Nigeria to lose $ 3 .4bn as FG extends gas flaring deadline

By Ikenga Chronicles November 7, 2016

The large scale air pollution by International Oil Companies (IOCs) through gas flaring will officially continue in Nigeria until 2020, putting up $3.4 billion worth of gas up in flames during the period.

The Federal Government, which had since late 1970s been shifting dates to end gas flaring, has kept mute on the new date since 2014 when the last deadline expired.

Gas flaring cost Nigeria a loss of over $3.363 million in the first half of 2016 and Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said that government is “determined to ensure flare-out within the earliest possible time, preferably by year 2020.”

Kachikwu told journalists on the sideline of a conference in Abuja that gas flaring is still a prevailing practice in the petroleum industry.

He said: “It is the position of government that the protection of the environment is a more important objective than oil or gas production.”

“Hence, government is determined to ensure flare-out within the earliest possible time, preferably by year 2020.”

With the new date, which, according to New Telegraph’s check, is yet to get the lawmakers’ nod as prescribed by law, the country risks a loss of $3.363 billion within the five years window – January 2016 to December 2020.

The country has already lost $336.33 million in the first half of 2016, as oil and gas companies operating in the country flared 112.11 billion Standard Cubic Feet (SCF) of gas between January and June 2016 according to data obtained from the Nigerian National Petroleum Corporation (NNPC).

At the Nigerian Gas Company’s average gas price of $1,000 per standard cubic feet (SCF) equivalent to a uniform cost of $8.84 for every MMBtu (Million Metric British thermal units) of the commodity, the flaring of 112.11 billion SCF translates to a loss of $336.33 million or N105.9 billion at the current exchange rate.

Giving a month-on-month (MoM) breakdown of the volume of gas flared by oil and gas companies in the period under review, the report stated that in January 2016, 22.32 billion SCF of the commodity was flared; 20.38 billion was flared in February; 20.11 billion SCF in March, while in April, May and June, 18.7 billion SCF, 15.8 billion
SCF and 14.8 billion SCF respectively were flared.

NNPC, in its Monthly Financial and Operational Report for the month of June 2016, also stated that the country earned $451.24 million or N142.14 billion from gas export in H1’16.

In addition, the NNPC report stated that the country earned N13.528 billion from domestic sale of gas in the period under review.

The report further stated: “The MoM breakdown of the amount earned from gas export in H1’16 showed that the country raked in $135.89 million, $72.53 million, $2.28 million, $131.17 million, $60.25 million and $49.12 million, in January, February, March, April, May and June 2016, respectively.

“However, all the proceeds from gas export, including proceeds from crude oil export in the period under review were utilised for the NNPC Joint Venture Cash Call payments, with zero remittance to the Federation Account.”

In the area of domestic gas sales for the six-month period, the report noted that the country earned N880.31 million, N944.4 million, N2.53 billion, N3.66 billion, N2.45 billion and N3.06 billion respectively in the months January through June.

In its analysis of commercialised and utilised gas, the report disclosed that out of a total of 1.35 trillion SCF of gas produced in the six-month period, 157.54 billion SCF was utilised in the domestic market; 591.88 billion SCF was exported, while 603.01 billion SCF was not commercialised, as they were either re-injected, used,as fuel gas or flared.

Also, giving an analysis of gas utilisation for the 12-month period, between July 2015 and June 2016, the report stated that total gas supply for the 12- month period stood at 363.19 billion SCF and 1.219 trillion SCF for the domestic and export markets respectively.

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