Global oil production continues to grow, and with it associated gas flaring volumes. New data released by the World Bank’s Global Gas Flaring Partnership (GGFP) show that while some high-flaring countries are making progress with flaring reduction, overall flaring volumes have increased. Nigeria has made significant progress to reduce gas flaring, and a government announcement in December has called out international oil companies for flaring penalty avoidance. Meanwhile, Total and Shell have signed preliminary agreements to develop significant oil production projects in post-sanction Iran.
Preliminary agreements for Total and Shell in post-sanctions Iran
Following the lifting of sanctions on Iran, Total and Shell have agreed a preliminary framework with the country to develop major oil and gas projects to boost the country’s oil output.
The agreement covers an expansion of the South Azadegan oil field worth between $10-12 billion, as well as another project at the Yadavaran oil field. Both will be key projects in southwestern Iran, and will support offshore gas field developments near Kish Island in the Gulf. There has yet to be an announcement as to how the two companies will divide the projects, and the preliminary agreements are still to be finalised.
The decision to award the first major energy projects to foreign firms was met with controversy in Iran when the tenders were first announced in October 2016, with some commentators describing the deal as a “disgrace”. Iran’s oil ministry has stated that foreign capital and skills will be crucial as the country looks to expand its energy sector.
Nigeria commits to tackling its flare gas problem
The Nigerian Government has accused international oil companies operating in Nigeria of falsifying gas flaring data to avoid penalty payments. Nigeria produces around 2.5 million barrels of crude oil every day, making it Africa’s largest producer of oil and the sixth largest oil-producing country in the world. While gas flaring has technically been illegal in Nigeria since 1984, the government has struggled to effectively measure and enforce the regulations. As a result, the country is losing between $500 million and $1 billion in penalty revenue.
Governmental agencies have struggled to get access to the latest scientific technology to enforce regulations effectively, however Mr. Babatunde Fashola, Nigeria’s Minister of Power, Works and Housing has recently stated that the problem is man-made and not the result of technical challenges.
Speaking at the Gas Competence Seminar in Abuja, Dr. Ibe Kachikwu, Nigeria’s Minister of State for Petroleum Resources, explained how the government plans to tackle the problem:
“Beginning next year, we will be putting up an independent tracking mechanism, not relying on figures from the international oil companies, to find out really what the actual flare volume is. My feeling is that there is a lot of management of those figures to suit the cap of penalties that are being charged.”
Kachikwu continued: “Nobody is effectively monitoring the volume. When you actually go for the real effect of what is flared, in terms of statistics, it is much higher than that figure.”
Global Gas Flaring Partnership data shows an increase in global flaring
New data from the World Bank’s Global Gas Flaring Partnership (GGFP) shows an increase in global gas flaring over the past five years, despite growing international support to reduce routine flaring. The new data shows a reversal of the trend of flaring reduction, and has been attributed to an overall growth in oil production, particularly in Iraq and the United States.
The US National Oceanic and Atmospheric Administration (NOAA) and GGFR developed the estimates based on satellite observations. The data shows 147 billion cubic meters (bcm) of natural gas was flared in 2015, which is an increase from 145 bcm in 2014 and 141 bcm in 2013.
Russia remains the world’s largest gas flaring country, flaring about 21 bcm annually, followed by Iraq (16 bcm), Iran (12 bcm), the United States (12 bcm), and Venezuela (9 bcm).
Nigeria, traditionally one of the highest flaring countries, has made significant progress to reduce gas flaring. Flaring in the country has reduced by 18 percent since 2013, to less than 8 bcm in 2015.
In an exclusive interview with Fluenta, GGFR Program Manager Bjorn Hamso explained the importance of a continued push for flaring reduction:
“The numbers are not surprising, they show that in the coming years we have significant work to do to decrease flaring. Commitments to improve the flaring situation, through the Zero Routine Flaring (ZRF) Initiative, will play an important part.”
Hamso explained the GGFP’s vision for the coming years:
“The countries and oil companies that have endorsed the ZRF Initiative represent about 55 percent of global gas flaring. We will continue to increase ZRF’s coverage, with the goal of bringing a 150-year-old oil industry practice to an end, and will continue to explore ways companies, governments, and development banks can co-operate to end routine flaring. Furthermore, annual flaring data from ZRF-endorsing governments and oil companies will be presented on a World Bank website, helping maintain focus on the issue.”
