By Libby George
UGHELLI, Delta State, Nigeria, Sept 30 (Reuters) - Jonah
Gbemre often has no electricity, but he says his home is
permanently lit at night by the flames of waste gas being
"flared" near his home town in Nigeria's Delta State.
Like Gbemre, nearly half of Nigerians have no stable power
supply, yet government attempts to harness gas belching from its
oil fields to generate urgently-needed electricity or revenue
have stalled.
And experts say that without progress towards its 2030
target of virtually eliminating flaring, which releases carbon
dioxide along with polluting methane and soot, Nigeria cannot
meet its pledge to cut greenhouse gas emissions by 20%.
"This flare site makes the nights like days," said
42-year-old Gbemre, his eyes both bloodshot and milky, something
he said his doctor attributes to the burning of the waste gas.
Reuters could not establish if there was any link between
Gbemre's eye problems and the flaring. Nigeria's National Oil
Spill Detection & Response Agency has said the practice can
damage human health and the environment.
After sunset, nearly 200 blinking flares dot the landscape
around Port Harcourt, the Delta oil hub. Experts say the gas
that Nigeria flares nationwide could be worth billions of
dollars if captured and transported to be used as liquefied
natural gas or for plastics or fertilizers.
But a 2016 programme by the Nigerian government to address
this by auctioning rights to capture and sell flared gas is
struggling, six sources close to the process told Reuters.
The coronavirus crisis has compounded delays to a project
which the World Bank hoped could serve as an example in its bid
to cut global warming through zero flaring globally by 2030.
Oil-producing nations all flare some gas, particularly at
remote fields or where there is ageing infrastructure.
Nigeria first targeted gas flaring in the late 1970s and,
through various schemes and regulations, has more than halved it
since 2001. Chevron, Shell and Eni, which operate in Nigeria,
say they have cut flaring by some 90% and are working to cut it
further. ExxonMobil and Total declined comment.
But as the largest sites were harnessed, progress stagnated
and flaring rose last year, a government-run satellite tracker
shows, while Gbemre has little faith in the state, which he
notes missed its own deadlines in 2004, 2008 and 2020.
Although Nigeria's Department of Petroleum Resources (DPR)
approved 200 bidders in February, it said in June, when the
sites should have been awarded, that the process was delayed by
six weeks due to coronavirus-related restrictions. "If this bidding round doesn't succeed, that's the end of
it," said Gbite Adeniji, a lawyer who helped design the
programme as a technical advisor at Nigeria's Ministry of
Petroleum, adding that roughly $3 billion is needed to
commercialize the remaining flares, with site costs ranging from
$20 million to $100 million.
The sources, who did not want to be named due to the
sensitivity of the matter, said many bidders have already pulled
out as many were unlikely to recoup their costs.
'LACK OF TRUST'
Only 48 of the nearly 180 sites still flaring in Nigeria are
on the DPR list, many of them are not commercially viable and
some of the best are missing, they added.
"The pool was three times smaller than they thought," one
source said of the sites.
Gas output at some, where oilfields are in decline, is
likely to end within 5-10 years and others are offshore, making
the required infrastructure more costly, the sources added.
DPR did not respond to a request for comment on how it
selected the flare sites, when it will announce winners or
whether it was committed to the auction process.
Two bidders told Reuters they dropped out early this year as
delays made them question Nigeria's commitment.
Oneal Lajuwomi, chief executive of Wavelength, said his
energy company spent $20,000, but decided it was not worth
putting in more cash, deterred by what he said was poor data,
including on the gas produced and how long it would last.
"How do you determine the economic viability of the project
if you don't know these things? The issue for us and a lot of
people was a lack of trust," Lajuwomi said.
Delays hurt bidders, who must revise the timeline with their
financial backers and sometimes make costly revisions to
feasibility studies to stay in contention.
One bidder still in the process and another source close to
it said that the DPR's silence had spooked some funders who have
been deterred by the unpredictable timeline and have less cash
available due to the coronavirus pandemic.
The sources said that the DPR and the Minister of Petroleum
had used their legal power to grant "exemptions" to sites, which
can keep them from being auctioned.
Neither the DPR nor the Ministry of Petroleum responded to
several requests for comment on this.
'THERE'S NO MONEY'
The World Bank said that it was not involved in the bidding
or selection of flare sites, adding that Nigeria, along with
Ecuador, Egypt, Mexico, Indonesia and Iraq, had made progress.
However, observers said Nigeria's troubled power sector,
combined with the location and size of some sites, made it
almost impossible for an investor to make money selling gas to
it, despite electricity tariffs that were roughly doubled.
"It's going to get harder and harder to totally eliminate
the flares, because many of them are quite small," Gail
Anderson, upstream research director at Wood Mackenzie, said,
adding: "Many of these are in sort of remote locations."
Renaissance Capital analyst Nikolas Stefanou echoed the
power sector issues, and said other buyers are often too small.
"The problem is being able to effectively find a reliable
demand source," Stefanou said.
And even as state oil company NNPC and the Ministry of
Petroleum announced plans to expand demand for fuels made from
gas, such as liquefied petroleum gas (LPG), DPR and a national
oil company subsidiary have also added fees to it.
Such issues make it tougher for those hoping to make money
from flared gas to find buyers.
Back in Ughelli, a 20-foot wall of burning gas sends waves
of heat over Root Ohoteka and four of her children. She uses the
high temperature to dry cassava flakes, which she sells.
The intense heat speeds up the process, but the 25-year-old
told Reuters she would rather find another way to feed her
family as she is worried about the effects the fumes will have
on their health.
"If I had money, I would stop. But there's no money."
($1 = 380.6000 naira)
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Gas Flaring and Nigeria's CO2 Emissions https://tmsnrt.rs/3jcZoVm
Flaring costs Nigeria millions in lost revenue https://tmsnrt.rs/2Hwz2iV
Top 30 Gas Flaring Countries in 2019 https://tmsnrt.rs/2FTv6sj
Gas flared by company field ownership in 2018 https://tmsnrt.rs/335TvTY
The gas flared in Nigeria has dropped significantly https://tmsnrt.rs/3cC2cZq
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