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The Federal Government has given the nod to 139 investors to commercialise gas flares from the 48 gas flares sites across the country. The successful investors emerged out of over 300 firms that participated in the bid for the Nigerian gas flare commercialisation programme. The Chief Executive Officer of Nigerian Upstream Petroleum Regulatory Commission, Mr Gbenga Komolafe, stated this at the Nigerian Gas Commercialisation and Investors Forum organised in Abuja to intimate all qualified applicants and others about the programme. According the boss of the National Oil Spill Detection and Response Agency (NOSDRA), Mr Idris Musa, the investors were selected based on their capacity to monetise gas flares.
Nigeria had flared natural gas valued at $685 million between January and November 2022, according to data from the Nigerian Gas Flare tracker, a satellite-based technology created by the NOSDRA. The plan to commercialise gas flares is a good development. Nigeria is ranked number two among the top 10 gas flaring countries in the world. Others are Russia, Iran, Iraq, United States, Algeria and Kazakhstan.
It is encouraging that government has stepped up this effort at this time. Two years ago, President Muhammadu Buhari at the United Nations promised that Nigeria would work in collaboration with the rest of the international community to end gas flaring in 2030. Let the government work towards realising the goal. Sadly, earlier plans by successive governments in the country to end gas flaring did not succeed much. According to the International Energy Agency (IEA), Nigeria was able to reduce gas flaring by 70 per cent between 2000 and 2020, but after that, not much has been achieved in that direction.
In all, Nigeria reportedly lost over N2trillion to gas flaring in the last 10 years. International Oil Companies (IOCs) operating in the country are reported to be burning gas found in oil wells when exploiting crude oil because they are unwilling to make the necessary investments to harness it. This practice is harmful to the environment and to the health of the people, especially those in the oil-bearing communities. The government has often imposed fines on the erring firms. But the fines are like a slap on the wrist as they have not been able to deter them. For instance, in 2018, the federal government increased gas-flaring penalties from N19 to N613 per thousand standard cubic feet (scf). It also announced a fine of N50,000 or six months in prison or both for any oil firm that provides inaccurate flare data. This has also not been able to rein in the oil-producing companies. Some of the oil companies have resorted to divestment of some of their assets in the country.
In 1999, the federal government established the Nigerian Liquefied Natural Gas as part of efforts to cut gas flares and monetise the by-products routinely wasted. Gas flaring without the permission of the Minister of Petroleum Resources became illegal in the country since 1984. The latest penalty for gas flaring stands at $2 per 1,000 scf. According to figures from NOSDRA, the penalty for gas flaring in the last one year stood at $393million. According to the World Bank report, gas flaring in Nigeria persists mainly due to a number of economic constraints, lack of appropriate regulation and political will to deal with the problem. The need to end gas flaring is more urgent now than ever before. Let there be the political will and regulatory framework to deal with the delinquent oil companies.
The IOCs operating in the country are estimated to produce about 2.524trillion of scf yearly. The gas they utilise is only 2.334trillion, with 289.6 billion scf flared. As a matter of urgency, the oil companies should heed the call to end gas flaring. The National Assembly should also put in place tougher measures to end the inimical practice, in addition to the relevant provisions of the Petroleum Industry Act (PIA). We advise that efforts should be intensified to complete the 7th Train of the Nigeria Liquefied Natural Gas (NLNG), which according to experts, can attract over $8billion annually in Foreign Direct Investment (FDI), as well as reduce gas flaring drastically. Therefore, the plan to commercialise gas flaring must be pursued with vigour.
