RESEARCH TOPIC

ENVIRONMENTAL IMPLICATIONS OF NATURAL GAS DEVELOPMENT

IN NIGERIA

ABSTRACT

This purpose of this paper is to examine gas development in Nigeria with

potentials to eliminate all manner of routine gas flaring

Nigeria has a proven gas reserve estimated in the region of about 185 trillion cubic

feet and ranked the 7th largest natural gas reserves in the world, representing more

than 5 per cent of the world’s total.

Unlike crude oil, the gas sector suffered uncoordinated development by the government

in harnessing the potentials resources. The consequence is monumental environmental

damage arising from massive gas flaring.

The gas flare in Nigeria has been termed a colossal waste and a disastrous

development experience for a country yearning for economy growth. Gas flaring

takes place in Nigeria than anywhere else in the world, and account for about 20

per cent of global flaring in 2001. In other words, Nigeria flares about 2.5 billion

cubic feet of gas daily, based on LNG value while more than 60 per cent of its

population is estimated to live in abject poverty.

To reduce the huge wastage of valuable resource associated with gas flaring and its

attendant environmental impact and global warming, the Nigerian government is

vigorously pursuing a number of natural gas utilization strategies aimed at refocusing the

gas resource to stimulate the domestic market growth, regional development and the

export market. The development of the gas industry will steer the low carbon direction

and immediately halt the ecosystem from multiplicity of gas flaring activities.

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It is now a worldwide phenomenon to reduce greenhouse gas emission, and there is

increasingly growing concern all over the world to improve the environment because of

public awareness of the link between natural resource issues, socioeconomic activities

and environmental management.

INTRODUCTION

Since the 1970s, the Nigerian economy has been heavily dependent on crude petroleum

for it mainstay and accounts for about 95 per cent revenues of export earnings.

Commercial oil exploration turned Nigeria’s heavily cherished political economy into a

mono-product economy upon which the state heavily depends. Consequently, increase in

crude oil exploration lead to a simultaneous increase in the level of natural gas

production, because vast proportion of natural gas produced in Nigeria is accidental to

crude oil production, meaning that it occurs in crude oil reserves as free gas. Despite this

development, there has been no significant inroad over the years to use the excess

proceeds from crude oil production to fund gas developments in order to eliminate

routine gas flaring.

In order to monetise Nigeria huge gas resources and reduce monumental environmental

damage associated with routine gas flaring and its attendant global warming, there are a

number of natural gas utilization projects now in place through the provision of gas

pipelines infrastructures and other distribution system using appropriate technology. For

a country such as Nigeria, one of the major criteria for measuring economic growth is

industrial productivity, and the potentials of natural gas as a catalyst for economy

development are enormous.

Nigeria flares the second largest volume of gas of any producer behind Russia, and about

40 per cent of Nigeria’s gas is flared as it is produced and account for 12.5 per cent of the

world’s total gas flaring, NNPC (2001). Nigeria flare is estimated at 1.2 trillion cubic

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feet of gas annually, which in turn is capable of generating well over 12,000 mega watts

(MW) of electricity that is seriously needed to catalyze the growth of Nigerian economy

and end the socioeconomic and environmental woes of the generality of Nigerians, C.

Ogiemwonyi (2008). In spite of the huge environmental and safety hazards together with

the losses of revenue arising from routine gas flaring, there are concerns that the country

natural gas legislative frameworks tend to support the continued flaring of gas by oil

companies during oil production activities, B. Agha (2009).

The development of the domestic, regional and international pipelines together with the

huge expansion of the Nigerian liquefied natural gas and the increase use of natural gas

for power and electricity generation will steer the low carbon direction, immediately halt

the ecosystem from multiplicity of gas flaring activities, enhance government revenue

generation and yield the much-needed foreign exchange to facilitate economic

development, create employment and address the problem of electricity generation that is

hitherto in deep crisis. The gas that is being flared could go a very long way to provide

the much-needed electricity to Nigeria’s teeming population of 150 million people

desperately in needs of it and for economy development.

Considerable improvement in electricity generation from a miserable level of about

3,000MW will absorb substantial share of associated gas that is currently being flared. It

is thought that if the current generating capacity was fuelled on associated gas, this could

mop up about 8.5 billion sm3 of associated gas per annum. More importantly, gas

development will resolve the lingering environmental problem that has massively

threatened the wellbeing of the subsistent peasant economy and basic survival of the

people in the Niger Delta Region. It will also influence the backward and forward

linkages and other socioeconomic development. From the perspective of sustainable

development, natural gas development will create the much-needed expansion in the

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domestic gas market. Natural gas is gradually becoming the fuel of first choice as well as

the preferred source of energy, Bakindo (2008).

