NATURAL GAS FLARING IN NIGERIA: RECENT DEVELOPMENTS AND WAY-FORWARD

Fig. 1. Photo of a Niger Delta community close to gas flare stack (Photo credit, Ed Kashi)

Gas flaring also known as “wealth in flames” is a consequent effect of oil and gas exploration. It is a 60-year old environmental problem that has plagued Nigeria. It involves the burning of natural gas encountered in the course of exploration of crude oil in flare stacks because the resource is economically unattractive at certain conditions. The flared gas is mainly methane (CH₄). Gas flaring which has its consequent environmental effects on anthropogenic activities has been a perennial problem because of the lack of gas centric legislation, investment and development within the Nigerian gas sector, unlike its counterpart crude oil. It is therefore an issue that can be solved if the right legislations are enacted. There are key factors that determine why gas flaring has to be minimized in Nigeria. One of such factors is the environmental cost associated with the exercise. The economic aspect is likewise another important factor. Invariably, both factors tell a convincing story why natural gas flaring has to be minimized in Nigeria.

Nigeria has witnessed an enormous amount of gas flared in the past years. From 2008 to 2017, 4692 Bscf of natural gas was flared in Nigeria (NNPC Annual Statistical Bulletin, 2017). Current ratings according to GGFR and NOAA put Nigeria as the 6^th highest natural gas flaring country in the world with 7.6 bcm flared in 2017 even though NNPC (2017) reveals that the percentage of total gas produced that is gas flared in Nigeria dropped from 27.08% in 2008 to 12.33% in 2017. There are different reasons that can be identified as to why Nigeria has witnessed such high amount of gas flared. One of such problems is the meagre financial fine levelled on oil and companies when they flare gas in the country. The writer would like to state at this point that it was a mark of disrespect and negligence to the citizens of Nigeria, especially those in the Niger Delta that oil and gas companies were allowed to pay a meagre sum of N10 per 1000 scf of gas flared by the Federal Government, considering the environmental and health costs that these persons would have incurred as a result of gas flaring in their environment. Even though a “better” legislation has been enacted, it cannot erase away the effects of the environmental and economic cost incurred by the populace during those periods of unregulated and irresponsible flaring of natural gas.

As earlier stated, gas flaring has negative consequences on the environment and anthropogenic activities. These include emission of green house gases (GNGs), proliferation of black soot in the atmosphere, acid rains, destruction of crops, health hazards, loss of income to the government and citizens etc. It is therefore important that the government ensures that gas flaring is cut down significantly to a very low value like in countries such as Georgia and Italy that flared just 1 mcm of gas in 2017.

The Nigeria government has of course been taking steps in cutting down on the amount of as flared in the country. The first attempt was in 1979 when the Federal Government enacted the Associated Gas Re-injection Act of 1979 (AGRA) and its subsidiary legislation, the Associated Gas Re-injection (Continued Flaring of Gas) Regulations of 1985 (the 1985 Regulations). Since then, there has been continuous propositions and enactment of regulations seeking to reduce gas flaring and monetise the resource. This has resulted in a steady decrease in the amount of gas flared in Nigeria. This steady reduction from 2008-2017 is shown in Fig. 2.

There have been several initiatives taken the FG to harness the economic benefits associated with natural gas. One of such ways is by monetising the resource through the Nigerian Gas Flare Commercialisation Programme (NGFCP). This is a programme that seeks to attract investors both local and foreign to invest in gas utilization programmes so as to provide a potential enormous multiplier and development outcomes for Nigeria. It is reported that this programme would generate 36,000 direct jobs and 200,000 indirect jobs in the Niger Delta. NGFCP is a very important programme that seeks to reduce the loss of income that the nation has witnessed as a result of gas flaring. This economic loss amounts to billions of dollars with the meagre N10 fine paid by oil and gas companies on every 1000 scf flared pre-2018. Using the official exchange rate of $1=N306.25 and the $2 penalty fine for 1000 scf of gas flared enacted recently, the country would have generated 219 billion naira  from gas flared in 2017 when the country flared 357, 703, 770 Mscf. The multiplier effect that such capital influx would have had on the recovering Nigerian economy cannot be over emphasized in this case.

Fig. 2. Amount of Natural gas flared in Nigeria from 2008-2017. (Data from NNPC Annual Statistical Bulletin, 2017)

The government has in another light worked on improving the pipeline capacity of the country is transporting gas from stranded locations to consumers. Dr. Maikanti Baru (GMD, NNPC) at the 2018 Oloibiri Lecture Series and Energy Forum, OLEF, organized by the Society of Petroleum Engineer, stated that between 2010 and 2018, the country has completed and commissioned almost 500 kilometres of pipelines for gas delivering to consumers. Some of the pipeline he listed were 196 kilometres, KM, Oben-Geregu pipeline; 110km Escravos-Warri-Oben pipeline; 50km Emuren-Itoki pipeline; 31km Itoki-Olorunshogo pipeline; 24km Imo River-Alaoji pipeline and 128km Ukanafun-Calabar. Also he listed the ongoing East-West OB3 pipeline, which is 127km, expansion of the Escravos-Lagos Gas Pipeline System and the awarded 40-inch by 614Km Ajaokuta-Kaduna-Kano pipeline and associated facilities. With these pipeline capacities functioning optimally, the amount of natural gas flared in the country would definitely witness a nose dive as the resource will economically commercialized by oil and gas companies.

The government of course deserves commendations for the steady progress being made in cutting down on the amount of gas flared in the country. But this is not a time to roll down the sleeves and go home for a job well done. The Federal Government needs to throw in all efforts in totally minimizing the amount of gas flare. It is of course a multifaceted approach but the author would like to specifically highlight one of them; the passing into law of the Petroleum Industry Fiscal Bill (PIFB). This is a rather ambitious proposition being that the Presidency has repeatedly refused to sign into law the PIGB. But the truth remains until the oil and gas companies get to understand clear cut fiscal terms governing transactions within the oil and gas industry, there will always be an inertia that slows that how fast natural gas as a resource can be monetized in the country. The writer at this point would like to reiterate the urgent to pass the PIB in all its forms into law as soon as possible if Nigeria is harness the economic benefits associated with natural gas.