World Bank has asked oil companies to take steps to stop burning associated gases up to 2030. According to Anita George, an oil extraction expert at World Bank, if oil producing countries are able to stop burning 140 billion cubic meters of associated gases per year (384 million cubic meters per day), it will be equivalent to halting the release of carbon dioxide from 70 million vehicles.

As a project manager at World Bank said, the initial research studies conducted on measurement of the volume of flared associated gases indicate that the U.S is the third largest country in view of burning associated gases after Iraq and Russia while Nigeria and Iran rank fourth and fifth.   

The background of gathering associated gases in Iran dates back to 1970 concurrent with the establishment of the National Iranian Gas Company (NIGC).

Over the recent years, the National Iranian Oil Company (NIOC) has implemented a number of gathering associated gases projects in offshore and onshore sectors of the country. Besides, the company is involved in a number of gathering associated gas projects now and plans to implement similar projects in the future.

Associated gases could be used as feedstock, for injection to oil reservoirs, for export or as fuel for power plants.

The figures show that between 2007 and 2012 more than 81 billion cubic meters of associated gases have been flared in Iran.

If each cubic meter of gas is calculated based on 30 cents, it means that during a five-year period, the country has lost 24 billion dollars due to burning associated gases, implying the loss of more than 4 billion dollars each year along with inflicting huge losses to environment.

Despite huge profits of gathering associated gases projects, the private sector normally avoids taking part in these projects.

Iran’s parliament in its debates on budget decided to add an amendment (amendment 28) to the budget. The amendment which was included in 2011 and 2013 budgets allowed the government to hold tender for gathering associated gases based on the one third of the price of each cubic meter of gas it delivers to power plants with the goal of spending the earning in protecting the environment.  

Although the parliament ratified the amendment in the current year budget, the Guardian Council found some defects in the amendment and sent it back to the parliament for correction. During the process of legislation and revision, the parliament decided to drop the amendment which put a brake on investment by the private sector in the associated gases projects.

The decision not only led to burning 9.2 billion cubic meters of associated gases each year in oil fields but it is estimated to inflict 2.8 billion dollars of losses to the economy.  

Now, with regard to the huge benefits of amendment 28, once again the government is expected to offer the amendment for including in draft budget which will be sent to parliament. There is no doubt that the amendment can not only play a key role in prevention of flaring gas and damaging the environment but will bring remarkable revenue for NIOC.