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FG, oil companies lose N87.16bn to gas flaring – Punch Newspapers


’Femi Asu

The Federal Government and oil companies in the country lost an estimated N87.16bn from January to May this year as a total of 90.9 billion standard cubic feet of natural gas was flared.

The oil companies wasted 19.95 billion scf of gas in January; 18.27 billion scf in February; 19.71 billion scf in March; 17.90 billion scf in April, and 15.07 billion scf in May, according to data obtained from the Nigerian National Petroleum Corporation.

With the price of natural gas put at $2.53 per 1,000scf as of Monday, the 90.9 billion scf flared translates to an estimated loss of $229.98m or N87.16bn (using the official exchange rate of N379/dollar).

The NNPC said a total of 1.30 billion scf per day of gas was supplied to the domestic market and 3.33 billion scfd was supplied to the export market in May.

“This implies that 61.97 per cent of the average daily gas produced was commercialised while the balance of 38.03 per cent was re-injected, used as upstream fuel gas or flared. Gas flare rate was 6.50 per cent for the month under review i.e. 486.19 million scfd,” it said.

The corporation said out of the 1.30 billion scfd of gas supplied to the domestic market in May, about 833.95 million scfd, representing 64 per cent was supplied to gas-fired power plants while the balance of 469.15 million scfd or 36 per cent was supplied to other industries.

The PUNCH had reported in May that the Federal Government said gas flare penalty payment by oil and gas companies in the country would increase to N103.51bn this year.

The Director-General, Budget Office of the Federation, Ben Akabueze, said the government would “tighten implementation of the 2018 revised gas flare penalty payment regime (resulting in upward revision of gas flare penalty for 2020 from N44.7bn to N103.51bn)”.

According to the revised payment regime for gas flaring, oil firms producing 10,000 barrels of oil or more per day will pay $2 per 1,000 standard cubic feet of gas, compared to N10 per 1,000 scf in the past.

Firms producing less than 10,000 barrels of oil per day will pay a gas flare penalty of $0.5 per 1,000 scf.

The Department of Petroleum Resources said in February that it had shortlisted 200 investors to bid for gas flare sites after the evaluation of statements of qualification submitted by interested companies.

The DPR said 45 gas flare sites would be put up for auction in the first phase of the Nigerian Gas Flare Commercialisation Programme.

The agency said in June that that programme had been delayed by the COVID-19 pandemic as bidders needed access to the flare points.

Approved in October 2016, the NGFCP was designed as the strategy to implement the policy objectives of the government for the elimination of gas flares from Nigeria’s oil and gas fields in the near term of between two and three years, with potentially enormous multiplier and development outcomes for Nigeria.

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