Supporting World’s Largest Gas Flare Commercialization Programme

–By Yange Ikyaa

The Federal Government of Nigeria recently announced its first bid round inviting willing parties to participate in the Nigerian Gas Flare Commercialization Programme (NGFCP).

In the bid offers, the Nigerian government urged interested entities to register and apply for the issuance of the Request for Qualification (RfQ) package, which will lead to the submission of statements of qualification (SOQs) by interested parties for participation in the programme.

The Nigerian government even later announced an extension to the earlier date slated to close bid submission to participate in the programme to Thursday, 28th February, 2019 as opposed to the initial submission date of Sunday, 20th January, 2019.”

Justice Derefaka, who is the Programme Manager of Nigerian Gas Flare Commercialization Programme (NGFCP), which is domiciled in the office of the Minister of State for Petroleum Resources, Ibe Kachikwu, announced the change of date.

In a document sent to Valuechain, Derefaka said “I write further to my previous e-mail on subject and the “Flare Gas (Prevention of Waste and Pollution) Regulations 2018” which provides a legal framework for the implementation of the Nigerian Gas Flare Commercialization Programme [NGFCP] to provide you with an update on the Programme. Please, note that the submission date for the NGFCP Statement of Qualification (SOQ) has been extended.”

The NGFCP auction, Derefaka assured, “presents a significant opportunity for domestic and international developers alike to participate in the largest market driven flare gas monetization program undertaken on this scale globally.”

 As at today, over 700 interested parties have registered on the NGFCP portal to bid and jostle for the approximately 178 gas flare sites spread across Nigeria’s Niger Delta region.

After the close of the submission of the SOQs’, there will be an opening ceremony for the SOQs’ after which the Proposals Evaluation Committee (PEC) duly constituted by the Minister of State, Petroleum Resources for the purpose of evaluating the SOQs presented by the Applicants to determine Qualified Applicants’ status.

The process will also help in evaluating the proposals to determine those applicants whether they have been awarded the Qualified Applicant (QA) status, after which a list of the selected Qualified Applicants will be published on the NGFCP Portal.

Only QAs will be issued the Request for Proposal (RfP) package and the PEC will carry out an evaluation of the Technical and Commercial Proposal on a strictly pass/fail basis, while the Financial Proposals will be opened only for those Bidders whose Technical and Commercial Proposals have passed.

Valuechain learnt that in the execution of the bidding process, bidders will have flexibility of choosing which flare site(s) to bid for, determine the gas price, and their end – use market or gas product, as well as the technology to be deployed.

Interested parties will also need to demonstrate project development experience and proposed proven technology which are all expected to be in their commercial applications.

Additionally, parties will need to demonstrate technical and commercial capacity, after which successful bidders will be granted titles to flare gas sites through gas sale/supply agreements with the federal government of Nigeria.

Interested parties or applicants are not required to be Nigerians entities in order to submit their SOQ. However, following a successful bid, each preferred bidder will be required to act through or establish a Nigerian corporate entity, which will enter into the necessary commercial agreements.

It is expected that applicants may come from a variety of backgrounds, including but not limited to, communities, technology providers, project developers, resource and energy companies, industrial companies, infrastructure companies, as well as financial investors/lenders.

Based on the integrity standards associated with this project, it has been predetermined by the Nigerian government that only registered parties on the Programme’s web portal, www.ngfcp.gov.ng, can participate in the NGFCP bidding process.

According to information sourced by Valuechain from the office of the Minister of State for Petroleum Resources, Ibe Kachikwu, “it is also important to note that the interface by those interested in the Programme with the NGFCP will be through the portal only, and all parties will only have access to relevant programme documents from the NGFCP portal using their log on details.”

The ultimate ownership of the NGFCP rests with the Department of Petroleum Resources (DPR), but since it is still in its design phase, it still resides with the Ministry of Petroleum Resources until the conclusion of the first auction round.

Joshua Egba, who is the Nigerian Country Director, United States Trade Development Agency (USTDA), described energy as the most important focal area to the agency. He also said the agency provides $100 million per activity in support of energy projects, covering equity and debt financing, as well as other technical areas.

