October 26, 2006—While the international community is examining ways for reducing greenhouse gas emissions and mitigating the impact of global warming on climate change, the Bank Group is making concrete contributions toward a greener world by helping oil-producing countries and companies reduce the waste of natural gas that is being burned––or flared––into the atmosphere.
Besides wasting resources and harming the environment, 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.
The Bank estimates that over 150 billion cubic meters (bcm) of natural gas are being flared and vented annually––equivalent to 25 per cent of the United States’ gas consumption or 30 per cent of the European Union’s gas consumption per year. And the annual 40 bcm of gas flared in Africa alone could generate half of that continent’s power needs.Flaring and Climate Change
Gas flaring also has a global impact on climate change, as it adds about 350 million tons of CO2 in annual emissions. This is greater than the potential yearly emission reductions from projects currently submitted under the Kyoto mechanisms.
Countries and companies, however, often face significant barriers to reducing 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; and an undeveloped regulatory framework for using that gas.
“Reducing gas flaring requires a global and concerted effort by governments and industry, as well as financial institutions and local communities,” 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.
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).Public-Private Collaboration
|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 unignited (vented).
The Bank’s Global Gas Flaring Reduction public-private partnership (GGFR) was launched at the World Summit on Sustainable Development in August 2002 in Johannesburg, and brings around the table representatives from governments of oil-producing countries, state-owned companies, and major international oil companies. Together they are working toward overcoming the barriers to reducing gas flaring by sharing global best practices and implementing country-specific programs.
Poverty reduction is an integral part of the partnership’s work program. It is working on ways that communities close to the flaring sites can use natural gas and liquefied petroleum gas, that may otherwise be flared and wasted. The program has already evaluated opportunities for small-scale gas utilization in several countries.
“The 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.”
For the next three years, the partners will focus their efforts in delivering results in high-impact countries such as Russia, the Gulf of Guinea, Libya, Mexico, Venezuela and Brazil. The G8 Summit in Gleneagles in 2005 and St. Petersburg in 2006 explicitly supported GGFR’s mission by encouraging its extension for the period 2007–2009.
Graph of global consumption vs flaring
On December 13–15, the World Bank’s GGFR partnership, in collaboration with the International Association of Oil & Gas Producers, is organizing a high-level Global Forum on Flaring Reduction and Gas Utilization in Paris, where key stakeholders from governments and both international and state oil companies will focus on best practices in flaring reduction and will identify opportunities for gas commercialization and market development.
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 percent 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 constraints,” he says.
For more information on the GGFR Partnership, please visit: http://www.worldbank.org/ggfr
Check out the flyer for the upcoming Global Forum on Flaring Reduction and Gas Utilization
Contributed by Mauricio Ibanez, EXTCC
Comments or questions about this article? Send an e-mail here.