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Nigeria Records N53.3B Loss To Gas Flaring In Two Months

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gas producers

International Oil Companies (IOC) and their local counterparts flared a total of 33.04 billion standard cubic feet of natural gas resulting in a major estimated loss of N53.26 billion to the country in the first two months of this year.

In its latest monthly report, the Nigerian National Petroleum Corporation (NNPC) said the oil firms flared a total of 17.53 billion scf of gas in January, compared to 15.51 billion scf in February, according to data obtained from the Nigerian National Petroleum Corporation.

With the price of natural gas put at $3.93 per 1,000scf as of Wednesday, the 33.04 billion scf flared translates to an estimated loss of $129.85 million or N53.26 billion (using the official exchange rate of N410.13/dollar).

The NNPC report, said out of the 206.05 billion scf produced in February, a total of 133.06 billion scf was commercialised, consisting of 40.15 billion scf and 92.91 billion scf for the domestic and export market respectively.

It said this implied that 64.48 percent of the average daily gas produced was commercialised while the balance of 35.52 percent was re-injected, used as upstream fuel gas or flared.

The gas flare rate was 7.67 percent in February (i.e. 565.52 million standard cubic feet per day), compared to 7.73 percent in January (i.e. 554.01 million scfd).

In January, a total of 223.55 billion scf of natural gas was produced, translating to an average daily production of 7,220.22 million scfd.

Out of the total gas output in January, a total of 149.24 billion scf was commercialised, consisting of 44.29 billion scf and 104.95 billion scf for the domestic and export markets respectively.

This indicates that 67.15 percent of the daily gas output was commercialised while the balance of 32.85 percent was re-injected, used as upstream fuel, or flared, the NNPC said.

According to the revised payment regime for gas flaring, oil firms producing 10,000 barrels of oil or more per day will pay $2 per 1,000 standard cubic feet of gas, compared to N10 per 1,000 scf in the past.

Firms producing less than 10,000 barrels of oil per day will pay a gas flare penalty of $0.5 per 1,000 scf.

The penalties paid by oil and gas companies for flaring gas in the country will be invested to build midstream gas infrastructure in host communities, according to a new provision introduced into the Petroleum Industry Bill (PIB) by the National Assembly.

“Money received from gas flaring penalties by the commission (Nigerian Upstream Regulatory Commission) pursuant to this subsection, shall be transferred to the Midstream Gas Infrastructure Fund for investment in midstream gas infrastructure within the host communities of the settlor on which the penalties are levied,” the Senate and House of Representatives said in subsection (4) of section 104 of the bill.

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Nigeria Loses N184 Billion to Gas Flaring in H1 2022

Nigeria lost N184 billion to gas flaring in the first half (H1) of 2022, the Nigerian Oil Spill Monitor.

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Oil and Gas

Nigeria, Africa’s largest economy, lost N184 billion to gas flaring in the first half (H1) of 2022, the Nigerian Oil Spill Monitor, a unit under the Nigerian Oil Spill Detection and Response Agency (NOSDRA), reported on Sunday.

Despite Nigeria’s huge gas deposits, Africa’s largest economy continues to struggle with the necessary infrastructure needed to convert gas flaring to useful natural liquified gas. In the last 18 months, Nigeria has lost almost a trillion Naira in gas value.

The report showed that Nigeria lost a total sum of N707 billion in 2021 alone while another N184 billion was lost in the first half of 2022.

NOSDRA report noted that gas companies operating in the country flared 126 billion standard cubic feet (SCF) of gas in the first six months of 2022, resulting in $441.2 million or N188.887 billion (using the I&E exchange rate) lost.

Further analysis of the report showed that oil firms operating in the offshore oilfields flared 62.2 billion SCF of gas valued at $217.6 million in the first half of 2022. However, companies operating onshore flared a total of 63.9 billion SCF, estimated at $223.6 million.

Speaking on the situation, Prof. Olalekan Olafuyi, the Chairman of the Society of Petroleum Engineers (SPE), Nigeria Council, in an interview on Sunday, said the Federal Government is working on raising gas flaring penalties to further compel oil companies operating in the country to comply with the existing gas policy.

He said “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.”

Presently, the federal government imposed a penalty of $2 on 1000 SCF of gas flared by oil companies producing above 10,000 barrels per day (bpd). While companies producing less than 10,000 bpd are fined $0.5 per 1000 scf of gas flared.

Even though Olafuyi did not state how much increase the new rate would attract, he said the Federal Government is working with the Nigerian Upstream Petroleum Regulatory Commission (BUPRC) to devise a suitable penalty increase.

