egbema/Ndoni local government, Rivers State, where seismic operations and eventual gas flaring occur on daily basis are examples.
According to a report anchored by Alagoa Morris and Akpotu Ziworitin published by Environmental Rights Action/Friends Of The Earth Nigeria(ERA/FoEN) in 2014, every oil company operating in the Niger Delta region flare gas daily. Joseph Obari, Spokesman for Shell Petroleum Development Company Limited, SPDC, and Onyekachi Omenuko, Deputy General Manager, Public Affairs & Communication, Port Harcourt District, TOTAL E&P, in separate interviews with BUSINESS EYE, confirmed the environmental body’s position on gas flaring. Mr. Obari, who, spoke with the magazine, explained that “Shell wants to “power progress together by providing more and cleaner energy solutions”. AGIP Oil is another familiar face in the business of gas flaring in the Niger Delta region. The magazine was unable to speak with the company as at press time.
The ERA report of 2014 observed that though the Niger Delta region is not located on volcanic bed, vibrations occasioned by gas flare furnaces within the environment, caused walls of buildings to crack as it was the case in Idu community in Ogba/Egbema/Ndoni local government, where the Nigerian Agip Oil Company, NAOC, had flared gas from three gas furnaces every minute of the day and for several years till date.
Though the companies harvest loads of cash, community folks who suck-in the gas daily have sad tales.
Idu-Obosiukwu community, in same Ogba , Egbema, Ndoni Local Government of Rivers State, suffers the tragedy of this quest to harvest the heart of the earth by oil and gas prospecting companies. In collected field report by ERA sighted by the magazine in Yenagoa, residents of the community reap danger to their environment and health.
Generally, this community suffers several collateral damages as was disclosed by the report made available to BUSINESS EYE.
In particular, buildings have corroded roofing sheets as soon as they are laid on the roof forcing residents to replace them twice or so every year. The walls of buildings crack easily due to the sound or vibration from the gas flare plant even the people suffer serious eye, skin and respiratory problems. Noise pollution ravages the entire community such that children complain that it affects them while learning in school.
Another problem they face is agricultural poor yields. The gas flare affects not only crop yield, some harvested crops are often rendered useless as the gas and high temperature make the cocoyam appear as if it had been roasted.
Mrs. Beatrice Ozurumba, is a native of Idu-Obosiukwu, a farmer, who narrated her experience over gas flare effects. “Our main occupation here is farming. Though there are other things we believe this gas flare is damaging in our lives, I would want you to just come and take a look at the cocoyam I harvested recently. The cocoyam was taken to the market but nobody accepted to buy them. They are not good for consumption. Soon after harvesting them, they all transformed into what looked like roasted ones. And, that is not natural. These farm produce are usually roasted on fire or put in pots and cooked over fire. That has been our tradition right from when we were children. But due to the effects of the gas flare, the cocoyam assumes the form of already roasted ones just on their own. And, because we spend time and energy to prepare our farms, plant the crops and continued taking care of the farm before harvest time, we see this unfortunate situation as a great loss.”
At Oboburu community, the story is not different. Chief Bobson Adioto, a native, narrated their daily experience in the hands of the two leading oil companies operating in their community.
“We are dying in silence in this community. A lot of things have been happening here. We don’t have say. Even our traditional rulers are not doing enough because they have been bought over by Total and that is why our leaders do betray us. Look at the hazard we are facing here [pointing]. We shall get close and you will see what I mean. The first earth tremor we experienced here in Oboburu was few years ago when an incident happened at Obagi and we living here in Oboburu felt the shaking of the earth for some minutes. Even the one that happened at Egita in 2012 shook the ground here for more than an hour.
He continued, “If you watch in front of you now, up there you will notice the air. It is caused by gas flaring by TOTAL and AGIP; hazards all over. We are not safe from the water we drink. We don’t sleep well in the night because of the roaring noise from the gas flare. Again, our metal roofing sheets are damaged seriously due to the flaring of gas in our environment. Once you build any house here, within the next three weeks, the roof will begin to change colour due to the high pollution from gas flare around us.
“Besides all these, our crop yield has continued to diminish, while some are going extinct, like the three leave yam and cocoyam. That is it. We are dying in silence. We also experienced an earth tremor here again this year not long ago. The ground was shaking and everyone was afraid in the community. Out of panic some wanted to run away, but where do you run to and leave your home?
“We have been experiencing earth tremor and had little or nothing to do about it. It happened in the night with a loud sound and, everywhere was just shaking for some minutes. For centuries ago our people never experienced this kind of thing here until recently and, it is caused by the activities of Total. Without Total and AGIP in our environment, we don’t think such will occur. Incidentally this kind of serious matter is yet to be reported to the general public and for the authorities to note. This is so because the oil companies operating here are good at bribing their way through; buying over all whose actions tends to be on the side of the people or the community. Since TOTAL came to Egiland in the name of Safraph until now, the company has not paid any compensation to us and the government doesn’t care about us.
