Oil and gas companies operating in Nigeria have wasted gas worth a staggering $485.3 million during the first half of 2023.
This increase in gas flaring, amounting to 9.97 percent compared to the previous year, can largely be attributed to the country’s improved crude oil production.
Utilizing data from the Nigeria Gas Flare Tracker (GFT), a satellite-based technology, it has been observed that gas flares in Nigeria have surged from $441.3 million in the same period of 2022 to $485 million this year.
According to the GFT, Nigeria flared an enormous 138.7 billion standard cubic feet (scf) of gas from January to June alone. This wasteful practice of gas flaring occurs when natural gas, a byproduct of oil extraction, is burned. Numerous factors contribute to this phenomenon, ranging from market and economic constraints to inadequate regulations and a lack of political determination.
Rather than making the necessary investments to harness the gas discovered in oil wells, oil companies opt to burn it alongside oil production. This harmful procedure not only pollutes the environment but also incurs fines imposed by the government.
Unfortunately, these penalties are often seen as a more affordable option compared to the investments required to effectively utilize the flared gas.
In 2016, the Federal Government established the Nigerian Gas Flare Commercialisation Programme (NGFCP) with the objective of selling more than 700 million scf of gas per day from 178 different flare sites.
However, the program encountered obstacles along the way. In June 2020, it was revealed that the COVID-19 pandemic had caused delays due to bidders requiring access to the flare points.
The restructuring of the Department of Petroleum Resources (DPR) following former President Muhammadu Buhari’s signing of the Petroleum Industry Act (PIA) in August 2021 led to the creation of two entities: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority. In October 2022, the NGFCP was relaunched by the NUPRC with the aim of reducing gas flaring and maximizing its economic utilization.
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Gbenga Komolafe, CEO of the Commission, stated that the relaunch was prompted by the need to realign the NGFCP with the objectives of the PIA and to adapt it to the current state of gas flaring, operational realities, market conditions, environmental factors, and global dynamics.
However, addressing the issue of gas flaring in Nigeria remains a.challenge due to the economic considerations involved in building infrastructure to capture the gas.
Etulan Adu, an oil and gas.production engineer, highlighted that the increase in penalties for flaring gas could impact its commercialization. This could potentially lead to divestment by international oil companies (IOCs) if long-term operations are no longer economically viable.
Interestingly, Nigeria has experienced a significant improvement in crude oil production during the same period.
According to the NUPRC,.the country’s daily production averaged 1.45 million barrels,
encompassing both crude oil and condensates.
This increase in oil production from Nigeria, along with Iraq, has helped counterbalance production cutbacks implemented by other
countries within the Organization of the Petroleum Exporting Countries (OPEC).
Haitham al Ghais, OPEC Secretary General, emphasized the necessity of utilizing all available energy sources to meet the projected 23 percent increase in global energy demand by 2045.
He stated that oil is expected to comprise around 29 percent of the energy mix and that substantial investments amounting to $12.1 trillion will be required for oil projects between now and 2045.
Al Ghais added that oil producers recognize the need to reduce emissions, decarbonize, and adopt cutting-edge technologies such as carbon capture, clean hydrogen, and the circular carbon economy.
These statements shed light on the ongoing struggle to balance energy demands, environmental concerns, and the long-term sustainability of the oil and gas industry.