Nigerian natural gas is greatly characterized as one of the best quality in the world, and

ostensibly the most important export oriented product to stimulate economy growth and

development. With little or no extra exploration cost, natural gas, which exists in much

larger quantities than crude oil is the energy source and industrial feedstock for satisfying

the yearning of a country with vast population that is in dire need of economic

development. With a proven gas reserve estimated in the region of about 185 trillion

cubic feet, Nigeria is ranked the world seventh largest proven natural gas reserve holder

and the largest of Africa, but with lack of vision to utilize this gas resources to fast track

the development of the domestic economy. The consequence of such lack of vision has

left Nigeria stranded in the middle of the road with no gas to fuel its power and industrial

requirements in today’s 21st Century, Y. Adeoye, (2008).

QuickTime™ and a
decompressor
are needed to see this picture.

Photo: Environmental Rights Action

A typical gas flares sight in the Niger Delta, causing monumental environmental damage.

The gas flare in Nigeria has been termed a colossal waste and a disastrous development

experience, X. Sala-I-Martin and A. Subramanian (2003). The scale of the waste is

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staggering. What is going on in the Niger Delta is a continuing economic, political and

environmental disaster, C. Cragg (2010). If put through a modern, combined-cycle

power station, this quantity of natural gas could fuel about a quarter of Britain's power

needs. It is equivalent to more than one third of the natural gas produced in the UK's

North Sea oil and gas fields and would meet the entire energy requirements of German

industry, D. Howden (2010). This lead to huge question why there is lack of seriousness

to harness the abundant natural gas resources for economy growth, and also to extinguish

all manner of gas flaring. But despite various efforts to enhance gas utilization, most gas

producing fields are still characterized by routine gas flaring. According to Billy Agha

(2009), Nigeria cannot stop gas flaring without ruining its economy. He asserted the

need to balance between the economy and actions to be taken, as any efforts to

undermine this fact will cause trouble in the system. Shutting down defaulting oil fields

will mean huge loss of revenue and the disruption of economic activities in the country.

Parties to this dastardly act must stop blame game and end this shameful waste of well-

endowed natural resources for economic development. The operating companies, they are

the operators, and clearly they have a responsibility to operate in an environmental way,

O. Ajumogobia (2008). He asserted that operators must take decisive corporate steps in

consonance with best worldwide practices and operational standards, to end flaring in

Nigeria. But Alexandra Gillies (2008), a Cambridge University researcher believe that

the ministry could make the plan succeed if they worked systematically and really got

tough with the oil companies. While urging the industry to rise up to the challenge and

demonstrate concerted confidence of all parties to their progammes and projects, C.

Ogiemwonyi (2008) stated that operators have consistently flagged the risks of oil shut-in

when asked to implement the gas flare down date.

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BACKGROUND TO THE RESEARCH

The World is at the threshold of “the age of green economics”, Ban Ki-Moon (2008).

An important inherently global agenda and by far the most contemporary issue that every

government in all part of the world is struggling to tackle is how to reduce the threat of

human induced climate change such as gas flaring to socioeconomic sectors, human

health and ecological systems. Climate change is the spectre at the feast, capable of

undermining our attempts to deliver a healthier, fairer and more resilient world, K.

Toepfer (2008). Environmental change may take any of three forms; overuse of

renewable resources, overstrain of the environment sink capacity, that is, pollution, and

the impoverishment of the space of living, (Libiszewski 1992).

More than ever before, it is now a worldwide phenomenon to reduce greenhouse gas

emission globally, and there is increasingly growing concern to improve the environment

because of public awareness of the link between natural resource issues, social economic

development and environmental management. Nigeria’s greatest environmental

challenge is curbing gas flaring in the Niger Delta region, J. E. Okeagu et al (2006). In

order to reduce the threat of greenhouse gas emission to the environment, there is need to

shut down the flares. Natural gas development in Nigeria will steer the low carbon

direction and significantly address the environmental impact of gas flaring.

Gas flaring is defined by a World Bank (2004) sponsored study as “the wasteful emission

of greenhouse gases that causes global warming”. Jike, (2004) has argued that most other

causes of environmental change become insignificant when pitched against the

consequence of gas flaring that occurs on a daily basis in the Niger Delta region.

The UNDP/World Bank (2004) estimates that the annual amount of natural gas flared or

vented (un-burnt) gas globally is equivalent to the combined annual gas consumption of

Germany and France, twice the annual gas consumption of Africa, three quarters of the

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Russian gas export, or enough to supply the entire world with gas for 20 days. This

flaring is geographically concentrated; ten countries account for 75 per cent of emissions,

and twenty for 90 per cent. The largest flaring operations occur in the Niger Delta region

of Nigeria, B. Gervet (2007). Flaring in the Niger Delta account for about 20 per cent of

the worldwide total gas flare.

