A First-Of-Its-Kind Framework for Commercializing Associated Gas

Abstract Gas flaring, the practice of burning off gas associated with oil production, is a significant waste of a valuable resource, and a major contributor to global emissions. Nigeria is one of the highest gas flaring countries in the world, with 178 flare sites and 7.4 billion cubic meters of gas flared in 2018. The country has taken ambitious steps to reduce gas flaring, with the Ministry of Petroleum Resources, the Department of Petroleum Resources (DPR), the World Bank-managed Global Gas Flaring Reduction Partnership (GGFR) and other international agencies working to design and implement a regulatory programme that creates value through associated gas commercialization. Limited resources and often competing priorities, portfolios, and assets restrict the oil industry to provide adequate, conclusive and fast track solutions to reach Zero Routine Flaring by 2030 (defined as: not routinely flare associated gas in new oil field developments and ending existing (legacy) flaring as soon as possible and no later than 2030). The paper demonstrates how Nigeria is creating an enabling and compulsory environment to monetize associated gas and utilize it for energy use, primarily for the domestic market, and substituting diesel, heavy fuel oil and other higher cost (often imported) fuels. Going further, the paper asserts that the government must take ownership and control of gas flaring reduction, where the industry can or will not put in place solutions to achieve this goal. The paper concludes that monetizing associated gas brings multiple benefits, including reduced emissions, a lower cost energy mix, greater energy sovereignty and a stronger "license to operate" for international oil companies operating in the country.