FG imposes N22 billion fine on oil companies for gas flaring

The Federal Government will impose a fine of $49 million (22 billion naira) on oil and gas companies operating onshore for flaring 24 b standard cubic feet of gas worth approximately 40 billion naira ($86 million) between January and February 2023.

According to the latest gas flaring data from the National Oil Spill Detection and Response Agency, companies operating onshore will pay the penalties for violating the flaring rule of gas.

"Companies operating onshore flared 24.5 billion SCF of gas worth $85.8 million, with penalties of $49 million to be paid," wrote the agency.

Gas is flared or flared as part of the oil production process. However, the federal government has recently led campaigns for gas monitoring as opposed to flaring.

The report says 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 emissions of carbon dioxide, with a potential power generation of 2,500 gigawatt hours.

On the other hand, companies operating offshore flared 25.8 billion SCF of gas worth $90 million; capable of generating 2,600 gigawatt hours of electricity and had the equivalent of 1.4 million tonnes of carbon dioxide emissions.

In particular, offshore companies flared SCF 10.84 billion and SCF 13.09 billion of gas in January and February 2023 respectively. NOSDRA did not indicate the amount of penalties offshore companies would pay for the flare.

In total, NOSDRA said 50.3 billion SCF gas was flared, or about 81 billion naira ($176 million) lost during the months under review.

The volume of gas flared in the two months was 11.9% lower than the 57.1 billion SCF of gas flared during the same period in 2022.

The oil spill response agency noted that the gas flared during the reporting period was equivalent to a carbon dioxide emission of 2.7 million tonnes and had production potential 5,000 gigawatt hours of electricity; while companies face penalties of $101 million, or about 46 billion naira.

The NOSDRA report identified the affected companies as including Shell Petroleum Development Company, which recorded gas flaring from oil concessions 11, 13, 14, 17, 18, 22, 23, 26 , 28, 30 and 39 among others; the Nigerian Agip Oil Company which reported flaring of gas from OMLs 61, 62; and Chevron Nigeria which recorded the flaring of gas from OMLs 49, 54, 95, among others.

Other companies involved 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, the gas has been flared in Nigeria since the 1950s, releasing carbon dioxide and other gaseous substances into the atmosphere, and has continually leads to environmental and health problems in oil producing areas.

Society of Petroleum Engineers, SPE Nigeria Council President Prof. Olalekan Olafuyi has said the Federal Government will increase penalties for gas flares as Nigeria races to meet its pledge towards the United Nations net zero goals by 2060.

While he did not indicate to what extent flaring rates would cause an increase, he said the board was working closely with the Nigerian Upstream Petroleum Regulatory Commission on the matter.< /p>

“We are working closely with the Nigerian Upstream Petroleum Regulatory Commission, and I can say categorically that companies that flare gas will now pay more than those that use it. So it will be beneficial for them to start thinking about ways to use their gas instead of flaring it,” he said.

Currently, companies producing more than 10,000 bpd pay a fine of $2 per 1,000 standard scf of gas flared, while those producing less than 10,000 bpd pay $0.5 per 1,000 bpd. $0.5 is paid per 1,000 scf of gas flared.

Deputy Managing Director, Deep Water, TotalEnergies EP Nigeria, Victor Bandele, said Nigeria would benefit immensely from converting flared gas to commercial use.

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