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By Michael Eboh
While Nigeria continues to delay in the implementation of its zero gas flare policy in the production of crude oil and gas, the country lost $1.5 billion to gas flaring in 2019, as oil and gas firms operating in the country flared 425.9 billion standard cubic feet of gas, SCF.
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Using current Central Bank of Nigeria’s, CBN, official rate of N307 to a dollar, $1.5 billion value of flared gas translates to a loss of N460.5 billion to the country in 2019.
Data obtained from the Nigerian Gas Flare Tracker, hosted by the National Oil Spill Detection and Response Agency, NOSDRA, showed that of the 425.9 billion SCF of gas flared between January and November, 2019, 22.6 million tonnes of carbon dioxide was emitted into the environment, while the volume of gas flared is capable of generating 42,600 megawatts of electricity.
In addition, NOSDRA, stated that the defaulting companies are liable of paying $851.8 million in penalties to the Federal Government, an equivalent of N261.5 billion.
The N460.5 billion flared by oil companies in the 11-month period, is 45.93 per cent higher than the N315.56 billion capital expenditure budgeted by the Federal Government for the Ministry of Works and Housing in the 2020 budget;
In addition, the value of gas flared in the period under review, would conveniently finance the capital expenditure of Ministry of Education (N185.34 billion), Ministry of Power (N129.08 billion) and Ministry of Health (N109.91 billion), which stood at a combined total of N424.33 billion.
On its own part, data obtained from the Nigerian National Petroleum Corporation, NNPC, stated that between September 2018 and September 2019, oil and gas companies operating in the country flared 276.04 billion standard cubic feet of gas, representing 8.92 per cent of total gas production of 3.09 trillion cubic feet produced in the country between September 2018 and September 2019.
Using average gas price of $4 per 1,000 SCF, this translates to a loss of $1.104 billion, and equivalent of N338.93 billion, using the CBN’s official exchange rate of N307 to a dollar.
Specifically, from September to December 2018, the NNPC stated that 20.54 billion cubic feet, BCF, 20.51 BCF, 23.78 BCF and 21.89 BCF of gas was flared respectively; while from January to May 2019, 18.30 BCF, 21.22 BCF, 24.95 BCF, 24.82 BCF and 19.84 BCF was flared respectively.
From June to September 2019, oil and gas firms flared 18.12 BCF, 20.47 BCF, 21.66 BCF and 19.94 BCF of gas respectively.
However, the Director General of NOSDRA, Mr. Idris Musa, had declared that Nigeria does not know the actual volume of gas flared in the country; while the Ministry of Petroleum Resources had last year stated that hundreds of gas flare sites were yet to be identified by the government and that efforts are ongoing to identify these sites, especially for its Nigerian Gas Flare Commercialisation Programme, NGFCP.
BudgIT, in one of its recently released reports, stated that one of the major drivers of gas flaring in Nigeria is the fact that commercially, it is more expensive to transport gas as opposed to crude oil; hence, oil and gas companies find it cheaper to flare gas.
According to BudgIT, in most cases, gas flares occur in close proximity to neighbourhoods, while it has been revealed that gas flaring have a calamitous effect on local populations, often resulting in depleted air and groundwater quality that ultimately leads to severe health crises.
“Studies showed that gas flaring causes deformities in children, lung damage, pneumonia, asthma, bronchitis, blood disorders and a host of other fatal health conditions,” it added.
In addition, the United States Energy Information Administration, EIA, stated that a considerable huge amount of Nigeria’s gross natural gas production is flared because some of the country’s oil fields lack the infrastructure needed to capture the natural gas produced with oil, known as associated gas.
Commenting on the effect of flaring, General Manager, Gas and Renewable Energy Department of the PPPRA, Mr. Olasupo Agbaje, disclosed that gas flaring is a menace which has caused, and continues to contribute to irreversible environmental degradation, posing hazards to human health.
According to him, whatever the reasons for flaring, the practice remains a waste of valuable resources much-needed for economic development.
He said, “We acknowledge that companies have made some effort at reducing gas flared, as can be seen in the obvious drop in the volume of flared gas, from 56.7 per cent of gas produced in 2000, to 14.33 per cent of gas produced in 2016. As a result, there is the tendency for the Nigerian government to believe the problem of gas flaring is under control.