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NNPCL to Lead Africa’s Transition to Clean Energy

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The Nigerian National Petroleum Company Limited (NNPCL) has set itself up to lead Africa’s transition to a more sustainable energy source.

The Chief Executive Officer and Group Managing Director, NNPCL, Malam Mele Kyari, made this announcement during his lecture at the 30th Convocation of the Federal University of Technology Minna, Niger State.

The lecture titled “Energy Transition & Energy AccessibilityThe New Paradigm” focused on how NNPCL can transit to low-carbon energy and renewables.

According to Kyari, the national energy company is expanding its use of natural gas and infrastructure backbone from Ajaokuta in Kogi state to Kano via Abuja and Kaduna.

In addition, he stated that this massive pipeline will receive fuel from the Obiafu-Obrikom-Oben (OB3) and Escravos-Lagos Pipeline System (ELPS) gas pipelines through the Oben node in Edo State and transport 2 billion standard cubic feet of natural gas to power plants and industrial off-takers in Abuja, Kaduna, and Kano.

He went on to say that as a national oil company and a major participant worldwide, NNPCL is prepared to transition to renewable energy.

“We are taking a firm position in this transformation by institutionalizing the required enablers for success,” the GMD hinted.

As an Energy Company of Global Excellence, NNPCL has changed the NNPCL R&D Division into a Renewable Energy Division, Kyari stated.

He further said NNPCL welcomes collaborative relationships with academics and business professionals who may conduct fruitful research and innovation in the energy sector.

He asserts that oil will continue to play a significant role in the global energy mix of the present and the future.

However, Kyari pointed out that as the shift to less expensive energy picks up speed, particularly in developed nations, oil companies must continually boost operational effectiveness and cut costs to be competitive.

He said earlier in the presentation that Africa is particularly blessed with an abundance of sunshine, which may enable a significant development of renewable energy and place Africa on the map of the world’s energy-sufficient regions.

Kyari said “what Africa needs is energy transition that addresses energy poverty across the continent and supports the use of comparative and cheaper available energy resources in Africa” in light of the financial strain required to move at the same rate as the rest of the globe.

Benefits of the New NNPCL

Transparency and good governance

Nigeria’s oil and gas company, NNPCL, is set to be privatized with the sale of shares to the public, like Petrobras of Brazil and Aramco of Saudi Arabia. Prior to the transition, political interference, lack of transparency and accountability, and bureaucracy shrouded the activities of the Company. The new development must be approved by the government and endorsed by the National Economic Council on behalf of the federation.

Increased revenue to the government

The transition is expected to increase the revenue base of the government. NNPC would soon emerge as the fifth-largest gas-producing in the world, adding that the new legislation would provide business opportunities that would enable it to earn more revenue for the country.

Speaking on the development, Dr Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), said the transition would now absolve the state-owned oil company from political interference and bureaucratic bottlenecks.

“We will see an NNPC that is independent and autonomous and an NNPC that would be decoupled or insulated from political interference and bureaucracy,” Yusuf said.

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Nigeria Sells $1 Billion Worth of Natural Gas to Portugal in 2022 – NNPC

The Federal Government of Nigeria has sold natural gas worth $1 billion to Portugal in 2022, according to the Nigerian National Petroleum Company (NNPC).

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Gas-Pipeline

The Federal Government of Nigeria has sold natural gas worth $1 billion to Portugal in 2022, according to the Nigerian National Petroleum Company (NNPC).

Mele Kyari, the Chief Executive Officer, NNPC, was quoted as saying at the Nigeria-Portugal Business and Trade Forum attended by President Muhammadu Buhari.

The NNPC boss said Portugal has been purchasing Nigeria’s energy for decades now and explained that President Buhari is on a state visit to Portugal for the second United Nations Ocean Conference.

He said “President Muhammadu Buhari is on a state visit to Portugal for the second United Nations Ocean Conference.

“On the sidelines of the event, President Muhammadu Buhari is leading a high-level Nigerian business delegation to the Nigeria-Portugal Business & Trade Forum.

“On the President’s delegation is the CEO NNPC Ltd, Mallam Mele Kyari, who highlighted the age-long energy partnership between the two countries, stressing that Nigeria supplies 70 per cent of energy imports to the European nation.”

On its Twitter page, the NNPC further quoted Kyari as saying, “This year alone, we have sold over a billion-dollar worth of natural gas to Portugal.”

NNPC boss also noted that there were ample opportunities to grow the energy supply to Portugal.

He told participants at the forum that Nigeria had invested in critical infrastructure to ensure domestic gas availability and increase gas supply to the international market.

 

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