How gas flaring kills Nigeria’s economy and strategies to end it

From all indications, gas flaring is a major challenge in Nigeria, a leading African petroleum producer. However, in this interview with Eyo Nsima, Lead Promoter, EnergyHub, Nigeria, Dr. Felix Amieyeofori, speaks on a wide range of issues, including the causes and options for tacking it.

In your opinion, what reasons account for the continued flaring of gas in Nigeria?

Nigeria will continue to flare gas until it provides the right incentives for investment in the gas business. Another problem is that the Federal Government is also not relying on revenue from gas. Gas has not become a sustainable economic product for the country. It over-depends on oil. In addition, until the government wakes up to this reality and enforce the zero flare programme that started since 1984, it would be paying a lip service to gas development. Oil companies will continue to flare associated gas as stopping gas flare would mean shutting in the associated oil wells and reservoirs. Therefore, it is a catch 22 situation.

How has the flaring affected the nation’s economy?

Based on the data on Gas Tracker by NOSDRA, the country flared about 225 billion Cubic feet, BCF of gas as at July 2020, which is a colossal loss of revenue. This is besides its devastating effect on the ecosystem.

What other measures can be taken to stop gas flaring?

The flare gas commercialisation which started since December 2016, must be pursued vigorously. It should not die like other previous programmes. Though there are now penalties since July 2018 labelled as “Flare payment,” where companies that produce about 10,000 bopd or more are fined $2 per 1000 scf of gas, while those that produce less than 10,000 bopd will be fined $0.5 per 1000 scf of gas flare.

The major challenge here is that unless the government truly pursue the flare commercialisation project that will take out the gas, most oil companies cannot sustain such flare penalties, especially under the current global crude oil market uncertainties. I also do not see how the government can sanction the erring companies for gas flare in the face of dwindling oil revenues.

How will the AKK Gas Pipeline Project impact on gas flaring?

We should laud the Federal Government for the award of the 40 inch x 614 km AKK gas pipeline, which is a part of the Trans African Gas Pipeline project that would run from Nigeria to Morocco, especially as it would enable us to export gas to Europe.

Besides, AKK gas pipeline will provide enormous industrialisation and economic development in the northern part of Nigeria. The Federal Government must commit itself to completing this pipeline on record time. The government should also be commended for kick starting work on the NLNG Train 7 in May this year, which is expected to be on stream in 2025.

When completed, the train 7 will increase the existing installed capacity of the train 6 from 22 million tonnes per annum to 30 million tonnes per annum. This will be a significant incentive for gas supply to NLNG when it is completed. Technically, we should see less gas flare in Nigeria.

Can Nigeria still meet its flare out timeline or target?

It is unlikely, as 2020 is already a few months to its end. However, the country can actually see a near zero routine gas flare by the 2030 World Bank Programme of Stopping Routine Gas Flare. That is another five years and hopefully, most of these projects; especially the gas flare commercialisation would be completed.

What advice do you have for producers, users, regulators and other stakeholders?

The major advice at this point is to encourage the government not to politicise projects targeted at ending gas flaring in the country. The present and future administrations should be committed to pursuing them.

They should support or encourage the producing companies to utilise cost effective technologies that will accelerate commercialisation of our gas. Finally，the government should work towards reviewing the domestic gas pricing so as to increase gas penetration in the country.