TOTAL Spokesman in the Port Harcourt District, Mr. Omenuko, could not respond to inquiries made by BUSINESS EYE as of time of going to press. However, Mr. Charles Ebereonwu, Manager, External Communication, at its Head Office in Lagos, intervened and promised to provide answers to the magazine’s inquiry. He had yet to respond to a mail sent to his inbox as he had requested by press time.
But Mr. Alagoa Morris, an environmental activist and field researcher, who spoke to BUSINESS EYE in Yenagoa, and tendered some documents off field work, argued that gas flaring had been declared unconstitutional in Nigeria since 2005 citing a Court Judgment delivered in Benin on the case of Jonah Gbemrey v Shell and the Federal Government:
“Routine gas flaring has been outlawed in Nigerian since the Associated Gas Reinjection Act of 1979 came into effect in 1984. The Act stipulated that before oil companies could be permitted to flare associated gas, they must present a plan of related action showing when and how they intended to stop the flaring. Even here, you can see that provision is made to take care of exigencies and; not routine flaring, 24/7. And still, because the act of flaring gas is illegal; even when the permission is granted to flare briefly [as it ought to be], penalties are stipulated to be paid by the company which sought for permission to flare”, he told the magazine.
“None of the oil companies operating in the geographical expression referred to as Bayelsa State is known to be complying with the law positively. The only area where they might be complying is in the payment of fines. Flaring of gas is done routinely, 24/7. And, these fines also point to the fact that they are erring. Unfortunately, the fines collected are shared by all Nigerians and those residing within the immediate environment have no benefit coming to them associated or identified with gas flaring. Conoil, Chevron, Shell and Agip; they are all operating in Bayelsa and have continued gas flaring routinely.”
Even as the communities lament and count their costs, SPDC says that natural gas is the cleanest of fossil fuels and Shell Companies in Nigeria have played a pioneering role in onshore, shallow and deep-water gas exploration and production and its delivery to domestic consumers and later, export markets since the early 1960’s.
In what is its role in harnessing associated natural gas, SPDC says it had continued to make progress in close collaboration with its joint venture partners and the Federal Government of Nigeria towards the objective of ending the continuous flaring of associated gas.
SPDC added that since 2000, all new SPDC JV facilities have been designed to eliminate continuous flaring of associated gas. “In parallel”, SPDC continued, “a multi-year programme has been successfully implemented to install equipment for capturing associate gas from older facilities. As a result, flaring volume from SPDC JV facilities was reduced by 93% between 2002 and 2016 and flaring intensity, which is flare divided by total hydrocarbon produced, by around 81% over the same period.”
The oil giant further disclosed that a reduction of gas flared from SPDC JV operations continued to in 2016 with a 53% decrease compared to 2015 and a flaring intensity reduction of about 35% from the previous year.
“The SPDC JV is committed to reducing the volume and intensity of flaring even further through a number of associated gas gathering projects and progress continues to be made on these projects. A summary of 2016 performance shows that Bonny Associated Gas Solutions (AGS) commissioned as per plan, Escravos Beach, Adibawa and Otumara/Sagharra AGS projects have been mechanically completed.”
Obari told BUSINESS EYE that the aspiration of the SPDC JV is to transform into gas-oriented business designed to secure value across the entire gas value chain that creates a sustained positive socio-economic impact for Nigeria. SPDC, therefore views natural gas as an opportunity with growth potential, given the right investment conditions.”
But while oil and gas companies in the Niger Delta region build and base their growth plans purely on economic values, community folks where they mine the gas count diverse sicknesses, scorched vegetation, receding marine life and poor farm yields. In some cases, certain cash crops like cocoyam and three-leaf yam are going extinct.
The National Oil Spill Detection and Response Agency, NOSDRA, Zonal Director, Port Harcourt Office, Sir Cyrus Titus Nkanqwung, declined to speak with BUSINESS EYE saying he needed permission from the Agency’s Head Office, which he hadn’t receive as at the time of going to Press.
Changing trends in energy consumption
Current trends reveal that major oil consumers are already sourcing for alternative energy in renewables, and the multinational oil companies – Shell, Total, Saudi’s Aramco and Stat Oil – are among leading investors.
According to the annual forecast of the International Energy Agency (IEA) made available in November, 2017, energy demand will rise 30 per cent by 2040, driven by higher consumption in India and Africa.
But at the same time, the report indicates that the renewable energy sources will become more important due to emergence of electric cars and the need stop gas flaring to reduce or curb its effects to climate change.
Based on this prediction, although the US oil and gas output is projected to surpass that of any other country in history, the report said renewable sources such as solar and wind are expected to meet 40 per cent of the new demand.
In the EU, renewable energy will represent 80 per cent of new capacity.
The Chinese government is currently focusing on renewable energy such that the demand for it will increase by an average of 2 per cent annually.
“Norway aims for all new passenger cars and vans sold in 2025 to be zero-emission vehicles. Sweden has committed to 100 per cent renewable energy by 2040. China has surpassed its 2020 solar target. Eleven EU countries have already hit 2020 target in renewables. USA, Germany, France, Canada, etc., have already made headway in renewables,” said Tony Atah, Managing Director, Chief Executive Officer, Nigeria LNG Limited.
It is estimated that by 2040, 31 per cent of world electric consumption would come from hydropower sources. This projection is already dictating policy direction and business plans of multinational oil companies.
