FINANCIAL TIMES: Group might miss flare deadline: “Royal Dutch/Shell might miss a high-profile Nigerian official target to end the environmentally damaging practice of burning off waste gas by 2008, according to the troubled oil group's joint top Africa-based executive.”: “Shell's performance in Nigeria is critical to attempts to restore its fortunes after the disastrous 4.47bn barrel write-down in proven reserves last year. Nigeria accounts for an estimated 10 per cent of Shell's worldwide production” (ShellNews.net) 19 Jan 05
By Michael Peel in Lagos
Royal Dutch/Shell might miss a high-profile Nigerian official target to end the environmentally damaging practice of burning off waste gas by 2008, according to the troubled oil group's joint top Africa-based executive.
Chris Finlayson, chief executive officer for exploration and production on the continent, said stopping the practice of flaring by the start of 2008 would be "very tough" because of past delays in implementing expensive projects to gather gas for commercial use.
Nigeria is one of Shell's most important locations but the oil companies' expansion plans there have been held back by logistical problems, a shortage of government investment and social unrest triggered largely by anger at the behaviour of multinationals and the government.
The office of Edmund Daukoru, presidential adviser on oil and gas, said oil companies that failed to meet the deadline would be punished, with possible sanctions including fines related to the amount of gas still being flared.
"Definitely they will be penalised - very badly," a senior official said.
However, Mr Finlayson said in an interview: "The delays that have already been incurred . . . make a solid January 1 2008 very tough. We will have to discuss with the government how to deal with that."
Mr Finlayson said some gas-gathering projects would probably still be under construction at the start of 2008 although Shell was looking at alternative technological methods to try to meet the deadline.
The company would not be "miles off the pace", he said.
Mr Finlayson said the delays originated two or three years ago when Shell's Nigerian joint venture, which is majority owned by the government and pumps almost half of the country's 2.1m barrel daily oil output, received less official funding than expected for gas projects.
Nigeria's oil industry, thought to be the world's biggest burner of waste gas, wants to harness more of the country's huge gas reserves, for commercial reasons and to relieve domestic and international pressure over pollution caused by the huge oil company flares across the Niger Delta.
The amount of gas flared by Shell in Nigeria rose 22.8 per cent in 2003 as production increased, although Mr Finlayson said gas flared per barrel of oil produced had fallen by half over the past four years.
ExxonMobil, Nigeria's second largest oil producer, said it expected to end non-essential flaring before the deadline.
Shell's performance in Nigeria is critical to attempts to restore its fortunes after the disastrous 4.47bn barrel write-down in proven reserves last year. Nigeria accounts for an estimated 10 per cent of Shell's worldwide production