“However, it is important to note that flaring 14.33 per cent of gas produced annually still translates to flaring 119.15 billion SCF of gas annually; this volume of gas would go a long way if used in generating electricity for Nigerians, not to mention the loss of potential revenue and health hazards that accompanies flaring such large volumes.”
Former Minister of State for Petroleum Resources and Former Group Managing Director of the NNPC, Dr. Ibe Kachikwu, bemoaned the fact that Nigeria had failed to properly utilize its gas resources for the development of the Nigerian economy.
He lamented the fact that a significant volume of gas produced in the country was flared, depriving the country the benefits that could have been accrued from the resources.
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Commenting on the latest target to end gas flaring, Professor Wumi Iledare, immediate past President of the Nigerian Association for Energy Economics, NAEE, believes that it is impossible to end gas flaring in Nigeria by 2020, especially as the country lacks the requisite infrastructure.
He said, “The government is joking. Just like vision 2010 and 2020, we can move towards accomplishing that goal. The United Nations is looking at 2030 for zero gas flare. We are the ones trying to accelerate it.
“It is a good idea, but you need to have stages, milestones. You cannot just wake up in two years and say what we have been trying to do in 40 years, would just have to end like that.” According to Iledare, to truly achieve zero gas flare, the Federal Government must subsidise the infrastructure needed to capture, produce and transport the commodity.
“If government wants gas sector to be developed, then it must subsidise the infrastructure that is required to develop the sector. The government has 60 per cent stake in most of the oil assets, which means that for every infrastructure that is required to be able to continue to produce, you must produce $60 for every $100 required.”
To curtail gas flaring, Olasupo Agbaje stated that the supply framework, infrastructure and market systems necessary for un-flared gas to reach its end users needs must be collectively and sustainably developed by all stakeholders.
Specifically, he added that the legal frameworks on gas flaring should be strengthened; concerted efforts should be geared towards executing the National Gas Plan; while more investments should be made by companies in natural gas capture infrastructure and more investments in gas flare stacks.
Over the years, the Federal Government had set various deadlines for the discontinuation of routine gas flaring in crude oil and gas exploration, but had consistently shifted the timeline, without cogent reasons.
The first deadline was set in 1973; followed by another deadline in 1984, then 2013 and lastly, 2019, yet none of these deadlines were adhered to.
However, it is important to note that the percentage of gas flared in the country reduced from 85 per cent of total gas produced in the country in the 1980s and 1990s, to about 50 per cent in the early 2000s, before dropping to about 15 per cent of total gas production as at today.
Today, Nigeria is ranked seventh on the global gas flaring index by the World Bank, compared to second position in 2012 and fifth position in 2015.
Nigeria, the Department of Petroleum Resources, DPR, said has the largest gas deposit in Africa, making it the leader in the continent and the ninth globally. The gas has the potential to catalyse industrial growth and development in addition to its role as a key revenue earner to government.
However, despite having the highest gas reserves in Africa, only about 25 per cent of those reserves is produced or under-developed.
According to the 2018 Annual Gas Dashboard of the Department of Petroleum Resources, DPR, Nigeria’s proven gas reserve is currently 200.79 trillion cubic feet (TCF) and about 600 trillion cubic feet unproven gas reserves.
In addition, the Petroleum Products Pricing Regulatory Agency, PPPRA, declared that Nigerian produces an average of 8.06 billion standard cubic feet per day (BSCFD).
It noted that 41 per cent of this production goes to the export market, through the Nigerian Liquefied Natural Gas, NLNG, and the West African Gas Pipeline, WAGP; 17 per cent goes to the domestic market, whereas 31 per cent is used for oil field operations including gas re-injection, while the balance of 19 per cent is flared.
However, to curb the flaring of gas in Nigeria, going forward, the Federal Government has launched the National Gas Policy and the Nigerian Gas Flare Commercialisation Programme, NGFCP, which aims to take gas from flare sites and hand them over to investors who would be able to capture the gas and utilise it for commercial purposes.
Another project that would help reduce gas flaring in Nigeria is the $10 billion Nigeria Liquefied Natural Gas Train 7 project, which is expected to grow the NLNG plant capacity by additional eight million SCF of gas annually.
The post Despite paucity of funds, Nigeria flares N461bn gas in 2019 appeared first on Vanguard News.
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