Royal Dutch Shell Plc  .com Rotating Header Image Nigeria: FG Slams Tougher Sanction On Gas-Flaring Firms

This Day (Lagos)
30 March 2008
Festus Akanbi With agency report

Federal Government has threatened to increase fines on energy companies that continue to release natural gas into the air when producing oil, the Minister of State for Petroleum, Mr Odein Ajumogobia (SAN), has said.

“We certainly will increase the penalty for gas flaring,” Ajumogobia, was quoted by Bloomberg News as telling reporters during a conference in Yaounde, Cameroon on Friday. “However, we are more interested in utilisation and monetisation of gas than penalties.”

The Department of Petroleum Resources had planned to increase the fine for flaring gas to $3.50 per thousand cubic feet of gas on April 1, up from N10 (nine cents) per thousand cubic feet, a measure that is to be endorsed by the National Assembly. However, Ajumogobia did not say when, or by how much, the fines would change.

Nigeria flares more gas than any country in the world. Gas flaring is a process in which natural gas is vented into the atmosphere, potentially hastening the pace of global warming. Oil wells frequently produce gas as well, though often in small quantities, making it costly to gather and transport the gas. Nigeria, which has the world’s seventh biggest natural gas reserves, flares 24.1 billion cubic meters of gas a year, according to the World Bank.
The government has moved the deadline to end gas flaring to the end of this year. Oil companies such as Chevron Corporation and Royal Dutch Shell Plc have said that even the new deadline is unrealistic, citing lack of access to sites due to continued unrest in the Niger Delta region and a shortage of government-owned pipelines to transport the harvested gas.

“The demand for gas is so significant and profitable,” Ajumogobia said. “There is a need to ensure a minimum threshold and that is what the penalty serves to effect.”

The agency report also quoted the minister as saying that the 4,128 kilometre (2,566 mile) Trans- Sahara pipeline project is scheduled to begin construction next year, and be completed six years later. The project aims to transport gas from Nigeria to Algeria “to try and satisfy the huge demand from Europe,” he said.

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