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Bringing Down the Barriers to Reduce Gas Flaring

December 13, 2006—About 300 representatives of governments and international and state oil companies are meeting in Paris this week at the Global Forum on Flaring Reduction and Gas Utilization to look for ways to reduce the burning of natural gas during oil production—a major source of global greenhouse gas emissions.

The event is sponsored by the World Bank’s Global Gas Flaring Reduction partnership (GGFR) in collaboration with the International Association of Oil & Gas Producers (OGP), to encourage oil producers to share best practices, learn about new technologies, and identify opportunities for further gas commercialization and market development that will allow them to reduce the burning or flaring of natural gas.

The goal, say organizers, is to break through the barriers—regulatory, commercial, and infrastructure-related—that encourage gas flaring at the expense of the environment.

What is gas flaring?
When crude oil is brought to the surface, gas associated with the oil comes to the surface as well. The gas may be used at the installation as fuel for generators, may be transported via pipelines and sold elsewhere, or may be injected into the ground.But in areas of the world lacking gas infrastructure and markets, this associated gas is usually released into the atmosphere, either ignited (flared or burned) or un-ignited (vented).

“Gas flaring wastes resources and harms the environment, and that’s why it is important to step up the efforts in reducing flaring and increasing gas utilization,” says Rashad Kaldany, Director of the Oil, Gas, Mining and Chemicals Department at the World Bank Group and Chairman of the Global Gas Flaring Reduction Partnership’s Steering Committee.

“Gas flaring also deprives developing countries of an energy source that is cleaner and often cheaper than others available, and reduces potential tax revenue and trade opportunities.”

An estimated 150 billion cubic meters of natural gas goes up in smoke each year. That’s equal to a quarter of all the gas used in the United States annually and 30 percent of the European Union’s yearly gas consumption.

And the gas flared in Africa alone could generate half of that continent’s power consumption.

Countries and companies, however, often face significant barriers to the reduction of gas flaring, including: limited access to international gas markets as well as weak local markets to commercialize the gas; lack of funding to put in place the necessary infrastructure to use the associated gas that comes with oil production; and an undeveloped regulatory framework for using that gas.

Public-Private Collaboration

The GGFR was launched at the World Summit on Sustainable Development in August 2002 in Johannesburg, South Africa, to bring together representatives of governments of oil-producing countries, state-owned companies and major international oil companies to reducing gas flaring by sharing global best practices and implementing country-specific programs.

Poverty reduction is also an integral part of the GGFR work program, which is developing concepts for how local communities close to the flaring sites can use natural gas and liquefied petroleum gas (LPG) that may otherwise be flared and wasted. The program has already evaluated opportunities for small-scale gas utilization in several countries.

 “The GGFR Partnership is helping us to promote associated gas as an opportunity rather than a liability,” says Bernard Legris, technical advisor for Total SA, an international oil company and one of the GGFR partners. “This is a crucial step to understand that valuing associated gas requires a change of mind, it means evolving from the age of oil to the age of gas.”

Last June in Washington, DC, GGFR representatives from partner governments and major oil companies endorsed and supported the Partnership’s extension for the next three years, during which the partnership will focus its efforts in delivering results in high-impact countries such as Russia, the Gulf of Guinea, Middle East, Venezuela and Brazil.  The G8 Summit in Gleneagles in 2005 and St. Petersburg in 2006 had also explicitly supported GGFR’s mission by encouraging its extension for the period 2007-2009.

Results on the Ground
 
In just under four years since the creation of GGFR, Manager Bent Svensson says the partnership has already achieved results on the ground – starting with the membership of the partnership itself. 

“If you look around the world today gas flaring is focused in some 20 countries, and we have most of these countries as partners. We cover more than 50% of the world’s gas flaring in our partnership and through the OPEC secretariat, which is also a GGFR partner, we get access to another 25 percent of the gas flaring countries,” he explains.

And Svensson says members of the partnership have already agreed to a global standard for reducing gas flaring in their operations, and that –he adds- “is probably one of our biggest achievements.”

He explains that 17 demonstration projects have already been set up in eight partner countries. “These projects are of two kinds. One is commercialization projects where we facilitate stakeholder engagement of various parties in order to make the projects viable. And the other area is in carbon financing where we try, jointly with our partners on the ground, to develop methodologies for gas flaring reduction projects to make them eligible to obtain carbon credits within the framework of the Kyoto Protocol clean mechanisms.”

“Effecting change in flaring and venting practices, however, requires time, effort and persistence,” acknowledges Svensson. “GGFR has been most successful where there is country buy-in, high-level support and an effective local partnership between government and industry, as well as ownership and leadership within the participating organizations.”

Prof. Anthony O. Adegbulugbe, Special Adviser on Energy to the President of Nigeria, agrees.  “GGFR’s collaborative approach has been instrumental in helping to create access to international markets, to develop local markets for associated gas, and to overcome upstream regulatory




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