Editorial

Ending gas flaring

Good news seems hard to come by these days in the oil and gas sector of the economy. Beyond the crash of oil prices in the international market, which has dipped revenue accruing to the Federation Account, there are disturbing reports that Nigeria loses a massive N139 billion monthly  to gas flaring.

Currently, Nigeria is the second top gas flaring country in the world, and number one in Africa, with an estimated 22.3 billion standard cubic feet (scf) of gas flared monthly. Globally, over 150 billion cubic metres of associated gas is flared annually.  Last year alone, Nigeria reportedly lost N1.6 trillion to gas flaring. Data from the Nigerian National Petroleum Company (NNPC) Annual Statistical Bulletin show that a total N173.76 bn was lost in 2014, out of which N27.23bn was lost in August of that year alone. The figure was arrived at using the Nigerian Gas Company’s price of $3 per scf at exchange rate of N197.

Besides, the data revealed that the economy lost over N296 billion scf of natural gas due to flaring by major oil companies operating in the Niger Delta region within a nine-month period in 2014 and 2015. Also, in 2011, Nigeria reportedly flared over 460 scf of gas, which if processed and exported, would have fetched the government over $2bn and reduced the health and environmental impact of gas flares in the Niger Delta. The financial and environmental losses to gas flaring are huge and must be checked, as they are impacting negatively on both the economy and the environment.

The present situation is reportedly due to the inability of government to complete projects that were designed to reduce gas flaring. Two of the projects are the Brass and Olokola Liquefied Natural Gas companies. Another project meant to reduce gas flaring but yet to come on stream is the $2bn Tran Saharan Gas Pipeline running from Nigeria to Algeria. This project is designed to transport about 30 billion cubic metres of natural gas from Warri in Delta State through Niger Republic to Algeria.

We are worried at the massive gas flaring going on and its harmful effects on the ozone layer. No doubt, the dangers of climate change are here with us. Only recently in Paris, France, President Muhammadu Buhari pledged Nigeria’s commitment to cutting emission by 20 percent in the first phase by ending gas flaring and promoting  the utilisation of solar energy. He also said that the second phase would lead Nigeria to cutting emission by 45 percent with the assistance of international climate finance.

It is, however, important to note that time is of essence in this regard. According to NNPC, the Brass LNG, with two trains and an output of ten metric tonnes per annum, was expected to have been completed since 2009, while the Olokola LNG which is a four-train plant with an output of 20 metric tonnes per annum ought to have been on stream since 2010. Six years on, these projects are far from completion, perhaps due to lack of commitment by the Federal Government.

Nigeria cannot continue to flare gas at this rate, especially on account of its health and environmental implications.

For example, International Oil Companies (IOCs) in Nigeria produce about 2.524 trillion scf of gas annually. The estimated gas they utilise is put at 2.235 trn, with a hefty 289.6bn scf flared.

Last year, the World Bank released a plan to end routine gas flaring by the year 2030 all over the world. It is good that the Federal Government has promised to sign a global agreement on zero routine gas flaring that is targeted at ending flaring in 2030. This assurance was made on March 14 by the Vice President, Yemi Osinbajo, during the opening of the African Petroleum Congress and Exhibition in Abuja.  Oil producing nations should key into that plan. The World Bank has been active for about 16 years on this serious issue. Among the top 10 gas flaring countries in the world are Russia, Nigeria, Iran, Iraq, United States, Algeria and Kazakhstan.

Undoubtedly, gas flaring that is not related to safety concerns is not only hazardous, it is unsustainable from both the resource management and environmental perspectives. For Nigeria, the call to end gas flaring is now more urgent than ever. What is needed is the political will and sincerity of purpose to make it a reality.

It is also important to put in motion the necessary legal and regulatory framework to achieve this objective. We urge the National Assembly to collaborate with the presidency towards actualizing this plan. If this is done, it will, among other things, encourage oil firms operating in Nigeria to invest in gas flaring elimination measures.  We urge the oil majors to heed the World Bank call and develop new projects that will utilise natural gas, instead of flaring it at a huge cost to  the ecosystem.

At present, there is an estimated 600 trillion cubic feet of gas reserve in Nigeria. Therefore, efforts should be intensified to complete the Seventh Train of the Nigeria Liquefied Natural Gas (NLNG), a project which experts say can bring in revenue of about $8bn in Foreign Direct Investment, as well as drastically reduce gas flaring. Altogether, the cooperation of all stakeholders in the oil sector is needed to end gas flaring and channel it to useful means that will benefit the country.

 

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