Gas Flaring Reduction Partnership GGFR MENA Carbon Forum 2009 Cairo, Egypt May 06-07 By: Heike Lingertat The World Bank Group 1
Topics 1. Overview of gas flaring 2. GGFR strategy in the context of climate change 3. GGFR and carbon finance 4. Carbon Finance: Conclusion and perspective for GFR projects 2
Overview of Gas Flaring 3
Where gas is flared Europe: 3 bcm CIS: 15-60 bcm North America: 12-17 bcm Central and South America: 10 bcm Africa: 30 bcm MENA: 42 bcm Asia: 7-20 bcm 4
How much gas is flared? GGFR estimates (upstream) over 150 bcm of natural gas are being flared annually (400 MtCO2eq/year) Relatively constant during last 20 years Gas flared and vented in the MENA region (42 bcm) equals annual gas consumption of Europe of which is over 11 bcm flared alone in Iran and 5.5 bcm in Algeria 75% of flaring occurs in less than 10 countries Flaring in Africa alone could be used to produce 50% of current power consumption of the continent Photos: Ed Kashi In perspective, all annual ER from CDM/JI projects equal 588 MtCO2 5
Gas Flare Estimated by Satellite Data Iran, Iraq and Algeria are among the leaders of volumes of gas flaring worldwide Estimated flared volume from satellite data Volumes in bcm 2005 2006 2007 2008 Change from 2006 to 2007 1 Russia 55.2 48.8 50.0 40.2-9.8 2 Nigeria 21.3 19.3 16.8 14.9-1.9 3 Iran 11.3 12.1 10.6 10.3-0.3 4 Iraq 7.1 7.4 7.0 7.0 0.0 5 Algeria 5.2 6.2 5.2 5.5 0.3 6 Kazakhstan 5.8 6.0 5.3 5.1-0.2 7 Libya 4.4 4.3 3.7 3.7 0.0 8 Saudi_Arabia 3.0 3.3 3.4 3.5 0.1 9 Angola 4.6 4.0 3.5 3.1-0.4 10 Qatar 2.7 2.8 2.9 3.0 0.1 11 Uzbekistan 2.5 2.8 2.0 2.7 0.7 12 Mexico 0.9 1.2 1.7 2.6 0.9 13 Venezuela 2.1 2.0 2.1 2.6 0.5 14 Indonesia 2.7 3.0 2.4 2.3-0.1 15 USA 2.0 1.9 1.9 2.3 0.4 16 China 2.8 2.8 2.5 2.3-0.2 17 Oman 2.5 2.2 1.9 1.9 0.0 18 Malaysia 1.7 1.8 1.7 1.9 0.2 19 Canada 1.2 1.6 1.8 1.8 0.0 20 Kuwait 2.5 2.5 2.1 1.8-0.3 Total top 20 142 136 129 119 -(10) Rest of the world 20 21 19 22 (3) Global flaring level 162 157 148 140 -(7) Source: Earth Observation Group, U.S. NOAA, National Geophysical 6
Satellite Imaging of Gas Flaring in the Sultanate 7
Typical Barriers to Utilization of Flared Gas 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 8
GGFR Strategy in the Context of Climate Change 9
GGFR Partners - 2009 Countries/NOCs Algeria (Sonatrach) Angola Azerbaijan Cameroon Chad Ecuador Equatorial Guinea Gabon Indonesia Iraq Kazakhstan Khanty Mansiysk (Russia) Kuwait Nigeria Qatar Uzbekistan Multilateral Organizations The World Bank OPEC Secretariat IOCs BP Chevron Conoco Phillips ENI ExxonMobil Marathon Oil Maerske Oil Shell Sonangol Sonatrach Statoil Hydro Total Uzbekneftgaz Goal: reduce associated gas flaring Basis: collaborative effort between Governments, IOCs and NOCs and other stakeholders Areas of action: 1- Commercialization of associated gas 2- Regulations for associated gas 3- Implementation of the global flaring voluntary standard 4- Leveraging carbon finance for projects that reduce flaring Donors Canada European Union France Norway USA 10
GGFR Strategy in the Context of Climate Change Transition to low-carbon economy by: Facilitation of public and private sector investments Increase energy access through sector reforms Policy, Regulation, Pricing Local and Small-scale use of flared gas Best Practice Dissemination Carbon Finance: Local: Advise on specific CDM projects and Technical Assistance Global: New CDM methodology initiative Leverage new post-kyoto World Bank Carbon Partnership Facility 11
GGFR Programs MENA Second largest flaring region in the world Iran and Iraq, as third and fourth largest flaring countries in the world, together flare more than 15 bcm/y Large reserves yet to be developed Medium term gas flaring reduction policy action should focus on a zero routine flaring policy in Middle East Algeria, Iraq, Kuwait, and Qatar joined the GGFR Planned work program for this year: Assist Qatar Petroleum and the Ministry in development of national policies and regulations Prepare a Country Implementation Program for Qatar GHG emissions inventory and regulatory overview Identify a demo project eligible for CDM Advise Iraq on Carbon Finance and in the medium and long term explore possible WB involvement 12
GGFR & Carbon Finance 13
