Nigeria Set To Implement New Oil & Gas Initiative

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By Tom Adazu

Nigerian Government seems now set to implement a new  petroleum exploration strategy aimed at stemming the twin  problem of gas flaring and community restiveness in the Niger Delta. The initiative named -Small Scale Gas Utilisation Project  (SSGUP) said to have been advised by the World Bank during  the Obasanjo regime and for which a Pilot project was endorsed could not however take off before the administration  expired.

The World Bank was said to have suggested the policy  initiative that ensures that on -shore oil exploration companies  are made to utilize associated gas recovered in the field to  generate power for the communities and set up domestic gas  LPG production to energise local economy of communities and  employment.

Presently such associated gas is flared by oil companies  causing considerable environmental problems for the Niger  delta citizens and have become one of the sources of  restiveness in the area. International Oil companies (IOC) are  presently operating in Nigeria under considerable regulatory  pressure to end the flares and re-inject the gas for valuable use  for the economy. Nigerian gas reserves put at 180 trillion cubic  feet (tcf) are reputed to be one of the largest in the world. But it  is estimated that 43% of the total annual natural gas  production are being flared, perhaps the highest flares in the  world.

A competent source at the Nigeria’s Department of Petroleum  Resources (DPR) hinted at the last Offshore Technological  Conference OTC at Houston USA that the policy for which two indigenous companies showed interest in 2006 to start the  pilot projects in River state, slowed down owing to the inability  of President Yar’Adua to endorse the marginal field before he passed on.

The renewed interest in carrying on with the project was said to  have been buoyed by approval of the award of Oml 11 and  17marginal fields abandoned by Shell for over 50 years, for the use of the indigenous oil companies as pilot projects for the  SSGU initiative. The source said the President was  enthusiastic on the project as it runs in line with the  “transformation agenda of boosting power supply and domestic  gas for the oil communities thus helping the economic transformation of the Niger Delta”

The source confirmed that indeed the two companies -Green  Energy Ltd and All Grace International Ltd have been made to  sign an MOU with the DPR for the implementation of 5 megawatts power plant for the two communities of Ubima and  Otakikpo in Rivers State within a few years after the final  endorsement of the Farm out Agreement (FOA) by Shell – owners of the assets and the Federal Government

The source said the programme however faces yet another  hurdle of whether the oil companies are willing to cooperate to  implement the programme since they own largely the fields,  citing the case of Shell which for over two years was yet to  endorse the project -a pre requisite for the farm out of the two  marginal fields earmarked for the project.

Reacting to the insinuations that Jonathan had made  discretionary award of oil blocks for some companies, the  Director of the DPR Mr Osten Olorunnisola told stakeholders  and media men at the venue of OTC in Houston that the  President had the power to make the award under the relevant  Nigerian laws.

*Tom Adazu, freelance reporter for Energy Newsreel was in Houston

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