Power sector under stress, loses 12,700GWh to gas flaring in 5 months

-Flares rise 8% to 127.3 million scf

Ilenre Irele

Indications have emerged that Nigeria may have lost 12,700 Gigawatts per hour generation potential to the continuous persistence of gas flaring by oil companies’ operations in the country in the past five months.

This comes as the country struggles to generate above than 4,000 megawatts of electricity to serve households, businesses, and the economy, due partly to limited gas supply to the Electricity Generation Companies, GENCOs.

Nigeria’s gas flaring has risen by 8.06 percent month-on-month, to 127.3 million standard cubic feet, MSCF, in five months (between January and May 2024), from 117.8 million Mscf recorded in the corresponding period of 2023.
Data obtained from the latest report of the National Oil Spill Detection and Response Agency, NOSDRA, by EnergyDay, put the gas value of the 127.3 MSCF flared in the said period at $445.6 million.
Going by the current N1,495/$ exchange rate of the Central Bank of Nigeria, CBN, $445.6 million translates to a loss of N666.17 billion in potential revenue.
According to NOSDRA, the defaulting companies, including mainly the International Oil Companies, IoCs, were liable to fines totaling $254.7 million, an equivalent of N380.8 billion.
Providing a further breakdown of the volume of gas flared across oilfields, NOSDRA disclosed that flared by companies operating offshore rose by 81 percent to 57.7 mscf against 58.1 mscf flared by companies operating onshore.
However, NOSDRA disclosed that the volume of gas flared during the period under review was equivalent to a carbon dioxide emission of 6.8 million tonnes.
NOSDRA lamented that despite efforts to reduce gas flaring, it has continued in Nigeria since the 1950s, releasing carbon dioxide and other gaseous substances into the atmosphere.
Meanwhile, operators have faulted the federal government’s penalties on flares, insisting that it is difficult to invest in the conversion of the flared gas owing to unfavourable policies and infrastructural deficit in the sector.
They, however, called for an incentives-based program for operators to convert the flared gas to LPG or other substances rather than current fines which is cheaper to pay than exploring the conversions.

$3bn spent on gas flare commercialisation –NUPRC

Similarly, the federal government said it is to spend about $3 billion in capital investment to fund various projects under the Nigerian Gas Flare Commercialization Programme. (NGFCP) which targets to create 300,000 jobs.
The $3 billion expenditure is tied to the process for the 2024 oil bid round aimed at boosting activities in the oil and gas sector.
Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, made this known recently at the inaugural NEITI House Dialogue in Abuja.
The NGFCP seeks to attract investments and develop a transparent market mechanism through a competitive procurement process for allocating gas flares, under clear and transparent criteria, to competent third-party investors using proven technologies in commercial applications globally.
The programme is an opportunity for federal government, industry, state government, ethnic nationalities, and local communities to work together to resolve an oil field unacceptable practice.
The $3 billion expenditure is tied to the process for the 2024 oil bid round aimed at boosting activities in the oil and gas sector.
The government is offering 12 oil blocks alongside seven deep offshore blocks from last year’s bid round.