Oil companies continue to flare gas in Nigeria despite the federal government’s lacklustre effort to contain it with the country losing N23 billion in April 

|  By Anayo Ezugwu  |  Jul 24, 2017 @ 01:00 GMT  |

THE latest financial and operations report of the Nigerian National Petroleum Corporation, NNPC, has showed that Nigeria lost $63.345 million (about N23.438 billion) to gas flaring as oil and gas firms operating in the country flared 20.50 billion standard cubic feet, SCF, of gas in April 2017.

The report disclosed that the volume of gas flared in April declined by 4.52 percent when compared to the 21.47 billion SCF flared in the preceding month.

The NNPC puts the price of natural gas at $3.09 per 1,000 SCF, while the dollar is currently exchanged at an average of N370 to a dollar. However, the volume of gas flared in the month under review, appreciated by 22.75 per cent when compared to 16.70 billion SCF flared in the same period in 2017.

Giving a breakdown of total gas commercialisation and utilisation in the month of April, the NNPC stated that out of the 242.26 billion SCF of gas supplied in the month, a total of 141.51 billion SCF was commercialised, comprising of 33.02 billion SCF and 108.49 billion SCF for the domestic and export market respectively.

This, according to the NNPC, translates to an average daily supply of 1.1 billion SCF per day of gas to the domestic market and 3.616 billion SCF per day of gas supplied to the export market.

“This implies that 58.42 percent of the total gas produced was commercialised while the balance of 41.58 percent was re-injected, used as upstream fuel gas or flared. Gas flare rate was 8.46 percent for the month of March 2017, that is 683.44 million SCF per day compared with average gas flare rate of 9.67 percent, that is, 682.66 million SCF per day, for the period April 2016 to April 2017,” the report said.

In the domestic gas category, 20.15 billion SCF was supplied to the power sector; 12.87 billion SCF was supplied to industries. In the export category, 0.72 billion SCF was supplied to the West African Gas Pipeline Company; 5.72 billion was utilised by the Escravos Gas to Liquid project; while Natural Gas Liquid/Liquefied Petroleum Gas, NGL/LPG, and Nigeria Liquefied Natural Gas, NLNG, utilised 3.22 billion SCF and 98.84 billion SCF respectively.  In the category of non-commercialised gas, the report stated that 68.36 billion SCF of gas was re-injected; 11.89 billion SCF was used as fuel gas; while 20.50 billion SCF was flared.

The report also revealed that in the first four months of the year, a total of 87.16 billion SCF of gas was flared, translating to a loss of $269.32 million, about N99.65 billion to the country.

This was in comparison to 79.51 billion SCF of gas flared in the first four months of 2016, translating to a loss of $245.686 million, about N90.904 billion. However, in the last four months of 2016, from September to December 2016, 90.08 billion SCF of gas was flared, equivalent to a loss of $278.347 million, about N102.99 billion.

However, the federal government has made it a grievous offence for oil and gas companies to present false gas flare data to regulatory authorities in the industry. This was contained in the National Gas Policy approved by the Federal Executive Council.

It added that a steep tier of fines would be meted out to any company found providing false data to any federal government agency relating to flares.

In addition, the document stated that the current gas flare penalty of N10 per 1,000 standard cubic feet of associated gas flared was too low. According to the document, the penalty had been eroded in value over time, and was not acting as intended as a disincentive. “Consequently, the low penalty has made gas flaring a much cheaper option for operators compared to the alternatives of marketing or re-injection,” it noted.

It added that the intention of government was to increase the gas flaring penalty to an appropriate level sufficient to de-incentivise the practice of gas flaring whilst introducing other measures to encourage efficient gas utilisation. It stated that the commercialisation of flared gas for supply into the domestic market is a high priority strategy for the government in achieving the national mandate for flare-out by 2020.

The document also explained that to support the goal of improving the development of Liquefied Petroleum Gas, LPG, infrastructure and due to the shortage of local cylinder manufacturing capacity, the National Gas Policy would promote the phased injection of 20 million cylinders over a period of five years.