FG to revoke licenses of oil firms over gas flaring…to launch infrastructure revamp programme

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The Federal Government, Monday, disclosed that from next year, it would commence the revocation of the licences of oil companies that fail to stop flaring of gas in their operations in the country.

Speaking at the 2018 Buyers’ Forum/Stakeholders’ Engagement organised by the Gas Aggregation Company of Nigeria, GACN, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, also stated that the Federal Government would launch the infrastructure revamp programme in November, that has the potential of attracting between $20 billion and $30 billion of investments into the petroleum industry and also help address the infrastructural deficiencies in the industry.

On the gas flare issue, Kachikwu revealed that the Federal Government had been locked in a battle with upstream oil companies over the issue, explaining that the Federal Government was keen on ending flaring , but oil companies still give lot of reasons why gas flare cannot be ended.

According to him, the bottom line of the disagreement the oil firms had with the government on ending gas flaring was cash call and money.

He said, “Government wants to end flare, oil companies still give lot of reasons why flare cannot be ended. Bottom line is cash call and money. But the reality is that whether or not we deal with cash call issues, it is not an optional agenda, it is a compulsive immediate agenda. It is destructive to the populace; it is intolerable in developed country and it should not be tolerable here either.

“Any oil company that cannot find a way to ending its flare ought not to be producing. And I have said to the Department of Petroleum Resources, DPR, beginning from next year, we are going to get quite frantic about this and companies that cannot meet with extended periods — the issue is not how much you pay in terms of fines for flaring, the issue is that you would not produce. We need to begin to look at foreclosing of licences. This is very urgent.”

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Kachikwu stressed that the quest to discourage gas flaring led the Federal Government to initiate the gas flare commercialisation programme.

In addition, the minister disclosed that future renewals of oil and gas licences would involve the assessments of the gas components and gas flare rate of each company seeking renewals.

“Some of the ones that have come recently for renewals have insisted that they are building massive gas processing plants and we are going to follow this right through so that the supply obligation, the processing facility, the treatment of gas; their submissions are very accurate and very aggressive,” he noted.

Kachikwu further emphasized the need for a critical implementation of the Domestic Supply Obligation, which would be extended to Domestic Supply and Processing Obligation for both gas and crude oil, stating that the country needed to move away from the point of just producing these commodities, throwing it into the vessel and shipping it out, to the point of processing as much of it locally as much as possible.

According to him, only through this would we be able to create more jobs, create better profit and returns on investments, achieve better pricing and address the challenges of local industries and industrialization.

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Also speaking, Managing Director of GACN, Mr. Morgan Okwoche, called for increased support for the company, while he highlighted the need for optimum collaboration among industry players in the development of the gas sector.

He called on the DPR to expedite action on the issuance/renewal of the five-year rolling Domestic Supply Obligation, DSO, volumes which will help in effective project planning.

In addition, Okwoche said, “I would like to see the non-existence of a Gas Distribution tariff model which is encouraging arbitrariness and monopolist behaviours which may hamper effective implementation of the network code is not addressed ultimately.”

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