According to him, “USTDA trade missions have been supporting the Nigerian Gas Flare Commercialization Programme, sponsoring DPR and other state agencies to the USA to study available technologies and financing mechanisms and policy directions.”

The agency currently works in 66 countries, and when the USTDA was created in 1961, the ideas and programs it was founded on came from foreign assistance initiatives that were developed in the Mutual Security Act of 1954, and the Foreign Assistance Act of 1961.

These acts addressed the idea of using taxpayer dollars overseas in order to help promote foreign trade with the US. For the first 19 years of its existence, this program was known as the Agency for International Development. In 1980, the agency was renamed the United States Trade and Development Program after it was combined with multiple other offices within this umbrella of programs.

In 1992, the name of the program was again changed to its current name, the United States Trade and Development Agency. Lawmakers supported the name change to clarify and emphasize that USTDA is an independent agency and to increase its visibility both internally and abroad as a promotion tool with foreign trade partners.

USTDA’s programs are designed to help countries establish a favorable trading environment and a modern infrastructure that promotes sustainable economic development.

According to USTDA, the agency’s development assistance has always involved building partnerships between U.S. companies and overseas project sponsors to bring proven private-sector solutions to developmental challenges.

As part of its programs, USTDA funds various forms of technical assistance, early investment analysis, training, orientation visits, and business workshops in the areas of trade capacity building and sector development, and project definition and investment analysis.

USTDA works closely with other federal agencies to advance host country development objectives, but unlike U.S. Agency for International Development (USAID), USTDA gives preference to projects that promote the export of U.S. goods and services. Most USTDA projects are located in Africa, Latin America, and Asia.

The agency’s activities span a wide variety of sectors, although projects in the transportation and energy and power sectors account for 43 percent of the funding in 2008.

In 2010, President Barack Obama signed an executive order, the National Export Initiative, in an attempt to double the amount of US exports through 2015.

To support this project, the USTDA launched the International Business Partnership Program, a program that helped connect American manufacturers with international trade partners around the world.

Dr. Nuhu Habeeb of DPR, said “the biggest challenge to Nigeria’s energy industry has been policy implementation. However, automation or the decrease in man to man interface in DPR operations remains cardinal in the agency’s current reforms and has helped its revenues to go up.”

Enorense Amadasu, who is the Deputy Director at DPR in charge of the National Production Monitoring System (NPMS) the automation of operations is now giving them the capacity to measure production and track hydrocarbon movement in real time.

Earlier in February 2019, Kachikwu announced the appointment of Engr. Rabiu I. Suleiman, Group Executive Director (GED) NNPC/Senior Technical Adviser, Refineries, Gas, Power and Downstream Infrastructure in the office of the Honourable Minister of State for Petroleum Resources, as the new Chairman of the Ministerial Steering Committee (SteerCo) of the Nigerian Gas Flare Commercialization Programme (NGFCP).

This move was made as a result of the former NGFCP SteerCo Chairman, Mr. ‘Gbite Adeniji’s departure as Special Technical Adviser, Upstream & Gas, to the Minister of State for Petroleum, at the end of December 2018.

Information sourced by Valuechain from the minister’s office indicate that “Mr. Gbite has returned to private law practice, from which he joined the Public Service in December 2015.”

The Ministerial Steering Committee (SteerCo) is to report to the Honourable Minister of State for Petroleum Resources on the program’s progress.

The Program Manager (PM) of NGFCP, Mr. Justice Derefaka, is to continue to oversee the day- to -day running of the programme, which is designed as a strategy to implement the policy objectives of the Federal Government of Nigeria (FGN) for the elimination of gas flare from Nigeria’s oil and gas fields.

The programme is also seen as a sign of Nigeria’s commitments as ratified at the Paris Climate Change Agreement (COP21), which included gas flaring reduction as a key national greenhouse gas (GHG) emissions mitigation in the Nationally Determined Contributions (NDCs).

Engr. Rabiu, who now chairs the NGFCP has over three decades’ wealth of professional experience in the oil and gas industry, traversing refinery operations, projects management, health, safety, environment and quality (HSEQ) management, LNG plants operations, engineering and technology management, frontier exploration and renewable energy initiatives, among others.