In an effort to achieve maximum utilisation of natural gas, the Federal Government has announced the commencement of moves to help it separate gas business from oil as well as identify strategies for success and appropriate policies to help drive the sector.

The Minister of State for Energy (Gas), Chief Emmanuel Odusina said this while delivering the keynote address at the recently held second quarter 2008 Nigerian Gas Association Business Forum in Abuja.

According to him, the identified strategy for success is increased gas utilisation through accelerated development of the gas sector and accelerated development of the domestic gas market.

“Full utilisation of natural gas in Nigeria will see gas overtaking crude oil in revenue in the foreseeable future. A major initiative to separate gas business from oil is being launched by the government and we can achieve maximum utilisation of natural gas by investing in local consumption development and export via, power-generating plants, plant-treating and processing plants (including liquefaction, production of LPG, CNG and other liquids), consumption of Natural Gas for re-injection as well as a networked natural gas distribution for domestic, commercial, industrial and petrochemicals.”

To support the planned aggressive expansion of the Nigeria Gas sector in an orderly manner, the Federal Executive Council recently approved the Nigerian Gas Master Plan.

The Gas Master Plan is the country’s first major holistic approach to address gas framework. The Gas Master Plan comprises three key sections: Gas pricing policy, domestic supply obligation regulation, as well as the Gas infrastructure blueprint.

“I am pleased to be accorded the honour to present a keynote address to this special gathering. First, I wish to appreciate the effort of the organisers of this forum for it is a demonstration of the fact that they have the interest of this nation at heart. The forum has come at a time when it is most relevant.

The theme of the forum: Gas Flares Out and Strategies for Success, is topical because it is in alignment with the current position of government on not only monetising the abundant gas resources but also to increase and promote the use of gas in Nigeria through linkages to the power, industrial and agricultural sectors.

It is our belief that this keynote address would enable us share our views with industry stakeholders on the subject matter. It will also serve as a medium to present our efforts so far towards total realisation of the project.

My discussion will follow the following outline: Available gas resources, Government efforts to end gas flaring, Strategies for success, Appropriate Regulatory Policy, What is Government's achievement so far?
I shall make a few contributions to each of the foregoing points, especially the last question, and leave this August gathering of industry professionals, a team of think-tanks, to come up with additional practicable contributions to this all important subject.

We shall begin this discussion by reviewing the available gas resource. It would be necessary to express that the estimated oil reserve in Nigeria is put at 33 billion barrels (28 of which are in the Niger-Delta and 5 in the Deepwater),while our gas reserves is about 187 Tcf (27 Tcf in the Deepwater and 160 Tcf in the Niger-Delta).

In terms of the Associated Gas (AG) Reserves, 56% of our reserves are in SPDC’s fields, 21% with Mobil Producing Nigeria Unlimited, 9% with Nigerian Agip Oil Company, 7% within the confines of Chevron Nigeria Limited, 3% in Elf’s Fields and other players hold 4% in their areas of operation.  In respect of Non-Associated Gas (NAG), SPDC holds 64%, NAOC 10%, MPNU 7%, CNL 6%, Elf 6% and other players have 7%.

This gives a picture of the distribution of our Gas Reserves, thus we can say there is gas in abundance. It is important to note that these were discovered in the course of looking for oil. I believe that more gas reserves will be discovered in the near future as we prepare for a deliberate effort to explore for gas.

The average yearly gas production is put at 2.36 TCF. However, it is important to note that an alarming proportion of the gas produced is flared. The Total Monthly Gas Flared figure is about 68.66 BCF; this represents 33% of the total gas produced in the month. This is an inestimable economic loss in addition to the considerable environmental degradation and social hazards associated with gas flaring.”
The minister further stated that government’s efforts at ending gas flaring have always met a brick wall.

According to him, in 1979, the Federal Government introduced the Associated Gas Re-injection Act, which required companies to submit plans to put AG to commercial use or re-inject it with the aim of achieving flare-down by end of 1984.

In 1985, the government, faced with the non-attainment of the flare-down targets introduced an amendment to the Act (known as Associated Gas Re-injection (Amendment) decree of 1985), which levied a volume-based penalty on gas flaring.

“This policy meant to discourage gas flaring and encourage gas utilisation did not stop flaring as operators gladly paid the penalties. Also the policy suffered dateline extensions culminating in the final dateline of December, 2008 by which time there must be elimination of routine gas flaring. Stiff penalties will be imposed for non-compliance by any operator.

"I also acknowledge the effort of the World Bank in carrying out studies with other stakeholders to address the Social and Environmental impact of gas flaring and the strategy to achieve gas flare-down in line with government's aspirations," he said.