FG Imposes N22bn Fine on Oil Firms Over Gas Flaring
The Federal Government will impose $49m (N22bn) fine on oil and gas firms operating onshore for flaring 24b Standard Cubic Feet of gas valued at about N40b ($86m) between January and February 2023.
According to latest gas flare data by the National Oil Spill Detection and Response Agency, the companies operating onshore will pay the penalties for violating the gas flaring rule.
“Companies operating onshore flared 24.5 billion SCF of gas valued at $85.8 million, with $49 million penalties payable,” the agency wrote.
Gas is burnt off or flared, as part of the oil production process. However, the Federal Government had in recent times led campaigns for gas monitisation as against flaring.
The report said companies flared 19.14 billion SCF of gas in January and 14.04 billion SCF of gas in February 2023, contributing 1.3 million tonnes of carbon dioxide emission, with power generation potential of 2,500 gigawatts hours.
On the other hand, companies operating offshore flared 25.8 billion SCF of gas valued at $90m; capable of generating 2,600 gigawatts hours of electricity and had an equivalent of 1.4 million tonnes of carbon dioxide emission.
In particular, the offshore companies flared 10.84 billion SCF and 13.09 billion SCF of gas in January and February, 2023 respectively. NOSDRA did not state how much penalties offshore companies would pay for the flare.
In total, NOSDRA said 50.3 billion SCF gas was flared, amounting to about N81bn ($176m) lost in the months under review.
The volume of gas flared in both months was 11.9 per cent lower than the 57.1 billion SCF of gas flared in the same period in 2022.
The oil spill remediation agency noted that the gas flared in the period under review was equivalent to carbon dioxide emission of 2.7 million tonnes and has power generation potential of 5,000 gigawatts hour of electricity; while the firms are liable for penalties of $101m, about N46b.
The NOSDRA report identified the affected companies to include Shell Petroleum Development Company, which recorded gas flaring from Oil Mining Leases 11, 13, 14, 17, 18, 22, 23, 26, 28, 30 and 39 among others; Nigerian Agip Oil Company which reported gas flaring from OML 61, 62; and Chevron Nigeria which recorded gas flaring from OML 49, 54, 95, among others.
Other affected companies include Mobil Producing Nigeria, Nigerian Petroleum Development Company, Addax Petroleum Limited, Famfa Oil and Elf Petroleum, among others.
NOSDRA lamented that despite efforts to reduce it, gas has been flared in Nigeria since the 1950s, releasing carbon dioxide and other gaseous substances into the atmosphere, and has continuously led to environmental and health challenges in oil producing areas.
The Chairman, Society of Petroleum Engineers, SPE Nigeria Council, Prof. Olalekan Olafuyi, said the Federal Government would increase gas flare penalties as Nigeria races towards achieving its commitment to the United Nations net zero goals by 2060.
Although he did not state how much increase the flare rates would attract, he said the council was working closely with the Nigerian Upstream Petroleum Regulatory Commission on the matter.
“We are working closely with the Nigerian Upstream Petroleum Regulatory Commission, and I can categorically say that companies who flare gas will now pay more than those utilising it. So it will be to their advantage to start thinking of ways to utilise their gas instead of flaring them”, he said.
Currently, companies producing more than 10,000bpd pay a fine of $2 per 1000 Standard scf of gas flared, while those producing less than 10,000 bpd pay $0.5 per 1000bpd. $0.5 is paid per 1000scf of gas flared.
The Deputy Managing Director, Deep Water, TotalEnergies EP Nigeria, Victor Bandele, said Nigeria would benefit immensely by converting flared gas into commercial use.
