N IGERIA’s gas flaring re-emphasises the aphorism that we are rich in energy resources but poor in energy supply and management. The Associated Gas Re-Injection Act was made as an Act to compel every company producing oil and gas in Nigeria to submit preliminary programmes for gas re-injection and detailed plans for implementation of gas re-injection. It made it illegal after January 1, 1984 to flare gas without the permission of the Minister of Petroleum. The targets to stop gas flares have since then moved from 1984 to 2008 and 2011. But gas is still being flared up to date.
According to experts, Nigeria flares about 1.2 billion cubic feet of gas a day (bcf/d), which could fuel about 7000MW of efficient thermal electric power, over 1,400 agro-processing facilities, 350 textile plants, 70 fertilizer plants with opportunities for creating over one million jobs. This amount of gas flare represents 12.5 per cent of all globally flared gas.
In 2014, Nigeria lost about $1billion as oil companies operating in the country flared a large proportion of the gas produced from January to September 2014.
Also, according to data from the Nigeria National Petroleum Corporation (NNPC), about 295 billion standard cubic feet (scf) of natural gas was flared in the nine-month period. International oil companies and indigenous players burnt a total of 43.7billion scf in January, 50.1 billion scf in February and 38.3 billion scf in March. In April, 22.3 billion scf of gas was flared; 19.7 billion scf in May and 23 billion scf was wasted in June. In July, 29.1 billion scf was flared; 39.1 billion scf in August; 29.5 billion in September; and 44.37 billion in November 2014.
According to the NNPC’s Monthly Petroleum Information, in December 2014, Nigeria lost $133.716 million, which is about N26.743 billion to gas flaring, as oil and gas companies in the country flared 20.11 per cent of their total gas production. Specifically, companies produced 221.634 billion scf of gas, utilised 183.78 billion scf and flared 44.573 billion scf.
The Nigerian Gas Company (NGC) put the average price of gas at $3 per unit of 1,000 scf, translating, to $133.716 million for 44.573 billion scf flared, and $551.346 million for 183.783 billion scf utilised. If 1.2 billion scf flared per day has the potential to generate up to 7000MW of electricity, the aggregate gas flared for 2014; about 376.41billion scf can translate into 21.97GW, in addition to its inputs in agro processing, textile plants, fertiliser plants, and the number of jobs created from the multiplier effect.
Despite the penalties, oil and gas operators have continued to flare gas and regulators seem to have looked away. While there is need to interrogate the positions of penalty payments considering the joint ventures arrangements, there is also the need to revisit the issues of gas pricing and availability of gas infrastructure; else the question will be the relative cheapness to flare gas than monetise gas.
Efforts should be made to harmonise and reconcile domestic gas pricing across markets in Nigeria while seeking ways to attract and sustain foreign investments and funding for gas infrastructure especially for the improvement of gas to power in Nigeria.
- Ofoegbu Donald,