Although Nigeria’s gas flare rate has been decreasing over the years, the country still faces significant challenges in achieving net zero emissions by 2060. Opeoluwa Akintayo highlights the economic costs of gas flaring to Nigeria over the past eleven years. Currently, Nigeria is grappling with a financial crisis, planning to borrow N11 trillion to fund its N21.83 trillion budget for the year, which represents over half of the total budget. Despite this ongoing cash crunch, the country has lost an estimated N9 trillion in revenue due to gas flaring over the last decade. Between 2012 and 2022, Nigeria flared approximately 80 billion standard cubic meters of gas, valued at about N9 trillion, as part of its oil production process.
A detailed breakdown reveals that in 2012, around 9.6 billion standard cubic meters of gas worth N460 million ($1.1 billion) were wasted. The figures continued with 9.3 billion standard cubic meters flared in 2013, 8.4 billion in 2014, and varying amounts in subsequent years, according to the World Bank. The potential revenue from gas flared in these years could have significantly contributed to Nigeria’s economy, with estimates of lost earnings reaching $1.1 billion in 2012 and decreasing to about $761,000 in 2021. Data from the National Oil Spill Detection and Response Agency (NOSDRA) indicates that from January to November 2022, Nigeria flared an estimated 5.6 billion standard cubic meters of gas, valued at $685 million.
Despite recent reductions in flaring volumes, Nigeria possesses substantial natural gas reserves that remain underutilized. In 2021, the country produced an average of 7,177.53 million standard cubic feet of natural gas per day, primarily for export as liquefied natural gas. Nigeria ranks as the 12th largest producer of natural gas globally and the second largest in Africa, with proven reserves of approximately 209.5 trillion cubic feet. Although Nigeria’s natural gas is relatively low in impurities, gas flaring continues to result in an estimated loss of nearly $2 million per day.
The financial implications of gas flaring are stark, particularly as Nigeria’s total debt reached N44.06 trillion by September 2022. The country has spent N3.04 trillion servicing external and domestic debts in the first nine months of 2022, reflecting a 23.4 percent year-on-year increase. A report published in August highlighted a loss of N891 billion due to gas flaring over an 18-month period. In the first half of 2022 alone, oil and gas companies flared a total of 126 billion standard cubic feet of gas, leading to a loss of approximately $441.2 million (about N183.54 billion). This flaring resulted in significant carbon dioxide emissions, estimated at 6.7 million tonnes.
The environmental consequences of gas flaring are severe, particularly in the Niger Delta region, where health hazards are prevalent. Residents in these areas face increased risks of respiratory disorders and cancer due to flaring activities. A 2017 study indicated that individuals living in gas-flaring host communities are 1.75 times more likely to suffer from hypertension compared to those in non-flaring areas. Furthermore, continuous gas flaring adversely affects food security and contributes to climate change, as methane emissions from flaring are significantly more potent than carbon dioxide.
In response to these challenges, the Nigerian government has initiated campaigns to promote gas monetization instead of flaring. The chairman of the Society of Petroleum Engineers, Prof. Olalekan Olafuyi, noted that the government plans to increase penalties for gas flaring as part of its commitment to achieving the United Nations’ net zero goal by 2060. Currently, companies producing more than 10,000 barrels per day pay a fine of $2 per 1,000 standard cubic feet of gas flared, while those producing less pay $0.50 per 1,000 standard cubic feet.
Despite the downward trend in flaring, Nigeria continues to lose substantial revenue and faces significant environmental challenges. Experts emphasize the need for the country to convert flared gas into commercial use to mitigate these losses. The Federal Government has shortlisted 139 oil and gas firms for a gas commercialization program, aiming to reduce flaring and its associated emissions. Minister of State for Petroleum Resources, Timipre Sylva, stated that the gas flaring commercialization initiative is at an advanced stage and could potentially eliminate 15 million tonnes of carbon emissions from the atmosphere, representing a significant step towards addressing Nigeria’s environmental and economic challenges.
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