Ending Gas Flaring: Driven by Insights, Sylva Puts His Hand on the Plow!

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  • (1) Six Months After: A Performance Audit of Buhari’s Ministers.

By Hamilton Nwosa ( Head,  The New Diplomat’s Business Desk)

As Nigeria looks to leverage its enormous hydrocarbon deposits to upscale its Next Level growth and development agenda, the Buhari administration has invariably placed substantial tasks on the shoulders of  the  Minister of State for  Petroleum Resources,  Chief Timipre Sylva, a former governor of Bayelsa State. The Brass born politician has,  according to energy industry players has ” demonstrated a remarkable understanding of his brief so far since assuming office.”

Notable players in complex Oil and Gas terrain  are of  the view that six  months into his appointment as Minister of State for Petroleum, Sylva has made inimitable strides in developing and facilitating the administration’s programmes for Nigeria’s oil and gas sector. His first step, The New Diplomat’s checks reveal,   was organizing the ‘Next Level Strategic Retreat’ on September 26, 2019 with Directors and Heads of Agencies of the Ministry of Petroleum Resources, where he unveiled his roadmap deliverables for the oil and gas sector for the next four years, and expressly sought and received the commitment of the Agencies of the Ministry of Petroleum Resources to deliver on these fronts.

The former Bayelsa State  governor was said to have listed the priority areas to include: Completion of the Nigerian Gas Flare Commercialisation Programme (NGFCP), Implementation of the reduction of Federal Government’s equity stakes in Joint Venture (JV) participation to 40 per cent, Curbing petroleum products cross border leakages, Increasing crude oil production to 3million barrels per day and Reducing the current cost of crude oil production by at least 5 per cent.

Other priority areas include; Aggressive promotion of the passage of the Petroleum Industry Bill (PIB); Promotion of inland basin exploration activities; Promotion of deep offshore exploration activities; Collaboration with the private sector to aggressively increase domestic refining capacity and Working assiduously to support President Muhammadu Buhari in his poise to achieving his target of raising millions of Nigerians out of poverty via job creation.

To ensure the required strategic coordination and inspire a tunnel vision approach, the Minister requested Heads of all the relevant Agencies to collectively pledge an undertaking to deliver on the set tasks and targets and execute the mandate therein even as they expressed their readiness to align with the spirit and letter behind the key priority areas and deepen Inter agencies collaboration across all tiers of the sector. Bureaucrats in these agencies said this was not unexpected as a technocrat and politician who has played in the industry while serving as technical Adviser to a former Minister of Petroleum, and was therefore at home   with the standard industry dynamics.

Similarly, at the twilight of the year 2019, and precisely on December 24, 2019, the Minister had declared 2020 as the year of Gas for the Nation. Sylva who  made this known when he received the Executive Management of the Nigeria Liquefied Petroleum Gas Association (NLPGA) led by the Mr. NuhuYakubu, President of NLPGA in his office, maintained that  the  NLPGA team’s visit would further afford them the opportunity to deeply explore the imperativeness for heightened Government involvement in shaping action plans to grow the Liquefied Petroleum Gas (LPG) industry as well as deepening the utilization of LPG in Nigeria. It may be recalled that amongst the key priorities of  Sylva, include the completion of the Nigerian Gas Flare Commercialisation Programme, which remains paramount with associated gas focused deliverables that include deepening domestic gas penetration and adoption amongst others.

Cresting on insights, the Minister was said to have further disclosed that plans are underway to mop up old and obsolete gas cylinders in circulation and replace them with brand new ones while noting the innovation that Techno Oil; a member of NLPGA, has reportedly brought to the table with its LPG Cylinder Manufacturing Plant.

Checks indicate that the Petroleum  Ministry  in acknowledgement of  Nigeria’s unsustainable high annual flare volumes of over 2 million tonnes of LPG has expects that when this is fully through with the Nigerian Gas Flare Commercialisation Programme, it will effectively position Nigeria on the part to deepened domestic gas usage and adoption.  So what is the broader vision? As experts  maintain , any one who comes into an organization without a plan and a vision, is billed to fail from the start. While unveiling the broader vision of the Nigeria Gas Policy (NGP), Sylva,  has highlighted that it  aims to drive the reduction of production cost of a barrel of oil from Nigeria by at least 5%. He  also indicated his plans and goal to achieve this by enlisting the support of local vendors within the Nigerian Content framework.  

