According to a recent report from the National Oil Spill Detection and Response Agency (NOSDRA), oil and gas companies operating in Nigeria have significantly increased their gas flaring activities. Between January and April 2023, these companies flared approximately 92.3 million standard cubic feet (mscf) of gas, valued at an estimated N150 billion. This represents a staggering 79.5 percent increase compared to the same period in 2022.
The NOSDRA gas flare tracker revealed that the 92.3mscf of flared gas in the four-month period resulted in a loss of $323.1 million, equivalent to about N150.08 billion at the Central Bank of Nigeria’s exchange rate of N464.5 per dollar.
Consequently, the responsible oil producing firms are expected to face penalties totaling $184.6 million (approximately N85.7 billion) for violating gas flaring laws during the mentioned period.
However, given the history of outstanding penalties against these firms, it remains to be seen if they will promptly pay the fines.
The report also highlighted the environmental impact of gas flaring, noting that the volume of gas flared in the four-month period alone is equivalent to 4.9 million tonnes of carbon dioxide emissions. Additionally, this amount of gas could have generated 9,200 gigawatts of electricity per hour.
The Petroleum Industry Act 2021 (PIA), signed into law by former President Muhammadu Buhari on August 16, 2021, serves as the primary regulatory framework for the oil and gas industry in Nigeria. The PIA aims to gradually eliminate gas flaring in the country and contains provisions to penalize flaring activities. Section 104 of the PIA criminalizes gas flaring by any licensee, lessee, or marginal field operator, except in specific instances such as emergencies or when exempted by the Nigerian Upstream Petroleum Regulatory Commission. Flaring is also permitted if considered acceptable as a safety practice under established regulations.
Furthermore, Section 105 of the PIA imposes penalties on individuals who violate Section 104. These penalties are outlined in the Flare Gas (Prevention of Waste and Pollution) Regulations 2018, commonly referred to as “The Regulation.”