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Gas flare commercialisation: DPR commences pre-qualification of above 254 firms

The Department of Petroleum Resources (DPR) has commenced evaluation of Statement of Qualification (SOQ) of over 254 companies which had shown interest in Nigerian Gas Flare Commercialisation Programme (NGFCP).

Gas flaring
Gas flaring

The Director of DPR, Mordecai Ladan, said this at the opening ceremony of the pre-qualification exercise in Lagos on Monday, June 17, 2019.

He said that evaluation committees were set up to evaluate those companies that had indicated interest to participate in the gas flare commecialisation.

Ladan, who was represented by Mr Olusanya Bajomo, the Deputy Director, Gas Monitoring and Regulation, said the commercialisation was instituted by the former Minister of State for Petroleum Resources, Dr Ibe Kachikwu.

The committee included the Proposal Evaluation Committee (PEC), International Observer Group (IOG), representatives of the Nigerian Extractive Industry Transparency Initiative (NEITI), NNPC, DPR and Ministry of Petroleum Resources (MPR)

Ladan said about 850 companies that had earlier shown interest when the advert was placed, but later dropped when a fee of $1,000 (N360,000) was attached to the application form and other processing documentation to know those who were serious.

He said the DPR had currently identified about 178 flare gas points across the oil producing states.

He said that this was part of President Muhammadu Buhari and former minister of State for Petroleum Resources agenda to achieve zero gas flare in Nigeria by 2020.

“Today, we are commencing the evaluation of statement of qualifications for the Nigerian Gas Flare Commercialisation Programme.

“Recall that advertisement was placed for interested parties who are willing to come to take the flared gas on behalf of the government.

“We are going to open the documents to ascertain those companies that have showed interest and submitted their statement of qualification in response to the advert placed in 2018. After the evaluation, the successful companies will move to the next stage.

“The Nigerian Gas Commercialisation Programme, which is government’s flagship programme that will create opportunity to take flared gas under the provision of Petroleum Act.

“Also authorised gas commercialisation through third party companies in order to promote investment and get people who are qualified technically, have the capability and experience to work in Niger Delta to harness gas flare to market.

“So, we are currently doing preliminary evaluation process that will see companies that qualify to the next stage.”

Corroborating Ladan, Mr Oluwole Ogunsola, the Deputy Manager, Gas Production and Monitoring Unit, said: “Federal Government through the DPR and other stakeholders are interested in incredible companies with technical capacity and financial capability to be able to take flare gas to market and that is why the net is wide at this time.

“There is no constraint to the number of firms that should undertake the programme. But ultimately, you find out that as you go along, some will drop by the side.

“It’s like a funnel, it would go narrower until we get to the key companies that will be able to take the flared gas to market. So, government is not constraining it so that will get the best out of the process.

“The provision of the law on paragraph 35B of the Petroleum Act, First Schedule, stipulated that government has the right on the flared gas.

“So, government has invoked that right by means of deregulation of the flared gas and Prevention of Waste and Pollution Regulation of 2018, signed by Mr President and minister of State, Petroleum Resources, which came into effect July 2018

“By that regulation, government owns the flared gas and the producer has not title to the flared gas, government can now allocate it to competent companies that can take it to marketplace, so, its government right.

“However, the programme was to make the operators to be able to make this work, so there are mechanism, well designed to protect the operators, such that if the guarantee a certain volume to third party off taker, they can even get some fees in term of connection agreement and be saved from penalty of flaring.

“We are designing a programme that will intensify the scheme.

“First, the regulation has increased the flared penalty, if you are producing 4,500 barrels on OML you pay 50 cents on flare, if you are doing over 10,000 barrel you pay two dollars, that’s already incentive to them to make it happen.”

Chairman of the Evaluation Committee, Mr Rabiu Sulaiman, Director, Gas, Ministry of Petroleum Resources, commended DPR on its initiative toward the high level of transparency that was exhibited in the process.

Sulaiman urged other committees to abide by the rules and regulation of the exercise, adding that it was tinted towards government’s aspiration in abolishing gas flare in the country.

“I implore everybody in this committee to exhibit high level of seriousness and commitment in the exercise. We are not here to disqualify anybody but to evaluate those companies that merited the biding.

“This exercise will be rigorous, but it’s going to pay off at the end because this will guarantee job creation, engagement in the oil producing states,” he said.

By Yunus Yusuf

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