Gas Flaring is still a prevalent practice in Nigeria despite government effort to curb the trend

|  By Anayo Ezugwu  |  May 15, 2017 @ 01:00 GMT  |

DESPITE plans by the federal government to end gas flaring in the country, the practice is still prevalent in the country. The Nigerian National Petroleum Corporation, NNPC, said that oil and gas firms operating in the country flared $794.22 million worth of gas in 2016.

The NNPC, in its Monthly Financial and Operations Report released recently, stated that the companies flared 245.13 billion standard cubic feet, BCF, of gas in 2016. Using the current gas price of $3.24 per 1,000 standard cubic feet as quoted by the NNPC, and an average Naira exchange rate of N310 to a dollar, the total amount of gas flared translated to a loss of N246.209 billion.

Specifically, for the months of January, February, March, April, May and June 2016, 22.32BCF; 20.38BCF; 20.11BCF; 18.70BCF; 15.80BCF and 14.80BCF of gas was flared, respectively, while 21.79BCF; 21.14BCF; 21.50BCF; 22.60BCF; 24.54BCF and 21.44BCF of gas was flared in the months of July, August, September, October, November and December, respectively.

In general, a total of 2.581 trillion cubic feet of gas was produced in 2016. The amount of gas flared represented 9.5 percent of total gas produced in the year under review. Of the total gas produced in the year under review, the NNPC report disclosed that 1.447 trillion cubic feet, comprising 307.22 BCF and 1.14 trillion standard cubic feet (TCF) for the domestic and export market respectively, was commercialised, while 1.134 TCF of the commodity was not commercialised.

In the domestic gas segment, 189.49 BCF of gas was utilised by the power sector; while 117.74 BCF was utilised by the industrial sector in the year under review. In the export segment, 4.06 BCF was utilised by the West African Gas Pipeline, WAGP; Escravos Gas gto Liquid, EGTL, utilised 41.08 BCF; 94.34 BCF was utilised for Natural Gas Liquid/Liquefied Petroleum Gas, NGL/LPG, while the NLNG utilised 1.0 TCF of total

In the non-commercialised segment, 752.58 BCF of gas was re-injected; 245.13 BCF was flared, while 136.03 BCF was used as fuel gas. Furthermore, the NNPC disclosed that the country earned $837.74 million from the export sales of gas in 2016, comprising exports from the NLNG, EGTL, NGLs and N-Gas.

On the other hand, the country recorded revenue of N28.4 billion from the domestic sales of gas in the year under review. On its plans for the future, the NNPC noted that beyond growing gas for the power sector, there had been a strategic positioning of the sector to support massive gas-based industrialisation.

The NNPC stated that it would incubate and midwife a portfolio of critical and mutually dependent investments – Central Processing Facilities, CPFs, Fertilizer, Petrochemical, Free Trade Zone, FTZ, infrastructure and Ports – which will jumpstart the gas revolution agenda. The NNPC added that it intends to develop or take equity in some of these gas-based industries such as fertilizer and others.

According to the draft of the National Gas Policy recently released by the ministry of petroleum resources, the flaring of natural gas that is produced in association with oil is one of the most egregious environmental and energy waste practices in the Nigerian petroleum industry. The draft policy states, “While gas flaring levels have declined in recent years, it is still a prevailing practice in the petroleum industry. “Billions of cubic metres of natural gas are flared annually at oil production locations, resulting in atmospheric pollution severely affecting host communities. Gas flaring affects the environment and human health, produces economic loss, deprives the government of tax revenues and trade opportunities, and deprives consumers of a clean and cheaper energy source,” it said.

The ministry said under the gas policy, the government intended to maximise utilisation of associated gas to be treated for supply to power generation or industry. “To ensure that flared gas is put to use in markets, the government will take measures to ensure that flare-capture and utilisation projects are developed and will work collaboratively with industry, development partners, providers of flare-capture technologies and third party investors to this end.”

According to the gas policy, the current gas flare penalty of N10 per 1,000 scf of associated gas flared is too low, having been eroded in value over time, and is 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. The intention of government is 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.”