Gas flaring constitutes absolute hazard to the oil producing communities. It causes air

pollution, acid rain, greenhouse effect, soil and crop contamination, as well as public

health woes, such as respiratory illness (asthma and bronchitis), hearing loss, skin

problems, high rates of childhood mortality, premature births and miscarriages. Acid rain

is evidenced by the fact that the shelf life of the corrugated iron sheets used for roofing in

most Nigerian villages has decreased from twenty to five years. Gas flares, burning 24

hours a day over the past 30 years in some production oil field are often situated near

impoverished villages/communities.

Critics of excessive gas flares in Nigeria have said that the Nigerian government does not

care about the welfare of the oil producing communities. Rather, the government is more

interested in maximizing oil revenue without regard to the monumental environmental

problem of the region. Nigeria cannot stop gas flaring without ruining its economy, B.

Agha (2009). The communities have to contend with high level of environmental

degradation, gas flaring, and pollution, continue threat of thick soot, making rainwater

unsafe to drink. The communities are predominantly peasant rural farmers and fishermen

for the sustenance of their livelihood. There is profound theoretical argument of a change

in agricultural production due to environmental change. The people live on water; yet

have no access to clean water or pipe born water. There is also no electricity in most of

these communities except light ray from gas flaring sites, but at night oil companies

facilities near these communities always glow with electric light. Why can this electricity

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be extended to these communities as part of corporate social responsibility (CSR)?

Hansen (1996), that airline pilots navigated by the light of hundreds of blazing flare

stacks. Like the proverbial adage, “a hen that laid the golden egg is meant to wallow in

abject poverty.” With over 50 years of oil and gas exploitation yet, no development plan

to suggest any willingness to develop the region. Various agencies of government like

the Niger Delta Development Commission (NDDC) and Niger Delta Ministry including

the multinational oil companies’ corporate social responsibility are more concern about

their personal gains from the region rather than carry out any meaningful development.

Not until very recently that Nigeria started benefiting from its vast natural gas resources.

Over the years, much of the gas produced has been flared representing about 55 per cent,

equivalent of 2.5 billion cubic feet a day. This is not a favourable remark for a country

willing to maximize its vast natural gas resources for economic development. The fight

against climate change is a reality but continuous gas flaring in Nigeria is a direct

negation of this principles. Flaring goes well beyond Nigeria’s shores and government is

determined to address it through the provision of adequate natural gas infrastructures,

because flaring in the Niger Delta account for about 20 per cent of the worldwide total

gas flare.

From the perspective of sustainable development, natural gas development will create the

much-needed expansion in the domestic gas market, reduce local, regional and global

greenhouse gas emission and improve the overall quality of health and life of the rural

gas producing communities. Since the concept of sustainable development is

synonymous with the process of economic development, therefore, it is imperative to

examine whether there is real and measurable emission reduction in the Niger Delta

region of Nigeria and the estimate of gas emission levels.

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DEVELOPMENT OF THE NIGERIA’S OIL INDUSTRY

Oil exploration started in Nigeria in 1908, when the Nigerian Bitumen Corporation, a

German Company pioneered the first initial effort to discover oil in Nigeria in Araromi

area in the present Ondo State. The First World War in 1914 aborted this effort.

In 1937 another search for oil resumed, this time by another Company, Shell D’Arcy,

(now Shell Petroleum Development Company (SPDC), got the concessionary rights to

prospect for oil in the whole of Nigeria. The Second World War ended another golden

opportunity for search for oil, but activities resumed again in 1947. After several years of

search with over N30 million financial investments, crude oil was eventually discovered

in 1956 at Oloibiri in the present Bayelsa State, of Niger Delta region, NNPC (2005).

THE NIGERIAN GAS INDUSTRY

Nigeria has huge gas reservoir, which is reputed as the 7th largest natural gas reserves in

the world. The estimated proven reserve is about 185 trillion cubic feet, and combined

probable and possible reserve could be about 300 trillion cubic feet. The natural gas

resources are largely unexploited with total gas production estimated current daily

production at 4.6bcf/d with nearly 55 per cent or close to 2.5bcf/d are currently being

flared. Unlike crude oil, the gas sector suffered an uncoordinated development by the

government in harnessing the potentials resources. Therefore, this study would seek to

address the monumental environmental impact arising from massive gas flaring in

Nigeria.

Nigeria is a leading flarer of natural gas on the planet both absolutely and proportionally.

