The European Bank for Reconstruction and Development (EBRD) is joining forces with the World Bank-led Global Gas Flaring Reduction partnership (GGFR) to help governments in Azerbaijan, Kazakhstan, Russia and Turkmenistan introduce energy efficiency measures to improve business competitiveness and environmental standards in oil and gas operations.
Through this joint initiative, both development banks will help oil-producing countries and companies reduce the waste of a valuable energy source and also combat damage to the environment. Currently significant quantities of petroleum gas, a by-product in oil extraction, are flared or vented into the air.
With this undertaking, the EBRD will also officially join the GGFR partnership, a public-private initiative of some 30 major oil-producing countries and companies that aim to overcome the challenges of dealing with such gases.
In collaboration with various oil and gas companies, the EBRD and the World Bank’s GGFR partnership will manage the production of a ground-breaking market study designed to assess gas venting and flaring operations on about 100 oil sites across the four countries and identify the main obstacles that hinder the further utilization of gases associated with the production of petroleum. In addition, the study will analyse current legal and regulatory frameworks and look into market, infrastructure and financing barriers.
“Gas flaring reductions in Russia and Central Asia are critical for improving energy efficiency and tackling greenhouse gas emissions,” says S. Vijay Iyer, Director of the World Bank’s Sustainable Energy Department. “We welcome this joint initiative and look forward to partnering with EBRD on achieving more tangible results in the economic utilization of associated gas. We also welcome the participation of other development banks in these globally important efforts,” he added.
As part of the new study, international and local experts will categorise oilfields in each country based on their location, type and size. They will also identify gas-oil production and own energy consumption volumes along with associated gas characteristics and its chemical composition.
According to Terry McCallion, EBRD’s Director for Energy Efficiency and Climate Change, the study will come up with a number of alternative options for associated gas utilization.
“We will aim to develop resource and energy efficiency improvements and cleaner production measures to minimise gas flaring in the participating countries. These improvements will later be supported via investment projects, ranging from using associated petroleum gas in power and heat generation on site to supplying it to gas treatment facilities where this gas could be turned into a liquid fuel for further use in other industries,” he says.
The identified four countries are among the world’s major flaring countries. Global gas flaring, estimated last year at 134 billion cubic meters (bcm), is not only a significant waste of a useful energy resource, but it also accounts for some 360 million tons of greenhouse gas emissions globally. According to latest satellite data, over 40 bcm of this associated gas – or about 30 per cent of global flaring – were flared in Europe and Central Asia in 2010, which amounts to some 100 million tons of carbon dioxide emissions – roughly equivalent to the annual emissions of some 20 million cars.
The study, with a total estimated cost of €1 million funded from the EBRD’s Shareholder Special Fund, will be carried out by a consortium led by the Norwegian consultancy “Carbon Limits” with the participation of local expert companies.
The study results will be made public next year at a number of workshops and presentations, which will include the participation of oil companies, foreign and local manufacturers of the necessary equipment, government officials, regulators and other relevant organizations.
For the EBRD, the study’s specific energy efficiency focus builds on the achievements gained under its Sustainable Energy Initiative (SEI), a programme that promotes improvements to reduce waste and harmful greenhouse gas emissions in the transition countries of the EBRD region – one of the most energy intensive and energy wasteful in the world. Since its launch in 2006, SEI financing has reached €7.3 billion through nearly 400 projects across 29 countries.
The new joint study is the latest effort in the EBRD and GGFR’s collective commitment to overcome the barriers in reducing gas flaring by sharing global best practices and implementing country specific programmes.