Urhobo Historical Society

Gas Flares, Oil Companies and Politics
In Nigeria

By Chijoke Evoh

Chijoke Evoh is a graduate student at the Milano School of Public and Urban Policy, New School University, New York, USA

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Monday, February 18, 2002

Oil production has been going on in Nigeria for over 45 years together with the flaring of natural gas. Understanding why this unsustainable practice has lasted for such a long time in the country entails the unraveling of the dynamics of the influence of multinational corporations over natural resource management in developing countries. It must be emphasised that the entire issues of curbing gas flaring or terminal gas flares boils down to one question: who manages natural resource exploitation in Nigeria ñ the government or multinational corporations?

Associated gases are routinely flared in the course of producing and processing oil. Flaring is a means of safely disposing of waste gases through the use of combustion. With an elevated flare the combustion is carried out through the top of a pipe or stack where the burner and igniter are located. This is a common practice in the oil production process. Hence, it is not necessarily an ecological or social crime to flare gas. However, the Nigerian case attracts more attention given the volume of gas flared since the beginning of commercial oil production in the country. For instance, when compared with oil production in the advanced countries, data collected by the Alberta Energy and Utilities Board (EUB) in Canada shows that in 1996 about 92 per cent of gases were conserved or used in some manner. The remaining eight per cent was flared. This socially responsible attitude towards gas conservation, as demanded partly by environmental requirements in Canada and other advanced countries, does not apply in Nigeria.

Nigeria has an estimated 180 billion cubic feet of proven natural gas, making it the ninth largest concentration in the world. Due to unsustainable exploration practices coupled with the lack of gas utilization infrastructure in Nigeria, the country flares 75 per cent of the gas it produces and re-injects only 12 per cent to enhance oil recovery. It is estimated that about two billion standard cubic feet of gas is currently being flared in Nigeria ñ the highest in any member-nation of the Organisation of Petroleum Exporting Countries (OPEC). This is an enormous flare amount. Consequently, and going by the current statistics, Nigeria accounts for about 19 per cent of the total amount of gas flared globally.

In the more than 1,000 oil fields located in the Niger Delta region of the country, the towering flames resulting from gas burning now seem to the local villagers as an inevitable consequence of oil production without any health or environmental risks. It is not surprising that the dangers of decades of intensive deflagation in the region attract little attention from the local communities compared to other effects of oil production such as oil spills, which have immediate degradation effects on the ecosystem. The effects of gas on the environment are negative. The main impact that sour gas has on the environment comes in the form of acidic precipitation. The incineration of sour gas (hydrogen sulphide) produces sulphur oxides, which are released into the atmosphere. The end result of these compounds when they combine with other atmospheric components, namely oxygen and water, is what is called acid rain. Acid rain produces several negative effects on the world in which we live. Considering the great health and environmental implications of gas flaring, the ministry of state for the environment proposed for the year 2003, the application of zero gas flares policy in Nigeria.

Oil producing companies in the country jointly attacked this policy proposal as technically infeasible. In a communique at the end of their meeting, the oil companies argued that accelerating the flare programme is a national policy and an issue of great economic importance that requires huge investment for the acquisition of the required technology. In effect and following the pressure of the oil companies, the government rescinded its initial 2003 deadline and extended it to the year 2008. Such a compromise on the part of the government makes one wonder how committed these companies are to attaining terminal flare in the next six years ñ an objective they have been so reluctant to accomplish in the past four decades.

This action on the part of the government to satisfy the oil companies came as no surprise in view of the "sacred bull" status of such companies in the country. Such corporate-government romance, especially when it comes to oil matters, is not a new phenomenon. Poor oil producing communities have always had to deal not only with the nonchalant attitude of oil companies towards their well-being, but also with the betrayal tendencies of their political leaders. This is partly the reason for the vicious struggle for control and management of the country's resource, especially its oil reserves, with each state demanding a larger share of the oil revenue.

However, it must be emphasised that political will finds expression in more than policy pronouncements. It should also be evident in the creation of the necessary climate where policies can take root and flourish for the immediate good of the masses. It must be pointed out that nowhere in the world, particularly in developing countries, have policies concerning natural resource exploitation been welcome by multinational companies involved in such activities. Their demands for relaxed regulatory policies are almost insatiable and this normally proves detrimental to the social and environmental conditions of the immediate communities. Oil producing communities in Nigeria are not an exception.

By implicitly acting according to the dictates of the oil companies, the Nigerian government has continued to relegate the health and environment well-being of Nigerians to the background. This policy of accommodating the oil companies at all costs and by all means in the country bears outrageous costs. It is a dangerous trade-off between economic gains on the one hand and public and environmental health on the other, which have longer-term consequences that are highly destructive.