This represents about 46 per cent of Africa’s total, and the most gas flared per tone of oil

produced, and it is about 20 per cent of the world’s gas flaring. According to the

Nigerian National Petroleum Corporation (NNPC), Nigeria flares the second largest

volume of gas of any producer, behind Russia. Flaring takes place predominantly in the

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Niger Delta region, which is about the size of Britain. In financial, environmental and

economic terms, about $150 billion may have been lost to gas flare in the country

between 1970 to 2006 and bring the country’s gas flare estimate to 1.2 trillion cubic feet

annually which in turn is capable of generating well over 12,000 mega watts of electricity

seriously needed to catalyze the growth of Nigeria economy, Chris Ogiemwonyi (2006).

World Bank Report (2004) estimates that flaring represents an annual economic loss of

about $2.5 billion USD to Nigeria.

HISTORY OF THE DEVELOPMENT OF THE GAS INDUSTRY IN NIGERIA

Since the first oil in 1956, natural gas resources in Nigeria have not until very recently

received any focused attention, partly because of the need to satisfy the desires of foreign

partners whose preference has been crude oil; our level of industrialization, coupled with

the over subsidization of petroleum products. For many years, therefore, government

bore the pains of the discomfort of seeing this natural endowment either being flared or

neglected if encountered in the course of crude oil exploitation. Legislation, which

attempted to impose penalties, was frustrated on the guise of lack of natural gas users.

In 1963 the first gas supply for power generation started through initially un-coordinated

leading to the establishment of facilities within producing fields for relatively small but

steady off takes. These initial efforts at natural gas utilisation involved the following

schemes:

 Supply to National Electric Power Authority (NEPA) Afam Power Station

 Supply to National Electric Power Authority (NEPA) Delta Power Station,

Ughelli

 Supply to five private industries in Aba

 Supply to old Port Harcourt Refinery

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Shell Petroleum Development Company Ltd (SPDC) executed the aforementioned gas

projects between 1964 and 1966. Mention must also be made of the gas supply to the

Eastern Nigerian Development Corporation (ENDC), the predecessor of Rivers State

Electricity Board (RSEB), which also, since the 1960s has been responsible for

distributing natural gas to industrial gas users within the Trans-Amadi industrial layout in

Port Harcourt. Apart from the uncoordinated attempts, the first major gas pipeline system

did not come up until 1978 when government through Nigerian National Petroleum

Corporation (NNPC) using her joint venture partner, SPDC implemented the gas supply

to National Electric Power Authority Sapele. NNPC however, quickly followed this with

the execution of 2 gas pipeline projects: Aladja Systems and Oben-Ajaokuta in 1981 and

1983 respectively. These projects with a combined system capacity of 270 MMSCF/D

were designed to deliver gas to the Steel Complex at Ajaokuta.

By 1985, a Gas Division was created in NNPC to ensure the realization of Government

objectives for gas utilization. Still in the quest for commercial and properly focused

growth and development of the gas industry in Nigeria, the Nigerian Gas Company Ltd

(NGC) was created out of NNPC in 1988 as a subsidiary. NGC is now shouldering the

responsibility of the control and further development of the network of domestic gas

infrastructure in Nigeria. Government has a social responsibility for orderly

development, growth and utilization of the country’s natural resources. As a result,

additional systems were constructed between 1985 and 1987 to supply gas to NEPA at

Afam, IGIL and other industries at Aba, and the National Fertilizer Company of Nigeria

(NAFCON) fertilizer plant at Onne. These systems though non-integrated, together with

the Aluminium Smelting Company of Nigeria (ALSCON) constitute the backbone of the

Eastern Gas supplies.

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ALSCON project entails a total of about 117 kilometres of pipelines of various sizes

traversing three Eastern States in Nigeria (Rivers, Abia and Akwa-Ibom) with a system

capacity of 450 MMSCF/D and will form the basis of a fully integrated network in the

East Delta. The Escravos-Lagos Gas Pipelines was commissioned in 1989 and has a

system throughput of 1100 MMSCF/D. It is the biggest gas pipelines project executed to

date in Nigeria and could be regarded as a `Gas Corridor’ to Lagos and the ECOWAS

Countries. Furthermore, the design concept of this line has envisaged the implementation

of extension projects. Two of such projects are the gas supplies to the West African

Portland Company (WAPCO) Plants and Ewekoro and Sagamu in Ogun State. These gas

supply systems were commissioned in 1993 and 1994 respectively and they represent a

modest beginning of commercially oriented gas pipeline projects.

Obviously the goal of developing these gas pipeline infrastructures is to address the

socio-economic needs of this country. Nigeria has over 1500 kilometers of gas pipelines

network with a combined design throughput of about 2000 MMSCF/D made up of

transmission trunk lines as well as spur lines from gas sources in the Delta and Eastern

State for deliveries to as far away places as Egbin in Lagos area to Ajaokuta Steel

Company Ltd (ASCL).

