Wednesday, 3 October 2012

Nigeria loses N99bn to gas flare in 6 months

Gas flaring has caused the nation to lose a total of N99 billion in monetary terms in the last six months, according to an industry report.

According to the Nigerian National Petroleum Corporation (NNPC) in its quarterly petroleum information bulletin seen by BusinessDay, the nation flared 222.8 million standard cubic feet (mscf) of gas, during the period under review, which if processed and exported, would have fetched the country about N99 billion and minimised the health and environmental hazards of gas flaring.

A breakdown of the report showed that Chevron, ExxonMobil and Shell, accounted for 67 percent of total gas flared in the first six months of year 2012. This is equivalent to N67 billion ($424) in monetary terms, using the current international price of $2.83.

Of that, Chevron topped the list, flaring 59.7 million standard cubic feet (mscf) out of 130.2 mscf produced, while ExxonMobil flared 56.6 mscf, out of 212.9 million. These are equivalent to N27 billion ($169 million) and N25 billion ($160 million) respectively.

Leading operator, Shell, which runs Nigeria’s liquefied natural gas (LNG) plant, flared 33.9 mscf, a relatively small part of the 414.3 mscf it produced. This is also equivalent to N15 billion ($96 million) of the N99 billion.

The remaining 73 mscf of gas flared, was accounted for by other Joint Venture Companies (33 mscf); production sharing contract (33bscf); service contract companies (5 mscf), indigenous companies and marginal fields (2 mscf).

Considering the scenario painted above, alongside what the newly drafted oil bill says, “Natural gas shall not be flared or vented after 31st December, 2012, in any oil and gas production operation, block or field, onshore or offshore, or gas facility,” except under exceptional and temporary circumstances and that “Any licensee who flares or vents gas without the permission of the Minister in (special) circumstances ... shall be liable to pay a fine which shall not be less than the value of the gas.”

Experts believe that the mandate given to oil firms to stop gas flaring by the end of this year is unrealistic.

According to Osten Olorunsola, director, Department of Petroleum Resources (DPR), oil firms operating in the country are flaring 1.4 billion cubic feet per day (Bcfd) out of 8.0Bcfd. The breakdown shows that 5.20Bcfd of Associated Gas (AG) is produced, and the balance of 2.80Bcfd being Non Associated Gas (NAG).

This wasted (flared) gas could comfortably have been used to generate electricity, if government’s gas programme had been effectively co-ordinated and executed.

“We are only utilising 6.6Bcfd of the total volume of gas, as a result of the inability of Nigeria to realise very early, that gas has very high value,” he pointed out.

Though Nigeria, being Africa’s top oil producer, has long pledged but failed to end flaring, claimed officially that the volume of gas flared has reduced. Nigeria comes second to Russia, in terms of volume of gas flaring worldwide.

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