Global Gas Flaring Reduction Partnership: A Brief History

1. Global Gas Flaring Reduction Partnership:A Brief History Jean-Eric Molinard Global Gas Flaring Reduction, World Bank Doha, 4thOctober, 2009

2. What is GGFR… Basis: collaborative effort between Governments, IOCs and NOCs and other stakeholders

3. 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 Gas flaring – Magnitude of the issue

4. Top 20 flaring countries:

5. Flaring levels: 2002 to 2006

6. 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

7. 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

8. “Hard” causes : Risks of gas re-injection in oil reservoir Distance from significant gas markets Reliability of supply from associated gas Gas infrastructure constraints Usual barriers in flaring reduction “Soft” causes: • Limited frameworks • Supporting fiscal terms • Underdeveloped domestic market

9. Flaring intensity: % change from 1996

10. Difficulties met in a recent past - Financing

11. 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 Difficulties met in a recent past - Financing

12. A few success stories Nigeria • GGFR is a founder and permanent member of the National Flaring Reduction Committee • Working around the 2010 deadline • Supervised mitigation studies Gas flaring intensity 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 Putin Cameroon • 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

13. 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? Ministry of Oil & Gas – Ministry of Environment and Climate Affairs March 30th, 2009, Muscat

14. 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 GGFR and Qatar - Expectations

15. Further information: jmolinard@worldbank.org www.worldbank.org/ggfr GGFR’s Vision is… Thank you!