RESEARCH OBJECTIVES

RESEARCH OBJECTIVES

The main objectives of this study are:

1. To determine the environmental implications of natural gas development in

Nigeria with emphasis on flaring reduction projects.

2. To identify major natural gas gathering, transmission and distribution

infrastructures in the domestic and regional networks, whether they are adequate

to extinguish all manner of flaring in Nigeria.

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3. To identify key obstacles that has constituted barrier to viable domestic natural

gas development in Nigeria.

4. To examine the institutional/regulatory frameworks aimed at reducing gas

flaring in Nigeria.

PROJECTS TO REDUCED NATURAL GAS FLARING IN NIGERIA

The availability of adequate resources to afford the cost of required technologies

necessary to recovered gas from production sites as well as the demand within the

domestic context, regional and international market will help to eliminate routine gas

flaring in Nigeria. The strategic development particularly in the downstream sector will

promote gas utilization, and it is technically feasible to eliminate gas flaring in Nigeria

like in some production facilities in the North Sea.

LIQUEFIED NATURAL GAS (LNG) PROJECT

Growth and expansion in the Nigerian economy can be predicated on the development of

huge gas reserves because expansion of gas utilization and develop export projects is

indeed a hallmark to halt gas flaring for environmental preservation. Five trains of LNG

were fully on stream by the end of 2007; with total natural gas feedstock capacity

conservatively in the region of 24.6 billion cubic meter a year (about 67.8 per cent of the

national gas consumption in 2005). To date, the capacity of total LNG installed is 22

million metric tones per annum.

THE WEST AFRICAN GAS PIPELINE (WAGP)

The objective of this project is to supply gas to some ECOWAS Countries, in pursuant to

Nigeria’s commitment to Article 48 of the Treaty which encourages member Nations to

co-operate, consult and coordinate their policies regarding energy and mineral resources.

This project will boost flaring reduction in Nigeria and is estimated to cost about $400

million USD. It was initiated in 1991, but the World Bank funded the project conceptual

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study in 1992 to determine its feasibility. The main purpose of WAGP is to harness

Nigeria economic benefit from natural gas, halt and possibly eliminate routine gas

flaring, create the needed gas infrastructure for economic benefit of the entire region for

sustainable development as well as greatly reduce the greenhouse gas emission.

Investments of $1.4 billion could be generated through investments from public and

private in the power plants.

MAJOR GAS SUPPLY INFRASTRUCTURE IN NIGERIA

Gas Pipeline Systems Design Line Diameter Pipeline

Capacity (Inches) Length
(MMSCFD (kilometers)
Aladja Gas Pipeline System 70 6, 8, 14 & 16 130
Oben-Ajaokuta Gas Pipeline System 200 24 198
Sapele Gas Pipeline System 200 10 & 18 44
Obigbo North/Afam Pipeline System 90 14 19
Imo River Aba Gas Pipeline System 35 12 28
Alscon Gas Pipeline System 160 14, 16, 7, 24 117
Alakiri-Onne Gas Pipeline System 138 14 17
Escravos - Lagos Gas Pipeline (ELP) 1100 30 & 36 514
System
Ibafo – Ikeja City Gas System 50 24 48.4

LIMITATIONS TO THE DEVELOPMENT OF NATURAL GAS MARKET IN

NIGERIA

LACK OF STRICT POLICY ON NATURAL GAS

The lack of strict policy on natural gas and past attitudes relating to energy matters has

not given the required stimulus for gas development. With the absence of a clearly

defined institutional/regulatory framework, gas projects have had to be executed in the

past on stand alone or dedicated basis with the sponsor(s) of these projects seeking

specific concessions from government to facilitate their implementation thereby leading

to an un-coordinated development of our gas resources.

LACK OF CAPITAL FOR NECESSARY GAS INFRASTRUCTURE

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Lack of capital for the provision of necessary gas pipelines infrastructures such as

integrated pipeline and gas distribution networks. This is more so against the backdrop

that the necessary capital investment requirements can become huge with long-term

commitments of funds. There can be no question that financing of such capital-intensive

infrastructures in a country noted for corruption is a major hurdle.

LACK OF ENERGY INTENSIVE PLANTS

The lack of energy intensive plants and chemical processing industries within economic

distance from gas sources that can utilize natural gas for processing heat or as feedstock.

Again, many factories that use gas are down. Aladja Steel factory has been out of action

for years, so also is Ajaokuta Steel. The Aluminium Smelting Company ALSCON is

already shutdown also is the National Fertilizer Company (NAFCOM). The NEPA

thermal power stations are operating at less than 30 per cent of their installed capacity.

