Federal Government Awards 49 Flare Sites To 42 Investors, Advancing Nigerian Gas Flare Commercialisation Program....KINDLY READ THE FULL STORY HERE▶

The Federal Government, seven years after initiating the Nigerian Gas Flare Commercialisation Programme (NGFCP), has announced the allocation of 49 flare sites to a consortium of 42 investors. The primary objective of this program is to mitigate environmental damage and reduce the adverse effects of routine gas flaring on the Niger Delta region’s inhabitants, while also capitalizing on these valuable resources.

Despite escalating environmental concerns and revenue losses in Nigeria’s petroleum sector, Nigerian National Petroleum Company Limited (NNPCL), Shell, ExxonMobil, Chevron, Total, and other oil companies have continued to flare approximately $3.9 billion (equivalent to around N3 trillion) worth of gas over the past four years.

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Although these companies have pledged commitment to environmental sustainability and combating climate change, their operations have left Nigeria with 1.2 trillion standard cubic feet of gas and expected carbon dioxide emissions of 65.9 million tonnes.

Frequently falling short of the zero gas flaring target, Nigeria, which possesses a gas reserve of over 209 trillion standard cubic feet, has been consistently criticized on the global stage for its gas flaring practices.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced on Wednesday that the selection of the 42 companies followed a competitive bidding process. Of these, 38 companies received awards for standalone single flare site development, while four were granted nine sites to be developed as clusters.

This move aligns with NUPRC’s responsibilities under Section seven (e) and Section 105 (two) of the Petroleum Industry Act (PIA), 2021. In the third quarter of 2022, NUPRC restructured the NGFCP and relaunched the program to conform with PIA provisions and reflect current economic and operational realities.

The Commission attributes the significant success in the NGFCP bid process to sustained engagement with key stakeholders, including domestic and international investors, development agencies, oil and gas producers, technology providers, and financial institutions.

Approximately 300 companies submitted applications for gas flare sites when the Request for Qualification (RFQ) was issued in the fourth quarter of 2022. The program was relaunched following the implementation of the Petroleum Industry Act.

The evaluation of Statements of Qualification (SOQs) led to the selection of 139 applicants. After issuing a Request for Proposal (RFP) to qualified applicants, 88 entities, including individual companies and consortiums, responded and submitted a total of 137 proposals. These proposals included technical, commercial, and financial documentation for one or more of the 49 flare sites designated for standalone or cluster development.

While some companies were designated as Reserve Bidders for corresponding flare sites in case Preferred Bidders fail to meet RFP terms and conditions, the 42 winners will proceed to individually execute Commercial Agreements with relevant parties and make the required award fee payments for the issuance of the Permit to Access Flare Gas by the Commission.

KPMG, a global network of professional firms, has been approved to collaborate with the Commission in implementing the award process to ensure the successful outcome of the gas flare-out commercialization initiative.

Recall that the gas commercialization program was launched by the Ministry of Petroleum Resources on December 13, 2016, after approval by the Federal Executive Council (FEC), but its realization was delayed for seven years. In 2021, the Department of Petroleum Resources (DPR), now NUPRC, identified 45 out of 178 gas flaring sites in the country for allocation to successful bidders, with additional flare sites expected to join the program.