Why involved in carbon finance? To help initiation of DNAs in GGFR partner countries (Angola, Nigeria, Indonesia, and Algeria) To better understand how flaring/venting reduction projects could earn carbon credits and achieve results Chance to make a difference: projects offer large, real, measurable ERs Industry engaged but not strongly linked with emerging processes Few projects back then (and still now, 34/4653, 8 registered) Few associated gas utilization methodologies (AM 0009 & 37 upstream and AM 0055 for downstream) SD benefits: from small to large scale projects 14
CERs from CDM by Region ECA Africa Middle-East LAC Asia & Pacific 15
CERs from CDM in MENA by Type Middle East & North Africa (MENA): PFCs 2% Solar 2% Agriculture 0% Wind 6% Biogas 3% Biomass energy3% EE Industry 1% EE own generation 2% EE supply side 2% Number 2012 kcers Egypt 12 16,673 Iran 1 1,621 Israel 34 15,513 Jordan 4 3,528 Morocco 10 3,006 Qatar 1 13,748 Syria 2 485 Tunisia 2 2 UAE 13 3,087 MENA total 79 57,662 N2O 15% Landfill gas 20% Fossil fuel switch 17% Fugitive 25% Hydro 2% 16
Gas Flaring Reduction Projects in MENA 4660 CDM projects in the pipeline ID Title Host country Status Methodology 1st period ktco2e/yr 2012 ktco2 2020 ktco2 CDM4138 Soroosh & Nowrooz Early Gas Gathering and Iran At Validation AM9 463 1621 5330 Utilization Project CDM1092 Al-Shaheen Oil Field Gas Recovery and Qatar Registered AM9 2500 13748 34002 Utilization Project CDM3300 Reduction of gas flaring through routing of United Arab At Validation AM37 104 365 1043 excess fuel gas in LNG train 3 to LNG trains 1 & Emirates 2 in ADGAS LNG plant on Das Island CDM3301 Flare reduction and Utilization of Low Pressure Gas at New Khuff Production Platform -- TOTAL ABK Source: UNEP Risø Centre United Arab Emirates At Validation AM37 146 682 1460 3,213 16,416 41,836 17
Carbon Finance Demonstration Projects TFT gas recovery project AG processed and marketed Project document drafted tco2e reduction: 200,000/y Start up:? Danilovsk gas recovery project Grid connected IPP (36MW) Operating / under validation tco2e reduced: 162,000 / y Start up: Dec. 2005 PetroEcuador screening 4 small scale project ideas drafted: AG to power AG recovery for LPG AG for fuel switch Kwale gas recovery project Grid connected IPP (480MW) Operating / under verification tco2e reduced: 1.4 M/y Afam Gas Integrated Project Grid connected IPP (650 MW) New developed methodology tco2e potential : 700,000 /y Start up: 1Q/2008 LNG Plant AG commercialization (6.8 mill m 3/y ) Dropped as CDM activity tco2e potential: 1,5 M/ y Start up: 2012 Medco Kaji LPG project AG for LPG Under validation tco2e reduced: 123,000/y Start up: 2004 18
The Climate Change Imperative World-wide Recognition - UNFCC Meetings - IPCC Nobel Peace Prize 2007 - World Future Energy Summit: a new Davos? - President Obama initiative for Copenhagen preparation April 2009 At the country level - Strict environmental policy adopted At the corporate level - 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 19
Carbon Partnership Facility (CPF) New financial instrument under development by the World Bank Group to scale-up longterm GHG reductions By accelerating carbon mitigation investments Purchasing ERs after 2012 (helping continuity of carbon market) Focus on investment and development programs/sectors (e.g. energy, transport, urban, etc.) 20
Carbon Partnership Facility (CPF) A flexible multi-program approach Carbon Partnership Facility Program 1 Specific priorities: Different projects/ Countries/ programs/ prices etc Program 2 Example, flaring reduction Program 3 Program 4, 5 etc A program by program approach for differentiated responses for different needs (e.g Flaring reduction, power sector development, energy efficiency, etc.) 21
Carbon Finance: Conclusion and Perspective for GFR projects Carbon finance can help implement flaring reduction projects; but Further dedication is needed since there are still few projects (34/4653 in pipeline, 8 registered) Project -by-project approach is insufficient to generate large flaring reductions Opportunities to tap into improved approaches (sectoral/program) to generate CERs through flaring/venting reduction Longer term post-2012 time horizons for oil & gas project financing is available through CPF of the World Bank Pending GFR 3 rd phase approval - engage with the WB/GGFR to pilot a CDM program under the new CPF (e.g. flaring reduction and power development) Include /coordinate carbon finance into NFRC plans Design country specific programs that would maximize the value of carbon finance for energy sector development (upstream & downstream) Initiate implementation pilots programs in line with national energy development plans 22
GGFR s Vision is Thank you! Further information: hlingertat@worldbank.org www.worldbank.org/ggfr 23