Other examples of poorly performing projects abound in various part of Nigeria.

URBAN CENTERS

Nigeria is highly underdeveloped, unlike the western countries with structured urban

centers. The un-ordered configuration of our urban centers hampers the installation of an

economic distribution network for gas.

CLIMATIC CONDITION

The climatic condition of Nigeria makes the need for space heating irrelevant and this is

most cases is the largest consumer/base load of natural gas in temperate regions of the

world.

LACK OF AWARENESS

Until very recently, there was apparent lack of awareness of the potentials of natural gas

use to the industrial sectors and the benefits to the Nigerian economy.

PRICING STRUCTURE

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The pricing structure gave no economic incentive to consider gas as an alternative energy

source. For example, NEPA pay N3/mmscf or 0.03/million BTU for gas supplied to their

stations. Equivalent prices in Europe and the USA are 2.27% and 2.08%/million BTU

respectively.

LEGISLATION AIMED AT REDUCING GAS FLARING IN NIGERIA

The main legislations, which seeks to regulate and possibly eliminate the flaring of gas,

are the Associated Gas Re-injection Act of 1979 No. 99, the Associated Gas Re-injection

(Continued Flaring of Gas) Regulations 1984, and the Associated Gas Re-injection

(Amendment) Decree No. 7 of 1985.

THE ASSOCIATED GAS RE-INJECTION ACT 1979 (NO. 99)

This Act makes it mandatory for every company producing oil in Nigeria to submit

detailed plan for the utilization of the gas produced in association with crude oil that is

currently being flared away. The Act provided further that no company engaged in

production of oil, should, after January 1984 flare associated gas without a written

permission from the Minister of Petroleum Resources.

THE ASSOCIATED GAS RE-INJECTION (CONTINUED FLARING OF GAS)

REGULATION 1984

Because the domestic gas market in Nigeria is limited and the huge financial resources

required to develop the gas industry, oil companies were faced with some difficulties to

embark on natural gas development programme. Under the 1979 Act, the penalty for

violation is the forfeiture of rights of concession granted to the violator in the particular

field(s) in relation to which the offence is committed. However, because of the

importance of petroleum production to the Nigerian economy, the Act was amended in

1984. The main substance of the 1984 Regulation was that it laid down the conditions,

which must be complied with before the Minister of Petroleum Resources could grant

permission to a company to continue to flare gas in a particular field.

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THE ASSOCIATED GAS RE-INJECTION (AMENDMENT DECREE) NO. 7 OF
1985

The Decree came into effect on 20th April 1985. It is meant to tackle the problem arising

from the implementation of the Associated Gas Re-injection programme. The 1985

amended decree specifically empowers the Minister to give permission to a company to

engage in the production of oil and gas and to continue to flare gas in a particular field(s),

if he is satisfied that after January 1, 1984 the utilization or re-injection of gas is not

appropriate or feasible.

The penalty for gas flaring was 2 kobo for every 28.317 standard cubic meters of gas in

1979, and was increased in 1992 to 50 kobo per million standard cubic feet, and then to

N10.00 per mscf. It was doubled by Presidential fiat in 1990 to N20.00. The increase did

not deterred oil companies from flaring gas.

THEORETICAL FRAMEWORK

This study will make use of the theoretical concept of Clean Development Mechanism

(CDM) as a framework to explicate environmental implications of natural gas

development in Nigeria.

THE CONCEPT OF CLEAN DEVELOPMENT MECHANISM (CDM)

On December 11, 1997 the Clean Development Mechanism (CDM) was established

under Article of the Kyoto Protocol adopted by the Third Conference of the United

Nations Framework Convention on Climate Change (UNFCCC). CDM is the first global

initiative aimed at reducing greenhouse gas emission into the atmosphere. The purpose

of CDM is to promote sustainable development in developing countries by reducing

greenhouse gas emission to the atmosphere and to assist industrialized countries realized

their target in line with the Kyoto Protocol. It is a flexibility mechanism that allows

industrialized countries to established projects with low carbon emission such as gas

flaring and other environmental pollution in developing countries and earned Certified
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Emission Reduction (CERs) from the investment activities. Projects that reduce the

proportion of GHG into the atmosphere will qualify for CDM whereas project, which

generates GHG, does not.

The main criteria for CDM projects are that it must lead to sustainable development,

economic benefit, real, measurable and incorporate the concept of additionality element

to mitigate climate change. In this scenario, it must show clearly that the projects would

not have been feasible without the incentive from CERs. The burden is on the host

country of a CDM project to determine whether it will lead to sustainable development.

