Traditionally, oil companies don't like to find gas together with their oil fields - associated gas (AG). They prefer to find gas without it being mixed up with oil - so-called non-associated gas (non-AG). Finding AG means they have to find ways to dispose of it in order to profit from the oil, the lucrative driver. Whereas finding non-AG gives them the freedom to control their gas production without reference to oil production. So flaring of AG has traditionally been much more common generally.
But while AG flaring has been increasingly frowned upon in most parts of the world, in Nigeria it has flourished. Understanding the scale of flaring requires an understanding of oil and AG production, as well as of flaring data. Reliable data are difficult to find. In addition, oil production in the Delta is often affected by conflict, and a significant amount of oil is stolen ("bunkering") by organised gangs. But it is possible to track a history of increased oil production. And more oil production means more AG production, and thus, without other means of dealing with the gas, more flaring.
As oil production has increased, so has associated gas production
Nigerian oil production has increased significantly. Official data suggest it has hovered around 2 million bbl/d for the last few years, but reached 2.5 million bbl/d in 2004. The Shell JV is reported to account for nearly half of this, or about 1.1 million bbl/d. The ExxonMobil JV produces about 570,000 bbl/d.[ 18 ]
Oil production levels determine the amount of AG produced, and thus bear on the amount of flaring. The rate and level of connection was summarised in a June 2001 speech by SPDC's current Chief Executive, Mr Basil Omiyi:
On the average, about 1000 standard cubic feet (scf) of gas is produced in Nigeria with every barrel of oil. Therefore, with oil production of some 2.2 million barrels per day, about 2.2 billion scf of associated gas is produced everyday." [ 19 ]
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However, recent figures of (what appear to be) AG production suggest a much higher AG/oil production ratio for 2000-2002. Table 4.1 has been compiled from data in the February 2004 UNDP/World Bank Strategic Gas Plan for Nigeria (the Strategic Plan).[ 20 ]
With unreliable information on oil production levels, and conflicting information on AG production levels, it is difficult to be confident about flaring volumes. We will however, try to answer the question 'how much does Nigeria flare?'.
How much does Nigeria flare?[ 21 ]
For the first 20 years or so of the industry, almost all the AG was flared: 2.1 billion cubic feet per day (bcf/d) or 92% in 1981 for example. This percentage barely declined during the 1980s, standing at about 88% in 1989. It seems to have reached about 2.6 bcf/d in the late 1990s, including venting, though by then this was about 75% of all gas production. Whilst OPEC has suggested that flaring has since dropped below 2 bcf/d, and whilst both OPEC and the Nigerian Department of Petroleum Resources have suggested that gas flared as a percentage of all gas production has dropped below 50%, this is not universally accepted.
For example, the Strategic Plan states:
"Current [2000] production of 4.6 bcfd is largely wasted with nearly 55 percent or close to 2.5 bcfd being flared. The gross monetary value of this gas is in the order of US$2.5 billion per year to the economy, amounting to US$50 billion over 20 years ... the balance [is] split between reinjection, NLNG feedstock, internal fuel usage, and a small percentage marketed as LPG." [ 21A ]
The figure of 2.5 bcf/d would have been about 71% of AG production in 2000. This volume figure is repeated on the NLNG company website. The Vice President Atiku Abubakar's website says Nigeria flares 75% of the gas it produces, though the page is undated. On 23rd November 2004 the World Bank stated: "Nigeria currently flares 75 percent of the gas it produces."
Given the significant increase in oil production in 2004, it seems reasonable to us to assume that Nigeria is currently flaring well over 2 bcf/d, probably around 2.5 bcf/d and quite possibly more.
No country flares as much
Whatever the accurate amount, there is general agreement that in global terms, Nigeria is by far the Number One Flarer.
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Using 2000 data, the World Bank has put together the regional estimates found in Table 4.2.[ 22 ]
Africa's contribution, at 37 billion cubic metres for 2000, could, according to the Bank, produce 200 terawatt hours of electricity, or 50% percent of the current power consumption of the African continent and more than twice the level of power consumption in Sub-Saharan Africa (excluding South Africa).[ 23 ]
Again for 2000, the World Bank Table (below, Table 4.3) shows Nigeria as flaring the most gas, both absolutely and proportionately, about 46% of Africa's total, and as flaring the most gas per tonne of oil produced, albeit at a less bad ratio than in 1990.
On the basis of the OPEC figures for Nigeria for 2001 - 16.8 bcm/y - Nigeria again comes out as the world's number one flarer and venter [ 24 ] on both absolute and proportionate bases. Estimating the total world flaring volume in 2001 at 84.87 bcm, Cedigaz data indicates that Nigeria accounted for 19.79% of the global amount.[ 25 ] The Nigerian amount is more than the second and third countries combined, [ 26 ] and four times higher than the nearest African country, Algeria, which is recorded as having flared and vented 4 bcm. European flaring is put at 2.54 bcm, or 0.76% of gross production; US flaring at 2.97 bcm, or 0.43% of gross production. World total gross production in 2001 was 3150.13 bcm, with 84.87 bcm or 2.69% flared and vented.
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If, as seems probable, Nigeria flares at least 2.5 bcf/d, however, this would equal 40% of all Africa's natural gas consumption in 2001.[ 27 ]
How much do the companies flare?
If around 2.5 bcf/d of gas is flared in Nigeria, then from information in the public domain it is impossible to arrive at this figure by adding up the estimated contribution from the individual JV companies that account for 95% of production. SPDC, the Shell JV company, is the biggest oil company in Nigeria and accounts for almost a half of production. The Table below (Table 4.4) has been compiled from SPDC's own figures for 2001-2003, in mmcf/d. However, SPDC's annual report published at the end of May 2005 conspicuously fails to quantify the amounts of AG flared and sold, whilst a graph of hydrocarbon emissions from flaring shows an increase over 2004.[ 27A ]
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These data indicate much lower AG, and higher non-AG, production than the Strategic Plan data. Clearly, there is a discrepancy, and it is reasonable to question whether SPDC has under-estimated its flaring.
