Nigeria Has Lost N53.26 Billion In Two Months Due To Gas Flaring

In the first two months of this year, Nigeria lost an estimated N53.26 billion as international oil corporations and local players flared a total of 33.04 billion standard cubic feet of natural gas.

According to data received from the Nigerian National Petroleum Corporation, oil companies lost 17.53 billion scf of gas in February, compared to 15.51 billion scf in February.

The 33.04 billion scf flared corresponds to an estimated loss of $129.85 million or N53.26 billion (using the official exchange rate of N410.13/dollar) at a price of $3.93 per 1,000 scf as of Wednesday.

According to the NNPC’s latest monthly report, a total of 133.06 billion scf of the 206.05 billion scf produced in February was commercialized, with 40.15 billion scf for the domestic market and 92.91 billion scf for the export market.

This meant that 64.48 percent of the average daily gas generated was commercialized, with the remaining 35.52 percent being re-injected, utilized as upstream fuel gas, or flared, according to the company.

In February, the gas flare rate was 7.67 percent (565.52 million standard cubic feet per day), down from 7.73 percent in January (i.e. 554.01 million scfd).

In January, a total of 223.55 billion scf of natural gas was produced, equating to 7,220.22 million scfd on an average daily basis.

In January, a total of 149.24 billion scf of gas was commercialized, with 44.29 billion scf going to the domestic market and 104.95 billion scf going to the export market.

According to the NNPC, 67.15 percent of daily gas output was commercialized, with the remaining 32.85 percent being re-injected, used as upstream fuel, or flared.

Oil companies who produce 10,000 barrels of oil or more per day would pay $2 per 1,000 standard cubic feet of gas under the revised payment structure, compared to N10 per 1,000 scf previously.

Gas flare penalties of $0.5 per 1,000 scf will be imposed on companies producing fewer than 10,000 barrels of oil per day.

According to a new clause put into the Petroleum Industry Bill by the National Assembly, penalties paid by oil and gas corporations for flaring gas in the country will be used to improve midstream gas infrastructure in host communities.

In subsection (4) of section 104 of the bill, the Senate and House of Representatives stated, “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 of the settlor on which the penalties are levied.”

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