Gas Flare: Nigeria Lost N53.26bn In Two Months – NNPC

In the first two months of 2021, Nigeria lost about N53.26bn following the flaring of a total of 33.04 billion standard cubic feet of natural gas by international and local oil companies operating in the country.

This is contained in a recent report by the Nigerian National Petroleum Corporation (NNPC). According to the report, the oil companies wasted 17.53 billion scf of gas in February, compared to 15.51 billion standard cubic foot (scf) in January.

With the current price of natural gas at $3.93 per 1,000scf, the 33.04 billion scf flared amounts to an estimated loss of $129.85m (N53.26bn) at the official exchange rate of N410.13/dollar.

According to the report, out of the 206.05 billion scf produced in February 133.06 billion scf was commercialised, made up of 40.15 billion scf for the domestic market and 92.91 billion scf for the export market respectively.

***It said this implied that 64.48 per cent of the average daily gas produced was commercialised while the balance of 35.52 per cent was re-injected, used as upstream fuel gas or flared.

The data put the gas flare rate at 7.67% in February (i.e. 565.52 million scf per day), compared to 7.73% in January or 554.01 million scf/d.

“In January, a total of 223.55 billion scf of natural gas was produced, translating to an average daily production of 7,220.22 million scfd. From the total gas output in January, 149.24 billion scf was commercialised, consisting of 44.29 billion scf and 104.95 billion scf for the domestic and export markets respectively.

This indicates that 67.15 per cent of the daily gas output was commercialised while the balance of 32.85 per cent was re-injected, used as upstream fuel, or flared, the NNPC said.”

According to the revised payment regime for gas flaring, oil firms producing 10,000 barrels of oil or more per day will pay $2 per 1,000 standard cubic feet of gas, compared to N10 per 1,000 scf in the past. Firms producing less than 10,000 barrels of oil per day will pay a gas flare penalty of $0.5 per 1,000 scf.

The penalties paid by oil and gas companies for flaring gas in the country will be invested to build midstream gas infrastructure in host communities, according to a new provision introduced into the Petroleum Industry Bill by the National Assembly.

“Moneys received from gas flaring penalties by the commission (Nigerian Upstream Regulatory Commission) pursuant to this subsection, shall be transferred to the Midstream Gas Infrastructure Fund for investment in midstream gas infrastructure within the host communities  on which the penalties are levied,” the Senate and House of Representatives said in subsection (4) of section 104 of the bill.” The state oil company noted.

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