Nigeria Loses N343bn As Oil Firms Burn 265bcf Of Gas In 9 Months
Despite Nigeria’s struggle with declining revenue, poor power supply and environmental degradation, oil and gas firms operating in the country flared 265.18 billion standard cubic feet, bcf, of gas between January and September 2020.
This, however, represented a decline of 23.6 per cent compared to 347.15 bc of gas flared in the corresponding period of 2019.
According to the data obtained from the National Oil Spill Detection and Response Agency, NOSDRA, the 265.18 bcf of gas flared in the nine-month period of 2020, translated to a loss of $928.3 million, an equivalent of N343.47 billion.
Consequently, the oil producing firms responsible for this flaring are expected to pay penalties amounting $530.5 million (an equivalent of N196.29 billion) for breaching the gas flaring laws in the nine-month period.
However, it is not known whether the oil firms have paid the penalties or not.
The volume of gas flared in the nine-month period is also an equivalent of 14.1 million tonnes of carbon dioxide emission and has a power generation potential of 26,500 gigawatts per hour.
Giving a breakdown of the volume of gas flared by oil and gas companies in the first nine months of 2020, the NOSDRA gas flare data stated that companies operating at onshore oil fields flared 154.8 bcf of gas, valued at $541.7 million, an equivalent of N200.43 billion, while companies operating offshore flared 110.5 bcf of gas, valued at $386.6 million, an equivalent of N143.04 billion.
The gas flared by the firms operating onshore attracted penalties of $309.5 million, about N114.52 billion; while it is an equivalent of 8.2 million tonnes of carbon dioxide emission; and is capable of generating 15,500 gigawatts per hour of electricity.
The volume of gas flared offshore, attracted penalties of $220.9 million, about N81.73 billion; represented an equivalent of 5.9 million tonnes of carbon dioxide emission; and electricity generation potential of 11,000 gigawatts per hour.
On a month-on-month basis, the report noted that in January, February, March, April, May, and June, 38.54 BCF of gas, 32.02 BCF, 35.8 BCF, 39.49 BCF, 38.88 BCF and 29.05 BCF of gas were flared respectively, while 18.34 BCF, 24.77 BCF and 8.29 BCF of gas were flared in July, August and September 2020, respectively.
In comparison, in January, February, March, April, May, June, July, August and September 2019, 41.82 BCF of gas, 39.33 BCF, 47.63 BCF, 41.89 BCF, 42.87 BCF, 40.8 BCF, 26.55 BCF, 36.11 BCF and 30.15 BCF of gas were flared respectively.
However, to ensure complete elimination of gas flaring, the Federal Government, through the Petroleum Industry Bill, PIB, is proposing that stricter sanctions, in form of fines shall be paid by the defaulters in the same manner and procedure in which the oil firms make payment of royalties to the Government.
The proposed PIB stated that the fine paid shall not be eligible for cost recovery or be tax deductible, adding that licensee or lessee shall pay a penalty prescribed pursuant to the Flare Gas (Prevention of Waste and Pollution) Regulations.
The law is further proposing that an oil firm licensed for crude oil and gas exploration and production, shall prior to the commencement of petroleum production, install metering equipment conforming to the specifications prescribed on every facility from which natural gas may be flared or vented as the relevant regulatory authorities may prescribe.
The bill is also stipulating that any licensee or lessee who fails or refuses to install metering equipment, would be deemed to have committed an offence under the Act and is liable to a fine as relevant regulatory authorities may prescribe.
The bill added, however: “The Commission or the Authority may grant a permit to a licensee or lessee to allow the flaring or venting of natural gas for a specific period, where it is required for facility start-up; or for strategic operational reasons, including testing.
“Notwithstanding any provision to the contrary under this Act, a licensee or lessee producing natural gas shall, within 12 months of the effective date, submit a natural gas flare elimination and monetisation plan to the Commission, which shall be prepared in accordance with regulations made by the Commission under this Act.”