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Shell Says Nigeria Security, Funding Gap Prevent End to Flaring

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Bloomberg: Shell Says Nigeria Security, Funding Gap Prevent End to Flaring 

By Julie Ziegler

May 7 (Bloomberg) — Royal Dutch Shell Plc, Europe’s biggest oil company, said it’s unable to meet a 2008 deadline to end gas- flaring in Nigeria because of a lack of security in the region and funding shortfalls.

Attacks on oil workers and facilities have hampered the construction of gas-gathering equipment in the Forcados Yorki field, The Hague-based Shell said in an article on its Web site.

“Increased violence and kidnappings in the area made it unsafe for work crews and the project has been stalled for two years,” the company said. “And now the project is not funded for completion by the Nigerian government.”

Shell said it needs an additional $3 billion for Nigerian projects to build equipment to capture gases and for facilities serving the 1,000 wells scattered across a region that’s larger than Portugal. The United Nations set a deadline to end flaring, or burning off natural gas, by 2008 under the 1997 Kyoto Protocol.

Nigeria flares the most gas of all countries after Russia, in part because oil companies struggle to meet the costs of gathering and transporting the associated gas that’s produced in conjunction with crude from wells. The release of gas into the atmosphere may contribute to global warming.

Nigeria’s Department of Petroleum Resources plans to increase the fine for flaring gas to $3.50 per 1,000 cubic feet, up from 10 naira (9 cents). No date has been set for imposing the penalty. The nation is also seeking to harness gas that’s currently flared to produce power for domestic use.

The country showed the largest decrease in gas-flaring during a 12-year period ending in 2006, according to estimates from the World Bank’s Global Gas Flaring Reduction Partnership and the U.S. National Oceanic & Atmospheric Administration. The nation reduced flaring by 10 billion cubic meters of gas a year, the data show. The biggest increase was in Russia, which burned off an additional 10 billion cubic meters a year, followed by Kazakhstan and Iraq.

Nigeria flared 23 billion cubic feet of gas in 2004, according to the World Bank. Russia burned off about 50.7 billion cubic meters.

To contact the reporter on this story: Julie Ziegler in Lagos at[email protected]

Last Updated: May 7, 2008 06:29 EDT

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