Factors to determine sustainable developing in Nigeria include; economic benefit,

efficient energy development and utilization, improvement in the environment, transfer of

technology, emission reduction.

THE INTERNATIONAL REGIME ON ATMOSPHERIC PROTECTION

The air quality standards and atmospheric protection has many international agreements.

Discussion will be restricted to the one that relate to the theoretical framework of this

study such as; United Nations Framework Convention on Climate Change (UNFCCC)

and the Kyoto Protocol (KP). They relate directly to the relevant theoretical framework

of this research.

THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE

CHANGE (UNFCCC)

When it became increasingly evident in the 1980s that there is possibility of global

warming as a result of anthropogenic emission of greenhouse gas emission and the

concern to improve the environment prompted governments, working through the World

Meteorological Organization (WMO) and the United Nations Environment Programme

(UNEP) to create the Intergovernmental Panel on Climate Change (IPCC) in 1988.

The United Nations Framework Convention on Climate Change (UNFCCC) was adopted

on May 9, 1992, but it was signed by 155 nations at the United Nations Conference on
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Environment and Development (UNCED) or ‘Earth Summit’ in Rio de Janeiro in June

1992. This represents the first global agreement to reduce the human induced climate

change and greenhouse gas emission, and is today the most universally accepted

international agreement.

The ultimate objective of the convention as stated in Article 2 is “… stabilization of

greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous

anthropogenic interference with the climate system. Such a level should be achieved

within a time-frame sufficient to allow ecosystems to adapt naturally to climate change,

to ensure that food production is not threatened and to enable economic development to

proceed in a sustainable manner”, IPIECA (2008).

According to IPIECA (2008), the definition of ‘dangerous’ remains to be settled. Since

the 1980, the issue of climate change has shifted from scientific to the political arena.

Recent report that Professor Phil Jones, Director of the University of East Anglia’s

Climate Research Unit manipulated data on climate change laid credence to this

argument. For so many years, the United Nation’s Intergovernmental Panel on Climate

Change has used the raw data analyzed by Professor Phil Jones, collected from hundreds

of weather stations around the world to bolster efforts to press governments to cut carbon

dioxide emissions.

THE KYOTO PROTOCOL

The Kyoto Protocol to the United Nations Framework Convention on Climate Change

(UNFCCC) aims to curb greenhouse gases such as air pollution and carbon dioxide in the

atmosphere. About 141 countries have ratified the Treaty, representing 55 per cent of

greenhouse gas emission and they also promised to cut down on their emission by at least

5.2 per cent by 2012.

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The Kyoto Protocol to the UNFCCC negotiated in the ancient Japanese Capital of Kyoto

came into force on 14th February, 2005, seven years after it was agreed. It aims to

strengthen the commitments of the UNFCCC. Africa will bear the burden if the world

refuses to act even though it did not contribute to the deteriorating state of climate

change, but developing countries including large developing countries such as India,

China and Brazil are not required to commit to specific binding emission reduction.

The Kyoto Protocol was ratified by Nigeria in October 2004, could initiate a project to

phase out gas flaring and attract fund from Annex I countries in line with the Treaty.

Under this cooperation success achieved by additional emissions reduction are converted

into emissions reduction credit in favour of the UNFCCC sponsoring Annex I Country.

Any interested Annex I country could provide the fund and technology necessary to

harnessed the gas and reduce flaring. The technicalities to quantify the project for carbon

credits entitlement, the principle of “additionality test” in relations to the CDM project

will be invoked by the Kyoto Mechanisms for gas flaring reduction. Oil companies who

are unable to stop gas flaring in Nigeria despite flaring being illegal can take advantage of

the CDM project.

RESEARCH QUESTIONS

This research study is primarily concern with the pertinent issues relating to the

environmental implications of natural gas development in Nigeria. The key research

questions to be addressed in this study are:

1. What is the environmental impact of gas development in Nigeria on the health of

local oil and gas producing communities?

2. Is the level of natural gas gathering, transmission and distribution infrastructures

adequate to extinguish all manner of gas flaring in Nigeria?

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3. What are the obstacles that constituted barriers to natural gas development in

Nigeria?

4. Is the clean development mechanism an option to eliminate routine gas flaring

Nigeria?

RESEARCH METHODOLOGY

Participant for this study will include 80 senior managers, employees and community

relations officers of some selected multinational oil & gas companies (Shell, Agip, Mobil,

Chevron, Nigerian Gas Company, NNPC and NLNG) operating in the Niger Delta

region, 100 local residence of Niger Delta communities, villages and clan and 42

employees of some related government department/agencies such as Niger Delta

Development Commission (NDDC), Ministry of Niger Delta and some selected Niger

Delta States Oil Producing Commissions, example, DESOPADEC, OSOPADEC,

EDSOGPADEC etc. where flaring takes place randomly selected and representing the

sample of the phenomena being studied. Telephone interview will be used for about 20

very busy managers of oil companies and communities chiefs/king who may be

unavailable for face-to-face discussion. About 30 structured questionnaires will be

administered in this course of the study.

