Nigeria loses N2trn to gas flaring in seven years

Lack of political will to effect the policy on gas flaring for the past seven years may have cost the Nigerian economy N2.027 trillion, BusinessDay analysis has revealed.

The flaring cost for the country is an average of N289.6 billion annually according to the Department of Petroleum Resources (DPR), and government has shifted the deadlines for oil and gas companies to end gas flaring between 1983 and 2016 seven times.

The financial loss from the flaring of 1.4 billion cubic feet of gas across oil fields in the Niger Delta is in addition to health hazards on the people within the environment.

Deji Olowogboye, a Lagos-based medical doctor, notes that prolonged exposure to an environment where gas flaring occurs may result in skin irritation, and poses danger to the lungs and eyes. The associated pollution from gas flaring is believed to impair development of children.

BusinessDay findings reveal that the first deadline for oil and gas companies to stop gas flares was set for 1984, and the military regime of Muhammadu Buhari began the culture of kicking the can further down the road.

The present Muhammadu Buhari government, this week, pushed further the deadline earlier agreed for year 2020, by indicating support for another agreement that would curb the practice in 2030.

At the sixth African Petroleum Congress and Exhibition organised in Abuja recently by the African Petroleum Producers Association (APPA), Yemi Osinbajo, Nigeria’s vice president, who represented President Buhari, said “Nigeria as a member of the World Bank Global Gas Flaring Reduction (GCFR) will sign the United Nations Agreement of ‘Zero Routine Flaring by 2030,’ although the national target is 2020.”

According to a gas flaring study in the Niger Delta by Eferiekose Ukala, published in the Washington and Lee Journal of energy, climate and the environment, in 1979, “Nigeria set a January 1, 1984 deadline for stopping gas flaring.”

The government also promulgated the Associated Gas Reinjection Act No. 99, to specifically address the issue of gas flaring, and through this Act, the government mandated oil companies to “re-inject gas into the earth‘s crust and/or submit detailed plans for gas utilisation.”

Oil companies in Nigeria cited lack of resources to construct a gas-injection plant within the stipulated time, and pushed for an extension of the deadline.

The government retraced its step and set another deadline for January 1, 1985.  There was no serious commitment between 1985 to 2005, by either the governments or the oil companies to look into the menace, until November 30, 2005, when Jonah Gbemre, representing the Iwherekan Community, brought a claim against Shell Petroleum Development Company (SPDC) and Nigerian National Petroleum Company (NNPC), in the Benin Judicial Division of the Federal High Court.

The court ordered the defendants to take immediate steps to stop gas flaring in the community, and after countless court appeals and filings, on April 11, 2006, the court ordered SPDC and NNPC to end flaring by April 2007.

The plaintiffs were further ordered to appear in court on May 31 2006, to present a programme for stopping gas flaring in the community.

However, on the said date, the judge in the case was removed from the Benin court and the case file was reported missing.                         

Due to national and international pressures, the Nigerian government announced that by December2007, all gas-flaring activities must end. Few months later, the deadline was extended to January 1, 2008, and then again to January 6, 2008, but none of the deadlines were met by the oil and gas companies and the Nigerian government enforced fines for non-compliance.

By this time, Kenule Saro-Wiwa Jr had instituted an alien tort action against Shell in a Southern District, New York Court and the case was settled in favour of Kenule Saro-Wiwa Jr.

This ruling jolted the Nigerian government from inertia and led to increase of penalties for gas flares from N10 to $3.50 per 1000 standard cubic feet (scf) in 2011.

The legislature hurried a legislation few months later, proposing to end gas flaring by December 2012.

According to figures from the Central Bank, oil and gas companies in Nigeria were fined N1.81 billion in nine months – January to September 2015, for failure to comply with the Federal Government’s directives on gas flaring.

Chairman, Senate Committee on Gas Resources, Nkechi Nwaogu in 2013, said NNPC with 60 percent equity in Joint Venture agreement with international oil companies, has one of the highest flare sites and was not paying the fines.

ISAAC ANYAOGU