Going by this trend, Total has invested $1.4 billion for 60 per cent controlling stake in Sun Power, an American Solar Energy Firm. Besides this, Total has acquired stake in energy storage services firm — Stem and Sunverge, located in California, and battery cell firms eyeing future of solar energy.
Other findings by the BUSINESS EYE show that the company also has 23 per cent indirect interest in EREN RE, located in Luxemburg and Marceau, France, by subscribing to a capital increase for an amount of €237.5 million. The agreement also gives Total the possibility to take over control of EREN RE after a period of 5 years.
EREN RE, established in 2012, has developed a diversified asset base (notably wind, solar and hydro) representing a globally installed gross capacity of 650 MW in operation or under construction.
The company aims at achieving a global installed capacity of more than 3 GW within 5 years. The capital increase subscribed by Total will enable EREN RE to cover its financing needs to accelerate its development in the coming years.
“Total integrates climate challenge into its strategy and is pursuing steady growth in low-carbon businesses, in particular in renewable energy. By partnering with EREN RE, we are leveraging a team that has a proven track record in renewable power production, and we are investing in an additional asset to accelerate our profitable growth in this segment, in line with our ambition to become the responsible energy major. So we welcome to Total Eren into the Total Group!” said Patrick Pouyanné, Chairman and CEO of Total.
The Royal Dutch Shell has spent over $400 million on a range of acquisitions from solar power to electric car charging points, indicating its drive to expand its investment in renewable energy beyond its oil and gas production.
Reports indicate that the scale of the buying spree pales in comparison to the Anglo-Dutch company’s $25 billion annual spending budget. But its first forays into the solar and retail power sectors for many years show a growing urgency to develop cleaner energy businesses.
Sources disclosed that Shell agreed in December, 2017, to acquire independent British power provider — First Utility – based in the UK, for around $200 million.
Although Shell has declined commenting on the acquisition, the company’s Managing Director in Nigeria, Bayo Ojulari, confirmed at an event recently that Shell also has 100 per cent investment in Tier 1 PV Module supplier — Solar Frontier, a subsidiary of Showa Shell Sekiyu based in Tokyo, Japan.
Other findings reveal that Shell has also created a green energy division to invest in wind energy in the Asia-Pacific countries such as Japan and Australia, and has committed to invest as much as $1bn a year in “new energy” by 2020 — a fraction of its projected annual capital expenditure of $25bn-$30bn., the company’s Chief Executive Officer, Van Beurden, disclosed during an interaction with reporters in Lagos last year.
Another multinational oil driller, Chevron, acquired its renewable energy arm in 2000, and went on to develop multiple large-scale solar and geothermal projects.
According to a Bloomberg report, the division doubled its projected profit target in 2013. However, according to the report, the company stopped the renewable arm in 2014 as revenue grew thinner in the context of Chevron’s total earnings.
Next to Chevron is BP, which has 14 onshore wind farm assets in the United States. In fact, BP had invested in solar energy through BP Solar with Tata, even though it has exited from the venture on reporting losses.
Saudi’s Aramco has a $5 billion investment in renewables with a view to generating 10GW energy capacity by 2023; while Stat Oil has announced $200 million investment in renewable energy by 2022. But where the company will pitch its tent is not yet known, although JP Morgan and HSBC are helping to scour for best deals.
It may shock you that no such investments are being initiated in Africa, not even Nigeria that has the largest economy in Africa with high energy demand. This magazine has gathered that even though the same oil companies (particularly Shell, Total, Chevron, etc.) are operating in Nigeria, they have done little or no investment in Nigeria’s liquefied gas.
When contacted, they declined commenting on any efforts they are making in that regard. Perhaps, gas flaring is their call in Nigeria as long as the government allows it.
Reports indicate that Shell has only 25.6 per cent shares in Nigeria’s Liquefied Natural Gas (LNG). Total has 15 per cent; Eni 10. 4 per cent; while the largest share of 49 per cent is owned by the Nigerian National Petroleum Corporation (NNPC).
Until these companies invest big in the nation’s NGFCP project, Nigeria’s anti flaring laws might just be firing water bullets.
Renewing Nigeria’s energy sector with urgency
Nigeria suffers an acute energy crisis due, largely, to the inability of the gas sector to meet domestic demand for power generation and other gas utilization projects and this has severely constrained the nation’s economic development.
The Africa’s giant with her population estimated over 170 million people is currently distributing little above 5,000 mw of electricity. Her economy is plagued, even with enormous resources, due to poor energy generation to drive investment.
Nigeria signed the Paris Agreement on Sept. 22, 2016 on the sidelines of the 71st UN General Assembly. The country also endorsed the Paris Climate Change agreement “Gas flaring – the “low-hanging fruit” in a global climate action plan, signaling her commitment to international obligations on gas flaring, oil spillage and pollution.
However, poor oil practices, lack of policy thrust and weak regulations paved way for flaring and other unfriendly practices to flourish, especially in the Niger Delta region.
But with the right pegs in round holes, the NGFCP could marshal a change in the right direction as the world heads towards a revolution in renewables.
