Nigeria loses $ 3 bn to gas flaring yearly

Feb 18, 2009 01:00 AM

Minister of State for Petroleum, Mr Odein Ajumogobia, has said Nigeria loses about $ 3 bn yearly to gas flaring.
Making the disclosure in a speech in Doha, Qatar, Ajumogobia said the amount was based on a natural-gas price of $ 3 per tcf, adding that huge additional revenues could have accrued from monetisation of associated gas, and expressed hope that the issue would soon be a thing of the past.

Investigations revealed that over 50 % of the gas associated with crude oil extracted in the country is flared. It is estimated that the country flared about 2.5 bn cf daily, but the flare out has reduced to about 1.7 bn cfpd.
The Federal Government had fixed December last year as the deadline to end gas flaring. However, oil companies operating in the country had ruled out the possibility of achieving the target, and expressed doubt over how zero-gas flare could be achieved. They listed security issues in the Niger Delta, insufficient funds and capable local fabricator, slow approval process of projects, lack of guarantee of payment for gas supplied and removal of tax holidays, as some of the factors militating against government's effort to end gas flaring.

In a recent report released by the World Bank, oil companies in Nigeria were said to have in the recent past, been charged a total of between N 20 mm and N 50 mm (or $ 150,000-370,000) annually for flaring associated gas. However, the Department of Petroleum Resources (DPR) had announced that from January 1, 2009, the penalty would be raised to $ 3.5 for every tcf of gas flared.
At a public hearing held by the Senate in November 2008 on a proposed Gas Flare bill, Senate President, David Mark, noted that the proposed fine is meagre and would not be a deterrent to the companies which have continued their act with impunity.

Industry analysts have however continued to query whether any amount of fine paid by the offending corporations could ever compensate for the lives being cut short by the polluting flares since over 50 years of exploration.
The gas that is flared in the oil fields of the Niger Delta is called associated gas, because it comes out of the earth along with the target crude oil and is separated from the crude to make the commodity useful.

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