 

Omiruagha Joshua Omovudu, a policy and development expert aver that  this Policy articulates  the vision of the Federal Government of Nigeria, sets goals, strategies and an implementation plan for the introduction of an appropriate institutional, legal, regulatory and commercial framework for the gas sector. “It is intended, from my analysis of the parameters,  to remove the barriers affecting investment and development of the sector.”, he added.

Many seem to agree with Omovudu that the NGP has been structured to make Nigeria an attractive gas-based industrial nation, giving primary attention to meeting local gas demand requirements, and developing a significant presence in international markets. The mission of the policy “ is to move Nigeria from a crude oil export-based economy to attractive oil and gas-based industrial economy considering Nigeria’s natural gas which had been adjudged globally as first-class quality, rich in natural gas liquids, almost Sulphur free and with very low carbon dioxide content. Industry experts say as a low-cost industry, Nigeria’s natural gas offers higher returns and typically should be an attractive investment opportunity both for local and foreign investors.”

Analysts posit that whereas NGFCP is approaching the strategic stage in the gas flare commercialization bidding process, the Minister had been engaging global investors in gas development in line with the commitment of the current administration’s accelerated drive to complete that phase.  The Ministry recently held an investment roadshow in Houston Texas, United State of America (USA), where the Program Manager of the NGFCP, Mr. Justice Derefaka, addressed prospective gas investors on the ease of doing business in Nigeria’s gas sector.

According to Derefaka, “In doing this, we will be adopting strategic winning ways of working by involving a wide range of stakeholders that will be involved in the National Gas Policy implementation.” He added that “amongst others, we will be looking at the implementation of a new and harmonized gas network code and a revised gas pricing regulation as provided by the Policy which will give more comfort to investors in Nigeria’s gas sector as there will be open access to gas facilities and infrastructure, and a more competitive price to encourage further investment and meet domestic demands”.

Consistent with Nigeria’s commitments for reduction of Green House Gases (GHG), the Ministry in its believe that the Gas Flare Commercialization Program would reduce Nigeria’s CO2 emissions by approximately 13 million tons/year, which could be monetized under an emission credits/carbon sale programme. It has, however, been estimated that about US$ 3.5 billion worth of inward investments by third party investors is required to achieve the gas flare commercialization targets by the end of the year, 2020, is opening up opportunity for global investors to come to the table.

While recently articulating the Ministry’s programs, Sylva listed other key priority areas the ministry will be pursuing to include: the eradication of smuggling of PMS (petrol) across Nigerian borders; the completion of gas flare commercialization program; increase of crude oil production to three million barrels per day (bpd); the passage of the Petroleum Industry Bill; increase of domestic refining capacity and implementation of the amended Deep Offshore and Inland Basin Production Sharing Contract Act.

While demonstrating progress and results on some of the programs, Sylva also recently highlighted that the Nigeria Liquefied Natural Gas Limited (NLNG) and Vitol SA have signed a 10-year LNG Sale and Purchase Agreement (SPA) for the supply of 500,000 tonnes of LNG per year from NLNG’s Trains 1, 2 and 3. The delivery is on an ex-ship basis which will start October 2021. This agreement indicates NLNG’s move in ramping up its long-term presence in the market. For many, this is a major step in the right direction.

Equally, while speaking at the 29th National Conference and Annual General Meeting of the Nigerian Environment Society in Benin, Edo State, the Minister noted that the realisation of the NGFCP will be greatly advantageous to the Nigerian economy, stressing that the programme could eliminate routine gas flares by 2020 and enable the government attain some of the United Nations Sustainable Development Goals (SDGs).  The Minister  who explained how the Ministry was committed to attaining the SDGs through the Nigerian Gas Flare Commercialisation said he was optimistic that several employment opportunities would be created through it.

