Indications emerged weekend that the Senate and multinational oil companies operating in the country are on a collision course over the actual date for gas flare-out in the country.
While the Senate is insisting on December 2008 as deadline for gas flaring, the oil companies, arguing that the National Assembly should not make a law that cannot be obeyed, want it to end in 2013 – a date they claim is more feasible.
Nigeria is currently the world’s second worst culprit in gas flaring after Russia with 2.5 billion cubic feet – the equivalent of 2.2 million barrels of oil flared – per day. The country loses $2 billion annually to gas flaring.
Under the subsisting gas flaring policy, which took effect from January 1, 2008, companies are required to pay a fine of $3.5 for every 1000 standard cubic feet of gas flared. This is in addition to the shutting down of any oil field where associated gas is flared after December 31, 2008. The penalty for this waste is N10 for 1,000 standard cubic feet of gas flared.
Speaking in Port Harcourt, Rivers State, Chairman of the Senate Committee on Gas, Senator Osita Izunaso, warned that they would no longer tolerate the constant shifting of the flare-out date and disclosed that the new bill to outlaw the practice was at “advanced stage”.
Izunaso said the Senate would not be persuaded “to buy the idea of constantly shifting the date for the stoppage of gas flaring by oil companies” and warned that after the law is passed and assented to, any violator would be made to close operations on any flare site.
The Committee, which is on a tour of some power-related projects, visited the Afam VI power generation plant expected to increase the power generation in the country by 650 megawatts, said the time was “now” to put their feet down and ensure the practice of gas flaring was totally stopped as in advanced countries.
The Committee Chairman assured Nigerians that the era of mouthing the flare-out period without adhering to it was over as all hands have to be on deck to stop it and give the people good environment to live in
“Gas flaring is a major problem that all hands must be on deck to tackle. I don’t believe that we will keep shifting the goal post. We are sticking by December 31 deadline; if anything happens thereafter we will know but certainly to the extent that the international oil companies are projecting for 2013, 2012 and all the rest of them, gas flaring is something that has to stop and we must stop it.
“We are saying that this is a definite time to stop and if you cannot comply, you can shut in the wells. If you shut in the wells we don’t lose, the revenue is deferred,” Izunaso insisted.
According to him, the bill on the flare-out and other objectionable practices in the sector was near passage. He said there would be a forum in form of public hearing where stakeholders would be allowed to make their input into the law before it is passed.
In an apparent reaction to the hard stance of the Committee, Managing Director of Shell Petroleum Development Company, Mr. Mutiu Sumonu, asked that the Senate should ensure they pass laws that would be obeyed without negatively affecting the revenue of the country.
To this view, Izunaso replied: “We are going to make available a copy of the draft bill to Shell and we will their input into what we are doing but we are not going to extend gas flaring to a period of time that will be unnecessary.”
He lamented that in a country where cooking gas is out of the reach of the people and most times not available, the resource was being flared, a situation he said should make them to stop flaring.
Sumonu had told the Committee during the dinner it organised for them that Shell had already committed $3 billion to building gas gathering facilities which underlies its commitment to ensuring stoppage of gas flaring in the country
He however drew the attention of the Committee to certain things that have to be done to be able to gather gas from the wells for positive utilisation and pleaded with the Committee to take a critical look at the working environment in the sector and have a change of mind on the flare-out period.
Last July, Senate had debated the general principles of the bill geared towards stopping gas flaring. It was read for the second time and referred to committees for further legislative processing.
The Senate subsequently referred the Bill for an Act to Prohibit Flaring of Natural Gas in Nigeria to the Committee on Gas.
It provides that “No company engaged in the production of oil and gas shall after December, 2008 flare natural gas produced whether in association with oil or not.”
“Any person who flares gas after the 31st day of December, 2008 commits an offence and shall be liable on conviction to a fine which shall be equal to the cost of gas at the international market,” according to the Bill.
The Bill further provides: “The operator of the field from which gas is flared in contravention of the Act shall be liable to pay a fine equivalent to fifty per cent of the penalty prescribed against the person who flared the gas.”
The Bill also provides that the concessions granted in the particular field or group of fields from which gas is being flared in contravention of the provisions of this Act shall be forfeited.