The qualitative method of data collection technique with a corresponding analysis

procedure will be used to explore the research question in this study. More than one data

collection and analysis technique can also be used to answer the research questions, as it

is now increasingly being advocated in research to use more than one data collection,

where a single research study may use qualitative and quantitative techniques and

procedures in combination as well as primary and secondary data, Curran and Blackburn,

(2001), A. Bryman et al (2007).

SOURCE OF DATA

21
Data for this study were sourced from the publications of Central Bank of Nigeria (CBN),

Nigerian National Petroleum Corporation (NNPC), Nigerian Gas Company (NGC),

Federal Office of Statistics in Nigeria, Internet as well as commissioned studies and

publications by various authors, national and international agencies such as World Bank,

International Monetary Fund, United Nations Development Programme (UNDP) and

United Nations. It will use primary data (telephone/electronically, semi-structured

interviews and self-administered questionnaires).

CONCLUSIONS AND FUTURE DIRECTION

Natural gas development is already a reality in Nigeria, but with no clearly but suspected

defined institutional and regulatory framework, and using oil business regime inherently

inflexible with gas development has encouraged large scale gas being flared since the

1960s when oil exploration commenced in commercial quantity, with attendant health

and environmental consequences.

With no clearly but suspected defined institutional and regulatory framework, and using

oil business regime inherently inflexible with gas development, has encouraged large-

scale gas flaring since the 1960s when oil exploration commenced in commercial

quantity, notwithstanding the recent meager economic gains from gas development

through the export of LNG abroad. We need to do much more to turn gas flare stacks in

Nigeria into a catalyst for economic development. There is a profound medical argument

the impact of gas flaring to the average life expectancy in the Niger Delta region is 43

years, and recorded Nigeria’s highest infant mortality rate of which about 12 per cent of

new born babies failed to see out their first year birthday. There is also a profound

theoretical argument of a change in agricultural production due to environmental change.

The communities have to contend with high level of environmental degradation even

22
making rainwater unsafe to drink. They are predominantly peasant rural farmers and

fishermen depending entirely on farming for the sustenance of their livelihood.

This paper align with the vex issues in the Niger Delta region which Frank (1997), argued

that taxation is one solution to the problem of negative externalities particularly gas

flaring in Nigeria. Taxation may not constitute the most pragmatic solution but it may

serve as a deterrent to the staggering pace of gas flaring in Nigeria. Flaring is striving

because of the paltry penalty paid by oil companies, and this has encouraged them to flare

rather than invest in gas utilization projects. Taxation of negative externalities such as

gas flaring will provide a veritable source to improve government revenue generation for

development and also discourage incessant routine gas flaring

The penalty for gas flaring was 2 kobo for every 1,000 standard cubic meters of gas in

1985 where authority to flare was not granted, but was subsequently increased in 1990 to

50 kobo per 1,000 standard cubic feet. It was increased to N10.00 per 1,000 standard

cubic feet in 1998, later doubled by Presidential fiat to N20.00 (equivalent of 11.19 cents)

per 1,000 cubic feet of gas flare, and by far not stringent to discourage all manners of gas

flaring. It is illegal to flare gas in Nigeria, yet oil companies operating in the Niger Delta

find it more rewarding to flare gas than embark on gas utilization projects. This is

particularly so because it is difficult to see how the menace of gas flaring in Nigeria can

be dispelled as long as the oil majors are not denied what Rachael Carson once called the

right to make a dollar at whatever cost to the environment (Carson, 2002).

The failure of various tier of government (local, state and federal) to provide the much

needed development benefit despite the huge oil revenue result in direct skepticism,

discontent and more recently violent conflict with attendant armed struggle, kidnapping,

hostage taken and other socio vices, with no cordial relationship between multinational

oil and gas exploration companies and their host communities. Agim (1997) that the

23
remote cause of the friction between oil companies and their host communities can be

traced to be deep-seated historical discontent with governance in Nigeria. In essence,

government failure to deliver on long term developmental benefit, resolve socioeconomic

issues and eradicate threat of massive gas flaring despite the huge oil and gas resources is

a pointer to the perceived political and economical marginalization, thus created a huge

sense of disenchantment within the people and communities in the Niger Delta region.

But the pace of militancy has halved the quantum of oil and gas production and

subsequently, the amount of gas being flared, as gas flaring is proportionate to associated

gas production.

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