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Gas flaring in Nigeria: Towards an alternative solution

A gas flare in Akalaolu. Since oil production began in the late 1950s, the industry has been flaring the associated gas in huge quantities.

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A new start is desperately needed for the Nigerian gas industry, both in its relations with its western co-partners and on the issue of natural gas flaring in the Niger Delta. This is needed, not merely for the health of the Nigerian economy in these difficult times, but also, literally for the health of its people.

The declaration of Force Majeure on 40% of the supply of Nigerian natural gas to the country's Bonny Island Liquefied Natural Gas (LNG) plant in early December 2008 is the culmination of a decade-long three-sided struggle between the Nigerian Government, the oil and gas companies and the inhabitants of the region in which they operate. The abrupt termination of supply from Shell Petroleum Development Company's (SPDC) Soku upstream plant in Rivers State was due to the need to remove some 50 illegal valves from its pipelines. These had been used to siphon off significant quantities of condensate, but effectively made the pipelines unsafe to operate.

The economic consequences of this 'temporary' shut-down should not be underestimated. Bonny Island LNG plant is Nigeria's only existing LNG export terminal and in 2007 delivered some 10% of the world's seaborne natural gas. It is also important for the European Union's energy security, some 9.7 million tons of the LNG, or 62.3%, being contracted to Spain, France and Portugal.

It also came at a time of increasing controversy over breached deadlines for ending the practice of flaring off gas associated with oil production. Government officials expressed frustration at the waste of a national resource using retail estimates of value put losses at $1.4 Billion annually. In preparing this report official data converges on losses equivalent to 30% of UK North Sea oil production each year.

However, the existence of some 50 illegal valves on a gas pipeline and continuing gas flaring is not the end of the story. With an average of two oil and gas workers kidnapped every week, numerous deliberate pipeline fractures and explosions, it is becoming increasingly difficult for the oil and gas industry to operate in the region. This means not merely that the industry that supplies 95% of Nigeria's export revenues is having difficulty functioning efficiently, but also that it cannot explore for the necessary reserves that will safeguard such income into the rest of the 21st century.

Failure to find and exploit such additional resources - which are known to be available - also means that Nigeria's laudable plans not merely to export oil and gas but to electrify the 40% of the country currently without power and develop its neighbours in West Africa will come to naught. Its production of high quality crude oil will continue to decline, while its opportunities to develop fertiliser production for better agriculture and power for future indigenous industrial development will slip away.

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