He said: “We have tested this approach with the Nigerian Gas Flare Commercialisation Programme and in addressing SDG-7, which is to ensure access to affordable, reliable, sustainable and modern energy for all. The NGFCP ticks 14 of the 17 SDG boxes and this will stimulate action over the next two to three years in five areas of critical importance to the SDGs, which include people, planet, prosperity, peace and partnership.” Part of the plans, according to him is to provide affordable, reliable, and sustainable energy for all is the provision of three liquefied natural gas trains for the purpose of generating 3,000 megawatts of electricity and 600,000 metric tonnes of liquefied petroleum gas yearly.

Many Nigerians believe this strategy  would  totally  help reduce the cost of energy across the country.

In a recent Nairametrics report, the government said it was uncomfortable with the way gas was being flared in the country. Last year, the government announced an increment in the gas flaring penalty from N10 per 1,000 Standard Cubic Feet (SCF) to $2 per 1,000 SCF of the commodity flared. In addition, it stipulated a fine of N50,000 or a six months jail term or both, on anyone who provides inaccurate flare data.

Industry operators while lauding  the  cardinal objective of the NGFCP which aims to provide a commercial approach to the elimination of routine gas flares by 2020 and drive positive social, environmental and economic impacts in the Niger Delta, and across Nigeria’s environmental zone by mobilising private sector capital towards gas flare capture projects, counsel that the project should be followed through.   Said a bureaucrat: “One of the shortcomings of great and laudable projects in government is to  allow the bureaucracy stall full implementation. So the political will is very, very important in this project.”   Fortunately,   the ongoing efforts of the Ministry to commercialise gas flare sites will raise output in LPG that will drive both local saturation and exports, an agenda that sits pretty well with bureaucrats in the Ministry of Petroleum Resources and they are said to have bought into it robustly.

Experts maintain that what is critically required now is support for the Federal Government efforts in getting credible investors in order for the Nigerian government to realize the objectives of the NGFCP. In this regard, the Ministry said to   be looking to leverage other international outlets to present the roadmap of the program to  enable  international  investors  across the world appreciate the entry and exit points.

Sources hinted that Chief Sylva has been selected,  among key  global competitors to present and showcase this program’s roadmap and opportunities at this year’s Canadian Oil and Gas Conference taking place in Alberta, Canada. Industry experts while applauding this initiative, stressed that it’s good starting point for the  campaign  given that Canada and Norway are the two internationally respected countries  that have successfully addressed issues relating to gas flaring. “  The reason for the invitation, it was learnt borders on the fact that Canada, being a rich oil producing country itself, offers some of the best practices in gas flare Commercialization.

Born on   born on  July 7, 1964 in Okpoma, Brass Local Government Area of present day Bayelsa State, Sylva who started   his primary education at St. Paul’s Anglican Primary School, Okpoma and finished at Ajeromi Central School I, Lagos in 1976 before completing his secondary education  at Government Secondary School, Brass from 1976 – 1981, is deeply rooted in the Niger Delta terrain, a  major factor that has seen him making significant strides since his appointment by President Buhari.

Sylva took a degree in English and  Linguistics from the University of Port Harcourt, coming tops in his class, and later competed  his NYSC at Shell Petroleum Development Company, Warri Delta State, heart of the Niger Delta region. After a career as a Executive Secretary of the National Minority Business Council in old Rivers State, young Sylva plunged headlong into Politics, and was duly elected as member of the old Rivers State House of Assembly in 1991 under the platform of the then National Republican Convention(NRC).

At the end of that short-lived transition,  remaining  unperturbed ,  he returned to business, and painstakingly worked himself up the political ladder. After serving  as Special Technical Adviser to the then Minister of  State for Petroleum,  his  diligence, courage and commitment  resulted in his election as governor of Bayelsa State in 2007 and subsequently again  between 2008-2012. For now, it appears Sylva has put his hand on the plough in his drive to ensure commercialization of gas flaring. How far will he go? That would be the subject of another assessment in the next one year!

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Hamilton Nwosa is an experienced, and committed communication, business, administrative, data and research specialist . His deep knowledge of the intersection between communication, business, data, communication and journalism are quite profound. His passion for professional excellence remains the guiding principle of his work, and in the course of his career spanning sectors such as administration, tourism, business management, communication and journalism, Hamilton has won key awards. He is a delightful writer, researcher and data analyst. He loves team-work, problem-solving, organizational management, communication strategy, and enjoys travelling. He can be reached at: [email protected]

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