Nigeria set to implement new oil &gas initiative

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