Why Gas Flaring in Nigeria Won’t Stop

Fri, Apr 12, 2013

By publisher

11 MIN READ

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Ebho Abure, an engineer and managing director Baseline Energy Services Limited, in an interview with Anayo Ezugwu, reporter, speaks on various controversial issues in the oil and gas sector including deregulation of the upstream sector, petroleum industry bill, pipeline vandalism and how to stop gas flaring in the country. Excerpts:

Realnews: As an expert in the oil and gas, how has it been doing business in Nigeria?

Abure: Well, for us Nigerians, it’s still a struggle because part of the challenge has always been inadequate funding to develop the infrastructure to do real services, especially for the marginal field operators in the upstream sector. They also have challenges in terms of raising funds to develop their assets.  So, funding still remains a problem because the bank rate we get for any loan here is not favourable to business.

Realnews: As an indigenous company, how have you be coping with foreign competitors doing the same  business with you?

Abure: They always have an advantage. They have more access to technology and are better equipped than us. Secondly, the funding issue that I have just mentioned is better for them because they are able to borrow cheaply abroad from their own countries as well and the issue of experience also works in their favour because they have been able to offer the services that we, for example, are doing here to the same parent companies that are here and elsewhere. So, it is a difficult and competitive industry.

Realnews: Does it mean we lack the necessary experience to run indigenous companies in Nigeria?

Abure: Not in terms of man power and human capital but in terms of those things that I mentioned. If you have a company and you said you are doing pipeline construction for instance, if you don’t have a yard and the necessary equipments to do the job, you may know how to do it but you may not be able to get it due to lack of infrastructure.

Realnews: You are involved in the construction of pipelines and maintenance of the facility. How often do you carry out maintenance services on these pipelines?

Abure: Well, most companies usually tender for these jobs, so it’s oil companies themselves that determine how often we do that. When they want to do such a service they will necessarily advertise it through the NIPEX porter or the print media, for example, and ask you to send pre-qualification as required by the NIPEST for the tender.

Realnews: So how often does a pipeline need to be changed?

Abure: It depends on the design life. For example, if I build a new pipeline today, it would take at least 20 to 30 years before I start thinking of changing it. It is determined by what we call design life and there are so many other things you have to put into consideration in terms of protecting that pipeline so that in any environment it finds itself, it will be able to last for that design life. Ordinarily, a newly built pipeline should last for between 20 and 30 years.

Realnews: Government seems to be finding it difficult to protect the nation’s oil pipelines. Do you have any suggestion on how this can be done?

Abure: I don’t think government is short of ideas because we have people who are coming up with all kinds of proposals to the Nigerian National Petroleum Corporation, NNPC, and other oil companies on a regular basis. So, the ideas have always been there. Now, the workability is a different issue because even if you put the most sophisticated technology in the creeks, before you get there the next day, you will find out that they have been moved either by the vandals or the intractable elements in the region. This makes it impossible for you to go there and look at what you are doing.  So, it is not so much the idea, but finding a lasting peace so that we, as Nigerians, are not destroying our own assets. It is crazy that a Nigerian would take dynamite and blow up the pipeline that belongs to this country.

Realnews: What are the inherent dangers faced by the community where oil pipelines are vandalised?

Abure: First and foremost is pollution in terms of spillage. Once you vandalise the pipeline, depending on what the pipeline is carrying either crude or refined product, if they are spills into the environment, of course, the damage is there either to the wild life or to the ecosystem in general. The other one, is the danger to the people themselves, you see fire in these areas, most recently the Arepo incident is a case in point. The inherent danger is there for the community that should really be able to live close to a pipeline without that fear of having fire incident all the time. Those, to me, are the most significant dangers to communities where pipelines are situated.

Realnews: The Petroleum Industry Bill, PIB, has been generating a lot of controversies across the country. What is your view concerning the bill?

Abure: Well, everybody has an opinion of what should be in that bill and what should not be in the bill. It is unfortunate that it is being politicised also, with most of the northern legislators saying that certain clauses in the bill should be removed particularly the 10 percent fund for the host communities. That is generating unnecessary distraction from the substance of the bill. But if you also ask, there are other elements in the bill that give too much power to the minister, for example. So, it depends on your take, to decide whether it is a good bill or a bad one. Hopefully, they will reach some accommodation that would be in the interest of the country.

Realnews: Do you think the country actually needs this bill?

Abure: Of course, we actually need to review some of these provisions of the procurement act that have been in the bill for a long time and of course, the bill is supposed to address all that. But, as I said, the bill will outline how to manage all that, So, if managing the changes would be a problem, do we have the capacity to manage that change as being envisaged in the bill all at once? The bill is creating so many agencies and doing so many things at once and it becomes very difficult to follow up their implementation of these at the same time.