The indispensability of oil revenue to the development of Nigeria is not in question, particularly given that the country derives about 90 per cent of its export earnings from the sale of the commodity. Rather, what is questionable is the claim of the oil companies that technologies needed to mitigate gas flaring is presently beyond their reach, hence their demand for sufficient time to acquire it. Such argument raises some logical questions. First, are the oil companies just realising that gas flaring is a problem in Nigeria after decades of activities in the country, and if not why have they not been working on the technology to curb the problem over the years? Second, are they planning on developing a special technology to take care of gas flaring in Nigeria separately from those used in other parts of the world, especially in the advanced countries? What accounts for less gas flare in other oil producing countries when compared to Nigeria? Answers to these questions may lie on both the oil companies and the Nigerian governments, part and present.
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Tuesday, February 19, 2002.

THE technology argument made by the companies is quite paradoxical. The argument comes at a time when technological innovations in the oil industry are rapidly increasing. The oil industry in Europe and America had already invested a reasonable amount of money in R&D of technologies over the years. This had resulted to an increase in deep-water drilling and enhanced recovery of more oil from formally depleted wells. The companies undertaking these technological innovations to enhance oil recovery are also the very ones operating in Nigeria. What these companies want the Nigerian public to believe is that, while technological advances have been made to enhance oil recovery in Nigeria, nothing has been done technologically to curb gas flaring after decades of oil exploration in the country. One cannot help but ask if this is intentional neglect or a technological oversight on the part of the companies?

From another perspective, it has been argued in some quarters that the participation of the federal government in oil production and exploration activities under the joint venture programme with multinational oil firms has incapacitated oil companies to stop gas flaring in the course of oil production. According to this view, the failure of the federal government to effect cash payment for its obligations in the operations of the joint venture partnership constitutes a major obstacle for the oil firms to focus their attention on curbing gas flaring. Hence the argument goes that the government could not credibly enforce gas flaring laws or penalise oil companies, since it has failed to redeem its own obligation. This argument is right to some extent. However, it exaggerates the effect of the government's insolvency to the gas flaring phenomenon. It must be emphasised that the joint venture partnership in question is relatively recent. Hence, it will be a misjudgment to blame the prolonged flaring of gas in Nigeria on such failure on the part of the Nigerian government present or past.

For whatever reason, it is hard to justify the rate at which oil companies have continuously flared natural gas in the course of oil production in Nigeria through the decades. It is not only the responsibility of the oil companies to end this unhealthy practice. Rather, the government bears a great responsibility in this regard as well. If the Nigerian government can provide the will to mitigate gas flaring to its barest minimum, the oil companies will certainly provide the way to do it in terms of technological applications. However, none of those companies will end gas flaring at their own behest. Stopping gas flaring will involve financial investments which oil companies would like to avoid. This is not an isolated case, rather, it is a clear depiction of the modus operandi of multinational corporations in the less developed parts of the world. In the industrial countries, this level of environmental abuse caused by energy production is rare. This is partly because public pressure has led most oil companies to take public image seriously and socially responsible behaviour is now considered an integral part of good business. However, due to the obvious laxities in policy making and implementation particularly in the energy sector in Nigeria, such level of civil consciousness is yet to be attained.

Therefore, civil liberty and community involvement are areas where the new democratic dispensation in Nigeria will be tested in the next couple of years. The participation of local communities, especially those from the oil producing areas, in energy policy making is crucial. The interests and concerns of the communities must be taken into consideration. A practice where oil companies have greater access to the corridors of power in Abuja than the local communities from whose lands the oil comes from, needs to be discontinued. Above all, a monitoring system to curb gas flaring which is perceived to be corrupt or penalties that are sufficiently low to make it profitable to engage in continuous flare are two dangers that will continue to undermine any effort to attain terminal flare in Nigeria. The policy of the previous military regimes in the country encouraged gas flaring by making it cheap for the oil companies to flare gas into the atmosphere and pay a fine of about 10 American cents per 1,000 standard cubic. This is against the 10 dollars penalty required in developed countries, which has discouraged the companies from flaring gas in such developed regions of the world.

The application of the existing technologies in oil production will go a long way in minimising the potential for unconfined flaring of gas in the numerous oil fields in Nigeria. These technologies are not out of the reach of the various multinational oil companies operating in the country as they have presented it to the government. Curbing flared gas could offer oil field operators significant safety and so many economic and environmental advantage to other stakeholders. It will substantially reduce atmospheric greenhouse (GHG) emissions thereby securing environmental stability in the region. Such reduction in emissions in Nigeria can possibly attract companies in the advanced countries seeking carbon reduction credit under the Kyoto Protocol programme of emission trading. This will definitely be an additional source of income to the country.

Increased efforts to expand the local utility of gas in the country will also have a significant effect in mitigating gas flare. There is little or no local and regional demand for the product. So far, the efforts of the government are concentrated in the liquefied natural gas (LNG) project which is targeted at foreign markets in Europe. The same effort needs to be applied both locally and regionally. This is where the proposed West African Gas Pipeline project with the governments of Benin, Ghana and Togo will play a great role. The development of a regional market for Nigerian gas that is currently being wasted will be appreciated economically and socially. All these efforts will combine to make 2008 a realistic target to end gas flaring in the country after about 45 years of flares. We earnestly hope that this will hold and that irreversible damage has not been inflicted on the natural environment so far.