The second biggest AG producer is ExxonMobil Nigeria, estimated by the Strategic Plan to be 740 mmcf/d. According to one source, "most operators currently flare about 70 per cent of their produced gas", but ExxonMobil, however, is said to use 70% of their produced gas, and to "have consistently met the estimated industry gas utilization figure of 30 per cent, making it a clear leader." [ 28 ]
The ChevronTexaco JV appears to be the next biggest AG producer at around 710 mmcf/d. Its Escravos Gas Plant is said to have a current capacity of 285 mmcf/d. Even if, which is unlikely, that Plant was operating at full capacity, taking all AG, that would leave 425 mmcf/d to be supplied, reinjected or flared.
The Agip JV company, Nigerian Agip Oil Company produces over 500 mmcf/d of AG. In 2000, it was reported to be ending "land area zero gas flaring" by 2001, and ending "swamp area gas flaring" by 2004.[ 29 ] In 2003, it reported that it had flared 5,424 million cubic metres of gas in Nigeria.[ 30 ] Its parent company, Eni's website, last updated in December 2004 stated: [ 31 ]
"Projects currently underway in the gas sector will enable Eni to become the first company to achieve- by the end of 2004 - the 'Zero Gas Flaring Policy' in all its sites in Nigeria."
The fact that Agip is still flaring probably explains why this statement has been deleted from the same web page updated on 13th April 2005.
We have found no data on the extent of flaring by TotalFinaElf. Minister Okopido stated in 2002 that TotalFinaElf would terminate its onshore flaring by 2002, with an offshore flaring termination date of 2005 "to be dialogued."[ 32 ]
To sum up, what can we make of all these different figures?
We think it is possible to say this:
[ 18 ] These figures are provided by the US government in the April 2005 EIA Country Analysis Brief: Nigeria, available here (see note 9).
[ 19 ] On page 2 of a paper entitled 'Shell Nigeria Corporate Strategy for Ending Gas Flaring', presented at a seminar in Norway, June 18-19, 2001. Available here.
[ 20 ] UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP)'s Strategic Gas Plan for Nigeria, February 2004, Appendix 3, Table A.3.3.
[ 21 ] The following narrative is based on the following sources:
(1) World Bank's Nigeria: Issues and Options in the Energy Sector Report, August 1983, page 4, paragraph 1.11.
The 232-page document is available here.
(2) World Bank's Nigeria: Issues and Options in the Energy Sector Report No. 11672-UNI, 1993, page 45, paragraph
4.2. The 223-page document is available here.
(3)World Bank's African Gas Initiative, Main Report, Volume 1, Table 2.2, February 2001. The 56-page document
is available here.
(4) OPEC Statistical Bulletin, 2003, Table 40, page 56.
(5) Department of Petroleum Resources presentation at a conference in Norway in August 2003, slide on page 19.
The 29-page document is available here.
(6) See the NLNG website at http://www.nigerialng.com/NLNG/The+Environment.
(7) See the Vice President's website (accessed on 9th April 2005), available here:
http://www.atikuabubakar.net/index.php?page=static/economy.html&topimage=images/facts.gif&menuid=3,0.
(8) World Bank Press Release of 23rd November 2004, available here.
[ 21A ] Strategic Gas Plan for Nigeria, Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) (February 2004), page 16, paragraph 2.5, and page 13, paragraph 1.12.
[ 22 ] Based on Cedigaz data for 2000, with revised data for the United States, and estimates for Russia and China. Cedigaz is the industry statistics gatherer: www.cedigaz.org. The Table itself is taken from page 16 of the Global Gas Flaring Reduction Initiative: Report No.1: Report on Consultations with Stakeholders, World Bank Group in collaboration with the Government of Norway, (c.2002). Accessible from here: http://www.ifc.org/ogc/global_gas.htm.
[ 23 ] Page 1 of Global Gas Flaring Reduction Initiative: Report No.3: Regulation of Associated Gas Flaring and Venting - a Global Overview and Lessons (World Bank, March 2004). Accessible from here: http://www.ifc.org/ogc/global_gas.htm.
[ 24 ] The latest year for this information in the Statistical Leaflet on their website: www.cedigaz.org.
[ 25 ] It should be noted that Russia, China and several other countries are recorded, certainly wrongly, as zero. The World Bank has sought to rectify this with estimates, of unspecified origin, and so the percentage contribution of Nigeria would be lower (though still the global highest).
[ 26 ] Second highest was Iran (10.50 bcm; 9% of gross production) and third was Indonesia (4.80 bcm; 5.8% of gross production).
[ 27 ] US EIA, International Energy Outlook 2004, page 69.
[ 27A ] The 56-page 2002 SPDC annual report is available here. The 36-page 2003 SPDC annual report is available here. The 47-page SPDC 2004 annual report is available here.
[ 28 ] Nigeria Oil Handbook and Review 2002, 11th Edition, page 92. We have little confidence in the reliability of this publication.
[ 29 ] See June 13, 2000 news item, "Agip pledges to end gas flaring," at http://www.ngex.com/news/160600.htm.
[ 30 ] ENI HSE Report, 2003, page 91. The 108-page report is available here.
[ 31 ] Originally available here and accessed on 9th April 2005. However, this page was updated on 13th April 2005 and the cited extract had been deleted.
[ 32 ] This statement appears in the Appendix to a speech made by the Minister at a conference in Norway in April 2002. The 19-page document is available here.
Executive Summary | Introduction | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Section 8 | Section 9 | Conclusions
