Reforms driving Nigeria's oil, gas output growth, minister says

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Sept. 28 -- Nigeria's Parliament is expected soon to pass into law the Petroleum Industry Bill, Nigeria’s Minister of Petroleum Resources Diezani Alison-Madueke told participants at the Rice University Baker Institute for Public Policy in Houston on Sept. 27.

"We expect in a few short weeks it will be promulgated into law," Alison-Madueke said of the bill while she met briefly with reporters after giving a keynote speech at a conference about emerging carbon management policies.

"In Nigeria, over 50 years’ experience in the oil and gas industry continues to reveal the complex dynamics of balancing global energy security, domestic economic growth, climate, and environmental considerations,” she said during her speech.

Regarding oil and gas reforms in Nigeria, Alison-Madueke said the government is getting closer to outlawing flaring natural gas, although she listed no specific time for when a complete ban is expected to be implemented.

“We are transitioning from gas flaring to gas utilization,” she said, citing the Agip Okpai combined-cycle power plant as an example. In Nigeria, associated gas often is considered to be a waste product of oil production rather than an economic resource.

Amy Myers Jaffe of the Baker Institute told OGJ that market incentives to price associated gas work best when it comes to encouraging countries like Russia and Nigeria to reduce the volumes of gas vented and flared. Russia and Nigeria are the biggest gas-flaring countries worldwide.

In 2002, the World Bank started a public-private partnership initiative called Global Gas Flaring Reduction of which Nigeria is a member. The National Oceanic and Atmosphere Administration estimated that during 1994-2008, the total amount of gas flared worldwide corresponded to 70% of total US greenhouse gas emissions during 2007.

In a Baker Institute study entitled “Gas Flaring and Venting: Extent, Impacts, and Remedies,” three researchers said flared gas volumes in Nigeria have decreased somewhat although most of that decrease is likely due to decreased oil production caused by civil unrest.

“Both regulatory enforcements and financial incentives are proving insufficient in Nigeria,” said the flaring study. “Several gas utilization projects are under way; however, the completed projects have not been as successful in reducing gas flaring volumes as claimed. In Nigeria, less complicated and lower cost technologies, such as LPG and gas-to-power, could be put in place to utilize associated gas locally.”

Most of the oil fields involved with gas flaring are close to poor communities that desperately need energy sources, concluded the study, written by Birnur Buzcu-Guven, Robert Harriss, and Donald Hertzmark. Buzcu-Guven is a research scientist with the Houston Advanced Research Center (HARC) and the Baker Institute, Harriss is HARC president and chief executive officer, and Hertzmark is a consultant.

Carbon-neutral plans
During her Houston visit, Alison-Madueke said the Nigerian government has a goal of making Nigeria carbon-neutral by 2025. Nigeria, which signed the Kyoto Protocol, recently developed a draft policy to address climate change.

Nigerian officials aggressively are working to promote a growing gross domestic product, and Nigeria aspires to become one of the world's top 20 economies by 2020, she said.

"The energy consumption that will be associated with such growth cannot be overemphasized,” Alison-Madueke said. “To achieve and sustain the GDP growth aspiration, we are on course to grow our crude oil reserves to and maintain it at about 40 billion bbl through 2020.”

She called for a “more effective linkage” between the industry and government to help drive Nigeria’s GDP through increased local content and participation.

Currently, Nigeria estimates it has 37 billion bbl of oil reserves and a production capacity of 3 million b/d, she said. The nation has proved gas reserve of 187 tcf and another estimated 600 tcf of undiscovered gas potential, she said.

“Experts are of the opinion that with the estimated undiscovered potential, Nigeria could easily be within the world's top three in gas reserves,” she said.

Contact Paula Dittrick at paulad@ogjonline.com.

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