FG records N13.33bn revenue loss from gas flaring fines
The Federal Government recorded a revenue shortfall of N13.33billion from gas flaring penalties issued against oil and gas firms in January and February 2023.
It was earlier reported that the Federal Government would impose $49million (N22billion) fine on oil and gas firms operating onshore for flaring 24 billion Standard Cubic Feet of gas valued at about N40billion ($86million) between January and February 2023.
This was according to recent gas flare data by the National Oil Spill Detection and Response Agency (NOSDRA) which noted that the companies operating onshore would pay the penalties for violating the gas flaring rule.
“Companies operating onshore flared 24.5 billion SCF of gas valued at $85.8million, with $49million penalties payable,” the agency wrote.
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 $90million; 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.
However, findings showed that the Federal Government did not get up to N22billion from gas flaring penalties in January and February.
Data from the quarterly statistical bulletin for the first quarter of 2023 by the Central Bank of Nigeria showed that the Federal Government earned N4.6billion in January and N4.07billion in February.
This means that a total of N8.67billion was earned between January and February 2023, leaving a shortfall of N13.33billion.
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.
It was also reported that 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 had 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.