Realnews: Some members of the National Assembly are proposing death penalty for oil thieves, do you think this is the only way we can have sanity in the oil and gas sector?

Abure: Is that worse than Boko Haram? Is oil theft worse than killing people who are in church or in their houses? Why are they not proposing death penalty for that? Is that worse that stealing N28 billion? I personally don’t favour death penalty because it’s not part of my upbringing and education so to speak. But in this country, there have been tendencies of not looking at issues holistically. If there is a crime, there should be an appropriate punishment for that crime. Some crimes should not be excused and others punished. A crime is a crime especially when it’s grievous.

Realnews: In your opinion, what punishment do you want them to give to oil thieves?

Abure: If oil theft is a crime, there should be an appropriate punishment for it, but not death penalty because it’s not more grievous than other crimes that are being punished now. What I would support is for them to make it in such a way that it will not be in anybody’s interest to go and vandalise the oil pipeline. Before, 10 to 20 years ago, this problem was not there. I used to hear about bunkering but at the time I started my career as an engineer, it was not there, but when you have mass unemployment and the settlement culture as we have in Nigeria, where anybody can do anything and get away with it, then it becomes a problem and that is why we have all kinds of criminal activities everywhere.

Realnews: Efforts to stop gas flaring in the Niger Delta do not seem to be working, could you hazard a guess why this is so?

Abure: If the federal government is serious, it will stop the oil companies from flaring gas. The penalty now is a beat loose and most oil companies think let’s flare the gas and pay the penalty. But that is actually energy that we are wasting, when we should be using it to generate electricity and power our plants in the industries that we have. There is so much use for the natural gas; we can make fertiliser from that, so there is use for gas. The question is why you would burn something you can use, when you burn it you are not getting anything from it in terms of flaring gas, rather if you channel it appropriately in the environment, you can generate electricity. I think the oil companies also have to be given an incentive so as to do this gas gathering and processing, and make it useful. Gas gathering is also not cheap, it requires equipment and right environment for you to be able to work in terms of the gathering. Those are the things, I think, government should look at, so that the gas being flared would actually be put to good use.

Realnews: Deregulation of the downstream sector remains a thorny issue in this country. Is that what the country needs just now vis-à-vis the level of poverty in the land?

Abure: Well, there is a court judgement that says it is illegal to deregulate the sector. So, I’m not sure whether the federal government is appealing that case. I’m not a lawyer. So, if a court of competent jurisdiction has given that ruling, it should not be discussed anymore because the federal government ought to obey the court. But having said that, when you look at the issue of deregulation, we always discuss the downstream, why not the upstream. Why is NNPC not being deregulated? That is the question we should be asking because that is where the money really is. If we are talking about deregulation, why are they focusing on the downstream, they should also deregulate the upstream.

Realnews: What is your assessment of the nation’s oil and gas sector at the moment?

Abure: I think it is making slow and steady progress in the sense that in 1990, for example, the indigenous companies were not in the industry then. But now you can count 10 to 15 indigenous marginal field operators, who are Nigerians. In as much as the sector is making progress, to indigenise the sector, there are still much to be done in terms of the way we share the oil blocks. If you recall recently on the floor of the Senate, there was a revelation that 83 percent of the people that own the oil blocks are from the North. The question we should ask is: are those in the north better than those in the south in doing oil and gas business? It is because the military was awarding these blocks arbitrarily and they were awarding it to their fellow northerners, which is the truth. But if it is open to bid competitively and evaluating the technical competencies of the bidders as regards their financial competencies, you would find out that we would not have such one-sided allocation of the block in the country. Those are the issues that need to be worked out. We are making progress, at least the Nigerians in the sector are producing five to 15 thousand barrels per day and by the time you add the number of them all, you find out that we have a significant percentage. I’m just talking about the upstream, in the midstream, there are quite a number of services Nigerian companies cannot provide which, given the right environment and funding, they should be able to provide. Those are the positive signs you can see in the petroleum industry.

Realnews: How do you think the sector can be made better?

Abure: I think the passage of the PIB in whatever form, will be an improvement. We should also look at being transparent in what we do because it would engender confidence and cooperation between foreigners and Nigerians in the sector. Lastly, the issue of honouring your commitment, hopefully, this democratic government will continue so that we will not have the kind of arbitrarily rules I refer to before because this kind of rules are not good for this country.

— Apr. 22, 2013 @ 01:00 GMT