Report Reveals Federal Government’s $16 Trillion Loss to Gas Flare Over a Decade
Over 10 years, from 2012 to 2022, the Federal Government has incurred an estimated loss of approximately $16 trillion due to natural gas flaring, according to the Energy Institute’s 72nd edition of the ‘Statistical Review of World Energy 2023.’
A breakdown of the statistics reveals that upstream and downstream oil and gas firms operating in the country engaged in significant gas flaring during this period. In 2012, the estimated amount of flared natural gas was 12.9 billion cubic meters, followed by 9.2 billion cubic meters in 2013, 8.3 billion in 2014, and 7.5 billion cubic meters in 2015.
The trend showed a gradual decrease, with 7.2 billion cubic meters flared in 2016. However, there was an increase to 7.5 billion cubic meters in 2017, followed by a decrease to 7.3 billion cubic meters in 2018, and a subsequent rise to 7.8 billion cubic meters in 2019.
The environmental issue notably diminished to 7 billion cubic meters in 2020, further decreasing to 6.5 billion cubic meters in 2021, and ultimately reaching 5.3 billion cubic meters in 2022.
The cumulative sum of gas flared by the country over the 10 years amounts to an estimated 86.5 billion cubic meters. Using a valuation provided by Hebrew Energy, where the value for each 1 billion cubic meters of natural gas is approximately $183 million, the total estimated loss to this environmental problem within the reviewed period stands at $16 trillion.
In 2020, the Nigerian government, under former President Muhammadu Buhari, expressed support for the United Nations’ 2050 zero gas emission agenda, with a commitment to cease gas emissions by 2060.
However, in October, the Nigerian Upstream Petroleum Regulatory Commission(NUPRC) announced that the Federal Government had granted gas flaring licenses to 42 firms as part of the 2022 Nigerian Gas Flare Commercialisation Programme auction process.
The Commission disclosed that 38 of these companies were awarded 40 flare sites for standalone single flare site development, while four companies were granted licenses for nine sites to be developed as clusters.
To discourage gas flaring, the National Oil Spill Detection and Response Agency (NOSDRA) stated that oil companies could be fined a total of $25.3 million, equivalent to approximately N19.4 billion based on the Central Bank of Nigeria’s current official exchange rate of N768.77/$.
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Engr Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Regulatory Petroleum Commission, emphasized that the wasteful disposal of natural gas not only poses health and environmental risks but also leads to resource waste and value erosion for the country.
He highlighted the goals of the Nigerian Gas Flare Commercialisation Programme, aiming to attract investments, establish a transparent market mechanism, and allocate gas flares to competent third-party investors using proven technologies in commercial applications worldwide.
