The Federal Government has fined oil and gas companies operating in the nation $294 million, or roughly N127 billion, for gas flaring.
According to the National Oil Spill Detection and Response Agency’s (NOSDRA) most recent data, the fee was for gas flared between January and August 2022. According to the EPA, 147 billion standard cubic feet were flared in the review period, costing $515 million (approximately N222 billion).
The amount of gas flared in the period was 13% less than the 169 billion SCF of gas flared in the same time in 2021, valued at $591 million (about N255 billion). NOSDRSA further stated that the volume of gas flared in the time under review in 2022 was comparable to 8 million tons of CO2, which could have provided the country with about 15 gigatonnes of energy as a consequence of gas flare in eight months.
In comparison, the 168.9 billion SCF of gas flared in the same time in 2021 resulted in fines of $338 million, or approximately N146 billion, while it was comparable to 9 million tonnes of CO2 emissions and was capable of generating 16,900 gigatonnes of electricity.
According to a breakdown of gas flare statistics for the 2022 period, firms operating in Nigeria’s onshore oil area burned 75 billion SCF of gas, worth $262 million (N113 billion), or 4 million tonnes of carbon dioxide emissions and 7,500 gigawatt-hour electricity generation potential. On the other hand, the firms were liable for penalties of $150m, an equivalent of N65bn.
Specifically, NOSDRA data pointed out that in January, February, March and April 2022, onshore oil firms flared 19 billion SCF of gas; 14 billion SCF; 10 billion SCF and 7 billion SCF, respectively. Also, 9 billion SCF, 5 billion SCF, 5 billion SCF and 5.4 billion SCF of gas were flared in May, June, July and August 2022, respectively.
On the other hand, the oil spill regulator stated that companies operating in the country’s offshore oil exploration and production territory flared 72 million tonnes of gas in the eight-month period of 2022, valued at $253m, which was about N109bn.
They were liable to pay penalties of $144m (N62bn), while the gas flared was equivalent to 4 million tonnes of carbon dioxide emissions and had power generation potential equivalent to 7,200 gigawatt-hour of electricity.
Particularly, NOSDRA reported that 11 billion SCF, 13 billion SCF, 6 billion SCF and 15 billion SCF of gas were flared by companies operating offshore in January, February, March and April 2022 respectively.
In May June, July and August 2022, the companies flared 12 billion SCF, 5 billion SCF, 4 billion SCF and 6 billion SCF of gas respectively. In July an indication by FG to jack up gas flaring penalties as the country raced towards achieving its commitment to the United Nations’ net-zero goal by 2060.
Currently, companies producing more than 10,000bpd pay a fine of $2 per 1000 standard SCF of gas flared. Companies producing less than 10, 000bpd pay a fine of $0.5 per 1000scf of gas flared. In 2020 alone, natural gas valued at $1.24bn was flared by oil companies.
Managing Director, TotalEnergies Exploration and Production Nigeria Limited, Mike Sangster, at the 2022 Nigeria Oil and Gas conference in Abuja, opposed the enforcement of penalties for gas flaring as contained in the Petroleum Industry Act 2021.
“I don’t think penalties are the answer to reducing gas flaring,” he said, adding that oil firms should be encouraged to move towards more gas production for the indigenous market and for export.
