Criticism flares up over gas waste

The Middle East continues to flare more gas than than almost any other region.

Gas flares burn near an oil well on the outskirts of Masjed Soleiman in Tehran. Iran ranks third in terms of flaring levels.

Fuel subsidies, international sanctions and fractious politics are among the reasons the Middle East continues to flare more gas than any other region except Russia.

The practice wastes resources and contributes to air pollution and global warming.

A study by General Electric (GE) shows Middle East oil and gas producers pumped 87 million tonnes of carbon dioxide into the atmosphere in 2008 by burning 34.6 billion cubic metres of gas. Most of that was a by-product of crude production from the region's oilfields.

"Flaring levels in the Middle East region remain relatively high," the report said. "The largest volumes of gas flaring occur in Iran and Iraq. However, Saudi Arabia, Kuwait, Qatar and other parts of the region have flaring issues."

Of the world's top nine gas-flaring nations, five are from the Middle East and North Africa region. Iran is in third place and Iraq fourth, behind Russia and Nigeria. Algeria, Saudi Arabia and Qatar are the sixth, eighth and ninth worst offenders, respectively.

"Gas flaring is one of the most challenging energy and environmental problems facing the world today," said GE.

The amount burnt is equal to 5 per cent of global natural gas production, or 2.4 million barrels a day of oil.

The 400 million tonnes a year of carbon emissions that result equal the amount of carbon dioxide from the exhausts of 77 million petrol-fuelled cars or 125 medium-sized coal plants.

Gas flaring is not a difficult problem to tackle.

"The technology to address the problem exists today and the policy reforms required are largely understood," GE said. "Many constructive efforts to reduce flaring are under way, yet on the current path, it will likely take a decade or more to minimise this wasteful practice.

"Governments with non-transparent policies and weak environmental regulations are particularly likely to flare large amounts of gas. The problem is exacerbated through policy distortions related to subsidised hydrocarbon and electricity pricing."

Subsidies contribute heavily to flaring in Gulf oil states, which are mostly not short of oil and gas expertise or infrastructure for processing and transporting gas produced from their oilfields.

But very low domestic gas prices, often below US$1 per million British thermal units, mean at smaller or isolated fields where gathering and processing costs are higher than average it is often more economical to flare gas.

In Iran, the problems caused by mandated low gas prices are compounded by international sanctions on the country over its nuclear programme. Both contribute to huge underinvestment in gas infrastructure.

"The country is in the process of expanding pipeline infrastructure to better connect isolated locations," GE reported. "However, until the issues around Iran's nuclear programme are resolved, access to advanced gas technology will likely be limited."

Iraq has a similar pricing issue compounded by a wartime legacy of ruined infrastructure.

"After the [two Gulf Wars], damage to gas-processing sites in the south was extensive and remains unaddressed," GE said. "Gas-processing capacity is limited at key sites where oil production exists and is expected to grow rapidly."

It estimated that by 2015, Iraq could flare 20 billion cu metres of gas a year.

In 2008, Shell proposed a $4bn (Dh14.69bn) project to process and market gas from Iraq's big southern oilfields.

But the deal was opposed by politicians who complained it lacked transparency and objected to plans to export some of the gas. A contract for the much-delayed project has still not been signed.

Yet GE says such a deal is essential: "If Iraq fails to synchronise oil and gasfield development with viable options for associated gas, the flaring problem … can be expected to expand significantly.

"The result will be enormous direct costs in terms of wasted resources and corresponding social and environmental costs."

Some other countries in the region have taken concrete steps to tackle gas flaring. In the UAE, Abu Dhabi National Oil Company, the nation's biggest oil and gas producer, aims for zero flaring except in emergencies.

In Saudi Arabia, the kingdom's master gas system project, which started operating in 1982, gathers almost 100 billion cubic metres of gas a year, of which about half would otherwise be flared.

"The success achieved by Saudi Arabia is one example in the long journey for the Middle East region towards managing gas flaring more effectively," said Joe Anis, the president and chief executive of GE's Middle East energy unit.

"Eliminating wasteful gas flaring has the potential to be the next big energy and environmental success story, and through better management the region can benefit not only from direct cost in terms of resource use but also in social and environmental costs."

The Middle East's total annual carbon emissions from flaring fell 11 per cent to 87 million tonnes in 2008 from 98 million tonnes four years earlier, even as oil and gas production increased.

The GE study recommended strengthening international commitments to eradicate flaring, involving local communities in anti-flaring projects and enhancing access to financing for gas pipeline, processing and storage projects.