A recent report by the National Oil Spill Detection and Response Agency (NOSDRA) revealed that Nigeria lost a hefty N702 billion from January to November 2023 as a result of gas flaring by oil companies operating in the country. The amount translates to 241 million standard cubic feet (scf). It also represents 18.9 per cent increase compared to 195.5 per cent of scf of gas flared in the corresponding period of 2022.
Besides, NOSDRA says that defaulting oil firms are liable to fines totalling $482 million or N401.3 billion. The volume of gas flared during the period under review is said to be equivalent to carbon dioxide emissions of 673.1 thousand tonnes. It has the potential to generate 241.00 Gigawatts hour (GWh).
Also, oil companies operating offshore are reported to have flared 132.9 million scf, while those operating onshore have flared 108.1 million scf. All of this comes against the backdrop of plans by the House of Representatives to probe the $2.5 billion said to be the annual loss to the economy due to gas flaring. No doubt, gas flaring poses a present danger to health and the environment. President Bola Tinubu, at the just concluded conference on Climate Change, COP28, in Dubai, the United Arab Emirates, pledged Nigeria’s commitment to end gas flaring. His promise was part of Nigeria’s contribution to the current global push to reduce methane emissions and other greenhouse gases.
Early this year, the federal government set in motion plans to check gas flaring, with the approval of 139 investors to commercialise gas flares from the 48 gas flare sites across the country. The successful investors emerged from over 300 firms that submitted bid proposals in response to government’s request. Nigeria reportedly flared natural gas valued at $685 million between January and November 2022. This is according to data from the Nigerian Gas Flare Tracker, a satellite-based technology created by NOSDRA.
The move to curb gas flaring is laudable. As fossil fuel is becoming less popular, more attention is being shifted to natural gas as the bridging fuel for many oil and gas-producing nations. Nigeria is among the top 10 gas flaring countries in the world, the second biggest gas flaring country in the world. Others are Russia, Iran, Iraq, United States, Algeria and Kazakhstan. At 75 million tonnes of CO2 equivalent annually, they outstrip the emissions from over 200 million Nigerians.
It is commendable that government has vowed to end gas flaring. At the United Nations two years ago, the then President Muhammadu Buhari promised to work with the rest of the world to end gas flaring by 2030. It will be a remarkable achievement if the government stops gas flaring by 2030. Successive governments have promised to end gas flaring but without much success. 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 little has been achieved.
Nigeria reportedly lost over N2 trillion to gas flaring in the last 10 years. International oil companies (IOCs) operating in the country have been accused of burning gas found in oil wells when exploiting crude oil. They have also not made the necessary investments to harness it. Gas flaring is harmful to the environment and to the health of the people, especially those in the oil-bearing communities.
Government has imposed fines on erring firms. But the fines are so little and, therefore, are not deterrent enough. 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 companies. Some oil firms have divested some of their assets in the country due to unfriendly business environment.
In 1999, the federal government established the Nigerian Liquified Natural Gas as part of efforts to cut gas flares and monetise the by-products routinely wasted. Since 1984, gas flaring became illegal without the permission of the Minister of Petroleum Resources. The latest penalty for gas flaring stands at $2 per 1,000 scf. The penalty for gas flaring in the last one year stood at $393 million. Lack of appropriate legislation is apparently fuelling gas flaring. The government should muster the political will to deal with the problem forthwith. According to estimates, the IOCs produce about 2.524 trillion of scf yearly. About 2.334 trillion scf is utilized, while 289.6 billion scf is flared. The IOCs should heed the call to end gas flaring. Tougher measures should be put in place to deal with the problem.
Efforts should be intensified to complete the seventh train of the NLNG, which will bring over $8 billion annually in foreign direct investment and reduce gas flaring. Let the plan to commercialise gas flaring be fast-tracked.