Jul 07, 2011

Ogoni: Less Hot Air and More Action – Gas Flaring Increases in the Niger Delta

Despite repeated commitments by oil companies and governments, gas flaring continues in Nigeria at an environmental cost.

Below is an article published by Think Africa Press:

Gas flaring in the Niger Delta region highlights the environmental problems posed by resource extraction, and the failure of successive governments to tackle these problems. Goodluck Jonathan, elected as president of Nigeria this April, has the opportunity to take action where his predecessors have failed.

Gas flaring is a routine practice with a number of extractive processes, including the flaring of associated gas following oil extraction. It is a wasteful process, as much of this gas could be used to provide fuel, either for the local market or for export. According to some estimates, $2.5 billion is wasted annually through gas flaring in Nigeria. Perhaps more importantly, the release of these gasses damages the health of the surrounding population, releases enormous amounts of greenhouse gases and contributes to acid rain. In fact, according to a World Bank  report released in 2002, gas flaring in Nigeria is the single greatest source of greenhouse gases in sub-Saharan Africa. Nigeria has the secondhighest gas flaring rates in the world, following Russia.

Companies in Nigeria are reluctant to reduce flaring and instead harvest the gas, as gas that is extracted alongside oil is more difficult and costly to separate and process than non-associated gas. So gas flaring is a simpler and cheaper alternative to obtaining the oil.

Shell, under the Shell Petroleum Development Corporation (SPDC) flares the  most gas out of all the corporations operating in Nigeria. The problem has long been recognized and highlighted by organizations, such as the Movement for the Survival of the Ogoni People (MOSOP), who are sharply critical of Shell’s practices within the region. In addition to gas flaring, the multinational is responsible for polluting the delta, killing fish and therefore harming the livelihoods of the people who live there. Shell’s well-publicised Corporate Social Responsibility programmes issue repeated commitments to reducing flaring, but no action has been taken to significantly reduce this dangerous practice. Statements by Malcolm Brinded, the director for exploration and production at Shell, suggest that the company may not be taking gas flaring seriously, as he declared that there was little evidence of the damaging health risks that flaring poses.

Broken promises: Gas flaring is not a new issue, and there have been numerous domestic and international attempts to rein in the practice. Yet each time there has been a reluctance to follow through on government statements and legislation. This was first recognized as an issue in 1969 by the federal government under the leadership of General Yakubu Gowon, who ordered the introduction of gas collecting facilities by 1974. When the deadline wasn’t met, it was shifted forward twice until 1984. This year saw the culmination of the Associated Gas Reinjection Act, as well as General Gowon’s executive order to make excessive gas flaring an illegal practice in the country. However, what started off as an attempt to reduce flaring turned into another royalty payment for the federal government, as companies found it more profitable to pay the annual fine than reduce their flaring practices. The international community eventually took notice and the OECD placed its own deadline on western companies to  reduce flaring by 2008. The deadline has since passed without enforcement or the penalisation of Shell.

Umaru Yar’Adua’s plan: Yet since 2008, the federal government has once again started to prioritise the issue of flaring. There is a risk, however, that these new efforts may follow a similar fate as General Gowon’s initiative. Action was taken under ex-president Umaru Yar’Adua’s government through two new executive orders. The first was the Nigerian Gas Master Plan (NGMP) in 2008. Part of the NGMP  addressed the wasteful status quo by providing legislation to encourage the integration of gas fields within the local infrastructure, and to create a market driven industry out of the resource by 2015, reducing gas flaring in the process. The plan includes the Domestic gas Supply Obligation (DSO), which contains a substantial penalty of $3.5m on companies that fail to integrate gas supplies into the local market.

Promising legislation was passed by the Senate a year later in 2009. It placed another penalty on the industry, this time requiring firms to pay the international market price for the quantity of gas still being flared after January this year. It is disappointing that the federal government did not stand its ground on the legislation: the deadline was moved again to December next year.

Whilst the deadline for the NGMP looms on the horizon and the new deadline for the senate bill is just over a year away, Shell’s most recent Sustainability Report released in April, states that the corporation has recently increased its use of flaring in the Niger Delta, blaming militants and a lack of government funding for this failure. The report also stresses the additional cost of the exercise, stating that additional gas collectors in the region would be priced at another $2 billion. Given that Nigeria’s oil production has amounted to over $56 billion over the last four years alone, the cleanup costs proposed seem more than manageable.

Goodluck Jonathan: the “Gas Revolution Agenda”: Rather than follow through with his predecessors commitment, Goodluck Jonathan launched the “Gas Revolution Agenda” in March this year. Despite the name, there is nothing revolutionary about the agenda. It mostly re-states what has been said since 1969 and there is little that distinguishes it from Umaru Yar Adua’s NGMP. So far, the agenda seems to be little more than a collection of words and intentions. It remains to be pushed into concrete legislation.

But Nigeria does not need another grand plan or agenda, nor does it need new legislation: the laws have been in place since 1984. What needs to take place is the enforcement of the laws and penalties that already exist and for the judiciary to take action for the persistent negligence of the oil industry within Nigeria in living up to its commitments. What is needed is less hot air and more action.