Oil Companies May Lose Licence Over Continued Gas Flaring


Oil companies that fail to stop gas flaring in their operations in the country may their licences revoked in 2019 as the federal government is looking to adopt a hard line in dealing with it sees as upstream oil companies’ refusal to curb gas flaring.

Speaking at the 2018 Buyers’ Forum/Stakeholders’ Engagement organised by the Gas Aggregation Company of Nigeria in Abuja on Monday Ibe Kachikwu, minister of state for petroleum resources, expressed government’s frustration in the long running efforts to get oil companies to cooperate on the issue.

He noted that the Federal Government was keen on ending gas flaring, but oil companies still give lot of reasons why gas flaring cannot be ended. 

“Government wants to end flare; oil companies still give lot of reasons why flare cannot be ended. Bottom line is cash call and money. But the reality is that whether or not we deal with cash call issues, it is not an optional agenda, it is a compulsive immediate agenda. It is destructive to the populace; it is intolerable in developed country and it should not be tolerated here either.

“And I have said to the Department of Petroleum Resources (DPR), beginning from next year, we are going to get quite frantic about this and companies that cannot meet with extended periods the issue is not how much you pay in terms of fines for gas flaring, the issue is that you would not produce. We need to begin to look at foreclosing of licences,” the minister of state said.

This is coming as it emerged that Nigeria lost $416.224 million (about N127.78 billion) to gas flaring in the first five months of the year, as oil and gas companies operating in the country flared a total of 130.07 billion standard cubic feet of gas from January to May 2018. 

According to data obtained from the Nigerian National Petroleum Corporation’s (NNPC), May 2018 Monthly Financial and Operations Report, 10.64 per cent of total gas produced in the five-month period was flared. Specifically, a total of 1.222 trillion standard cubic feet (SCF) of gas was produced in the period under review, out of which 500.06 billion SCF was non-commercialised. 

On a month-on-month basis, a total of 31.68 billion SCF, 27.25 billion SCF, 26.88 billion SCF, 23.06 billion SCF and 21.20 billion SCF for January, February, March, April and May 2018 respectively. 

Data obtained from the NNPC puts the price of natural gas at $3.20 per 1,000 SCF, therefore, using the Central Bank of Nigeria’s (CBN), exchange rate of N307 to a dollar, the flaring of 130.07 billion, translates to loss of N127.78 billion to the country. 

Under the non-commercialised gas segment, the NNPC report stated that 315.9 billion SCF of gas was re-injected; 54.11 billion SCF was used as fuel gas, while 130.07 billion SCF was flared. In the commercialised gas segment, the report disclosed that total domestic gas supply for the five month period stood at 187.81 billion SCF, while total export gas stood at 534.27 billion SCF.