World Bank, major oil firms urge cuts in gas flaring

The World Bank-led Global Gas Flaring Reduction (GGFR) partnership called on emerging countries’ governments and oil companies to join their initiative to reduce the flaring of gas obtained as a byproduct of oil extraction by 30% by 2017.

This would achieve a reduction in carbon dioxide emissions equivalent to taking 60 million cars off the road, as it would cut flaring from the current 140 billion cubic meters (bcm) in 2011 to 100 bcm by the end of 2017, Rachel Kyte, World Bank vice president for sustainable development, told reporters.

“The BRIC countries should do more on gas flaring reduction and our doors are open to them,” Mauricio Rios, in charge of communications for the World Bank's Oil, Gas and Mining Policy Division, said at a GGFR meeting in London.

The government of Brazil and the country’s oil giant Petrobras, Russia’s federal government and Russian oil companies as well as Indonesia’s Petronas are among those whom the GGFR would like to see among its members, Hege Marie Norheim, a senior vice-president for climate at Norway’s Statoil and one of the founding members of the partnership, said.

The GGFR, which was formed in 2002, has helped reduce gas flaring by 20% to 140 bcm last year from 2005, “roughly the equivalent to talking 52 million cars off the road” in terms of its impact on the environment, according to World Bank data.

More from Emergingmarkets.org

Paradox of plenty in African oil

GCC states warned high oil is not forever

Nigeria: oil on troubled waters

The members of the partnership – which includes oil majors such as BP (BP), Chevron (CVX), ConocoPhillips (COP), ExxonMobil (XOM), Eni and Shell and companies from emerging markets such as Mexico’s Pemex, Angola’s Sonangol or Azerbaijan’s SOCAR – will focus on helping countries develop infrastructure and markets so that the gas is directed towards domestic use rather than flaring.

“We’ll have to meet the energy needs of the poor and we simply can’t afford to flare any more gas,” Kyte said.

GAS TO ELECTRICITY

Among the GGFR’s members, Mexico reduced gas flaring by 66% in only two years, Azerbaijan cut it by almost half since joining in 2010, and Nigeria reduced it by 4 bcm in the past 5 years.

In Qatar, 180 million cubic feet of gas that was formerly flared is now used for electricity, providing about a third of the country’s power.

In the Republic of Congo, the government, together with companies operating in the country, have developed a 350 megawatt gas-to-power project which increased access to electricity for around 300,000 people.

Reducing the amount of gas flared does not come without challenges, members of the GGFR said, as it requires high levels of investment over many years.

Manoelle Lepoutre, senior vice president for sustainable development and environment at Total, said the cost of reducing flaring depends on the complexity of each project.

“It’s a huge amount of investment,” she added, but “as awareness is increasing, it’s easier for operators to discuss it.”

If all the associated petroleum gas was captured, it would have a market value of close to $50 billion a year, as global gas flaring is equivalent to 30% of the current European Union gas consumption, Suma Chakrabarti, the president of the EBRD which hosted the GGFR meeting in London, said.

The EBRD’s countries of operation have “huge investment opportunities associated with the reduction of gas flaring,” with Russia alone estimated to flare more than 20 bcm per year, Chakrabarti added.

The bank has financed two gas flaring reduction projects in Russia worth a combined $170 million over the past years and is currently performing a study for Russia, Kazakhstan, Azerbaijan and Turkmenistan to identify further investments in the field.