N217 bn Lost to Gas Flaring in 2016, Senate Moves to Amend Gas Legislation

House wants Kogi, Enugu and Anambra declared oil producing states

Nigeria lost over N217 billion to gas flaring in 2016 as companies in the sector flared a total of 244.84 billion standard cubic feet (scf) of natural gas.

According to Senator Bassey Albert Akpan (Akwa Ibom, North East) who cited the figures from data he quoted from the Nigerian National Petroleum Corporation (NNPC), the volume is sufficient to feed three LNG trains or generate to 3.5 GW of electricity, which is Nigeria’s average power generation.

Leading the debate on the proposed amendment to the 38 year old Associated Gas Re-Injection Act, Akpan, who is the sponsor, argued that it is necessary to ensure that gas flaring sanctions are in tune with contemporary economic challenges.

The current penalty of N10 only, per 1,000 Standard Cubic Feet (scf), was outdated, and has not deterred operators in the gas industry from gas flaring, he said.

The bill also seeks the achievement of National Flaresout Target with January 1, 2030 deadline.

The lawmaker added that the outdated penalty, has compounded the consequences of flaring, including environmental challenges, and the limited availability of gas for domestic use, with tremendous negative effects on human health, economy, tax revenue, trade opportunities, and the atmosphere..

“The latest report from the NNPC also shows that in 2016, 22.32 billion scf of gas was flared in January, 20.38 billion scf in February, 20.11 billion scf in March, 18.7 billion scf in April; 15.8 billion scf in May, and 14.8 billion scf in June. Similarly, in the second half of the year, the country recorded the highest volume of gas flared in November at 24.54 billion scf, up from 22.60 billion scf in October; 21.5 billion scf in September; 21.14 billion scf in August, 21.79 billion scf in July and a total of 21.15 billion scf in December,” he said.

Akpan added that the euphoria of oil discovery and commencement of production in 1958 made the government turn a blind eye to stipulating proper regulations to guide the industry.

“The Bill equally makes it mandatory for operators to submit gas utilisation plan within 90 days of the commencement of the Act for effective monitoring… taken into cognizance the experiences of other countries like the United States of America which emphasises creation of infrastructure for gas utilisation as condition for grant of license…also makes specific provisions for the installation of requisite gas flare meters equipped with facilities that enable real time, online data retrieval for independent reporting and monitoring by the industry regulator,” he said.

Akpan added that with the exit of Joint Venture Cash Call regime by government, attendant low oil price, the consideration and passaged of Petroleum Industry Governance & Fiscal Bill, low construction cost in the oil and gas industry, it is the time for investment in gas infrastructure.

The bill, Gas Flaring (Prohibition and Punishment) Bill, 2016, passed through second reading following a vote by the Senators.

In another development, the House of Representatives urged the Federal Government to declare Kogi, Anambra and Enugu States as oil producing States since exploration/ mining activities have begun in the Basin since 2012.

The House also resolved to set up an Ad-Hoc Committee to determine the commercial viability of the oil and gas deposits in the Anambra Basin in order to optimize the commercial mining in the Basin where hydrocarbon activities began in 2012, for the benefits of the three states and to increase oil revenue for the country and resolve all outstanding boundary issues between the three States.

The resolution followed a motion sponsored by Hon. Emmanuel Egwu, Hon. Tony Nwoye and Hon. Patrick Asadu who noted that the government is fully aware of already explored and determined huge oil and gas deposits in commercial quantities in Anambra Basin, which cuts across Ibaji Area, Idah-1 , Alade-l, Atu-l , Inni-1 in Kogi State; Eziagulu Otu, Enugwu Otu, Nzam, Ezi-Anam, Anaku, Omor in Anambra State and Igga, Ojo, Uzo Uwani Areas in Enugu State.

Asadu, in his argument, said the failure to optimally harness, deposits in the Anambra Basin which would generate social and economic activities in the Basin has caused disaffection and crisis across the bordering States.

“Cognizant that Oriental Resources Plc has, since 2012, been prospecting on OPL 915 and OPL 916, derivable from the three adjoining States of Kogi, Enugu and Anambra but these have not been commercially mined as it is still awaiting Oil Mining License (OML) from the Department of Petroleum Resources (DPR) years after former President Goodluck Jonathan flagged off the operations of Oriental Petroleum Resources;”

“Believes that the declaration of Kogi, Anambra and Enugu States as oil producing States will not in any way jeopardize the on-going field tracing and provisional boundary demarcation between the States by the National Boundary Commission but will rather aid in determining the percentage of derivation accruable to the three (3) States, equally to be noted is that hydrocarbon has been found in the Basin but not yet optimally utilized,” the lawmaker added.