In the midst of an enduring shortage of gas for electricity generation, Nigeria continues to experience significant revenue and generation potential losses due to persistent gas flaring by oil companies operating in the country. According to the latest data from the National Oil Spill Detection and Response Agency (NOSDRA), companies in Nigeria’s petroleum industry flared a staggering 241.1 million standard cubic feet (MSCF) of gas in the first 11 months of 2023.
The impact of this ongoing gas flaring was notably highlighted by the temporary shutdown of the Egbin Power Plant, Nigeria’s largest thermal generating station in Lagos. The power plant, with an installed capacity of 1,320 MW, was forced to cease operations due to issues surrounding gas supply, resulting in a reduction of 676 MW of bulk power generated into the nation’s grid for 72 hours.
NOSDRA estimates the value of the 241.1 MSCF of flared gas during this period at $843.7 million, translating to a loss of N702.2 billion potential revenue based on the Central Bank of Nigeria’s current official exchange rate of N832.32/$. This represents an 18.9% increase compared to the 195.5 MSCF of gas flared in the corresponding period of 2022.
The defaulting companies are now liable to fines totaling $482.1 million, equivalent to N401.3 billion, according to NOSDRA. The volume of gas flared in this period equates to carbon dioxide emissions of 673.1 thousand tonnes and holds a power generation potential of 24,100 gigawatt-hours.
Despite ongoing efforts to reduce gas flaring since the 1950s, the practice persists, releasing carbon dioxide and other gaseous substances into the atmosphere. Industry experts emphasize that the volume of gas flared could be harnessed to generate megawatts of electricity, capable of powering millions of households.
As of the latest data, Nigeria’s total electricity generation stands at 4,212.86 MW, while the installed capacity is 13,014.14 MW. The need for gas commercialization, proper gas regulation, the development of floating Liquefied Natural Gas (LNG), and amendments to the Petroleum Industry Act (PIA) have been underscored by experts as crucial steps to address the challenges and harness the potential of Nigeria’s gas resources. Notably, Nigeria lost $22.9 billion to gas flaring in the decade spanning from 2011 to 2021, as reported by NOSDRA.
