Justice Derefaka, programme manager, Nigeria’s Gas Flare Commercialisation Programme (NGFCP) has explained why there is a huge disparity between satellite estimates and national statistics when it comes to gas flared by oil companies operating in Nigeria.

A comparison of data obtained by the Gas Flare Tracker ( GFT), a satellite-based environmental monitoring tool, and data from the Nigerian National Petroleum Corporation (NNPC) as submitted by oil companies, showed a sharp difference beginning from 2018 when the new flare penalty came into implementation.

“Given that flaring is subject to regulations and penalties, there is a tendency that flaring is systematically underreported,” Derefaka said. “The fact that satellite images are not continuous measurements, but “snapshots” represents a possible source of error.”

Prior to 2018, operators pay a penalty of 50cent per million standard cubic feet of gas (MMSCF) flared, but with the increase in the penalty to $3.50 for companies producing more than 10,000 barrel of oil per day (bpd), wide discrepancies have been observed in data reported by companies to evade penalty charges.

According to the NNPC’S data, in 2018 Nigeria flared 282bcf of gas which makes about 10percent of the total gas produced. On the other hand, GFT reported 472.4bcf of gas for the same year. Also, according to NGFCP, Nigeria flared 325bscf of associated gas in 2019, representing 11percent of gas produced in the country, while GFT recorded 475bscf as gas flared for the same year.

Derefaka noted there is a possibility that satellite estimates may also include refinery flares and illegal refineries.

GFT, developed in 2014 and upgraded in 2019, uses remote sensing to determine the amount of flare. It moves across the Niger Delta every 24 hours, records and calculates the value of gas flared, emissions, fines and the energy that can be generated from the flares.

To solve the issue of data discrepancies, Derefaka, who is also the technical adviser on gas and policy implementation to the minister of state for petroleum resources, said key provisions in the new regulatory law Flare Gas (Prevention of Waste and Pollution) Regulations 2018 require mandatory reporting, access to gas flare data and penalty for providing inaccurate or incomplete flare gas data.

Also, Director-general, Budget Office of the Federation, Ben Akabueze said gas flare penalty payment by oil and gas companies in the country will increase to N103.51billion this year, a move taken by the federal government to manage the resultant budgetary pressure from the coronavirus crisis and the oil price slump.

Akabueze said the government would “tighten implementation of the 2018 revised gas flare penalty payment regime (resulting in upward revision of gas flare penalty for 2020 from N44.7billion to N103.51billion).”

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.


Source: Business Day