Global Gas Flaring Reduction

Partnership:A Brief History

Doha, 4Doha, 4thth October, 2009 October, 2009

Jean-Eric Molinard

Global Gas Flaring Reduction, World Bank

What is GGFR…

Basis: collaborative effort between Governments, IOCs and NOCs and other

stakeholders

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Gas flaring – Magnitude of the issue

• An estimated 150-170 bcm of gas is flared globally each year

• Adds around 400 million tons of carbon dioxide into the atmosphere each year

• 75% of global flaring occurs in fewer than 10 countries

• Major flaring areas are: Russia, Gulf of Guinea and the Middle East

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Top 20 flaring countries:

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0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

Australia, PNG, India

CHINA

SOUTH EAST ASIA

USA-CANADA

EUROPEAN UNION

SOUTH AMERICA +MEXICO

AFRICA

MENA

RUSSIA-CASPIAN SEA:

BCM/Year

2006

2004

2002

Flaring levels: 2002 to 2006

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The Climate Change imperative

•World-wide Recognition- UNFCC Meetings

- IPCC Nobel Peace Prize 2007,…

•At the country level- Strict environmental policy adopted across all GDPs per capita

•At the corporate level- Focus on major oil companies to move to low carbon energy

solutions

•At the World Bank Group level- New Climate Change Funds are being developed

- Visibility of GGFR at the presidential level

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GGFR scope

•Facilitation- In the Gas Flaring Reduction Committee in Nigeria- In Russia, bilateral discussions with GoR and stakholders- In Equatorial Guinea, Gabon,…

•Best Practice dissemination activities

•Technology- Amsterdam conference in December 2008

•Country Implementation Plans- GGFR is facilitating some CIPs to eliminate flaring- helping countries to implement flaring policies : Nigeria, Algeria,

Gabon…

•Carbon Finance- Technical assistance- CDM methodology- Scaling up under new funds- Demo projects

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Usual barriers in flaring reduction

“Soft” causes: Limited frameworks

Supporting fiscal terms

Underdeveloped domestic market

“Hard” causes : Risks of gas re-injection in oil

reservoir Distance from significant gas

markets Reliability of supply from

associated gas Gas infrastructure constraints

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Flaring intensity: % change from 1996

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Difficulties met in a recent past - Financing

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Difficulties met in a recent past - Financing• Raising funds or equity financing flaring reduction projects is

not a critical issue in most countries of the region

• Hence, leverage of the World Bank support does not hold

• However, the cost of these flaring reduction projects follows the same trend as oil development projects – expensive, and sometimes not economical before any taxation consideration

• One year ago, gas flaring reduction projects used to compete in the countries priority list with more sought after and lucrative oil projects

• Since then, the oil price situation almost reversed, and gas flaring reduction projects suffered from the “low” prices environment. Today is more favorable (75 $/bbl…)

• Yet, the carbon finance part of GGFR’s added value can be a good incentive

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A few success stories

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Global Partner countries

Nigeria GGFR is a founder and permanent

member of the National Flaring Reduction Committee

Working around the 2010 deadline

Supervised mitigation studies

Gabon GGFR is a member of the national flaring committee and will finance

a Gas Master Plan which will include flaring reduction plans

Russia Recognition of the issue, and public mention by former President

PutinCameroon In the context of gas flaring reduction, GGFR reviews the study for

export projects, provides support on domestic gas pricing and facilitates a pipeline export project

Gas flaring intensity

Ministry of Oil & Gas – Ministry of Environment and Climate AffairsMarch 30th, 2009, Muscat

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36 bcm estimated of gas flared in Middle East. Enough to feed a 25 Mt LNG plant, or 6 medium size LNG trains

In the 80’s, Saudi Arabia reduced gas flaring from 38 bcmy to less than 1 bcmy in developing their petrochemical industry

Unbalance: some countries import gas while flaring substantial amounts of gas

Qatar, as gas industry world leader, has the potential infrastructures to monetize their currently flared associated gas

Some countries use HFO for power generation (and pollution from its combustion) while still flaring associated gas (Kuwait)

Flared gas could be utilized in power generation projects (Yemen)

Legacy: oil reserves vs no flaring project

Today, Qatar, UAE and Iraq are GGFR members. Oman should join soon and Kuwait is reviewing the paperwork. Discussions with Saudi Arabia are still ongoing

Why moving GGFR action in the Middle East?

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GGFR and Qatar - Expectations

• Despite some contradictions and current difficulties, there is high added value for Middle East countries to work with GGFR

• This in-country workshop aims at kicking off the three key components of the work program that has been agreed with Qatar Petroleum

• GGFR initiative can only be successful if all stakeholders work in a good co-operative spirit

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Thank you!Further information:

jmolinard@worldbank.orgwww.worldbank.org/ggfr

GGFR’s Vision is…