Nigeria wastes $1bn of gas despite shortages for power plants

Natural gas estimated at $1 billion and capable of powering millions of households was flared in Nigeria last year, according to BusinessDay findings.

Data obtained from the Nigeria Gas Flare Tracker, a satellite-based technology, created by the National Oil Spill Detection and Response Agency (NOSDRA), showed the country flared about 275.2 million standard cubic feet per day of gas from January to December.

Nigeria’s gas flaring problem is particularly serious because the country is also facing a major power shortage. Homes and businesses in the country experience blackouts for hours every day.

Findings showed the gas flared in the period has the potential to generate 1.13 million megawatts (1,125 gigawatts) of power for the country.

“The gas that is being flared in Nigeria in a year could power at least 40 to 50 percent of the entire African continent that doesn’t have electricity right now,” NJ Ayuk, chairman of African Energy Chamber (AEC), told BusinessDay.

The AEC boss added that there is a need to go on a gas gathering system. “Capture that gas, stop flaring and turn it into electricity, so poor people can have a fighting chance for a better life in our continent.”

“Small businesses can have the power so they can operate and create more jobs, pay more taxes. And what does that do to the government? The government benefits a lot because you expand the tax base,” he added.

Last week, the Transmission Company of Nigeria (TCN) said there had been a gradual decrease in available generation into the grid due to gas constraints to the thermal generating companies.

According to TCN, this development impacted the quantum of bulk power available on the transmission grid for onward transmission to the distribution load centres nationwide.

“Consequent upon the current load on the grid, load distributed to the distribution load centres has also reduced, as TCN can only transmit what is generated,” Ndidi Mbah, general manager, public affairs of the company, said.

According to Mbah, TCN was doing everything possible in collaboration with stakeholders in the power sector to ensure that it kept the grid intact despite the current low power generated into the system.

Experts have stressed the need for gas commercialisation, proper gas regulation, the development of floating liquefied natural gas (FLNG), and an amendment of the Petroleum Industry Act.

“The optimal strategy would be a practical push for gas commercialisation, supported by a robust infrastructure network. A portion of the liquefied petroleum gas (LPG) consumed locally is imported, although the exact percentage is uncertain,” Preye David Orodu, lead engineer at KEOT Synergy, said.

“By promoting gas commercialisation, we can attract investment, thereby lessening our reliance on imports,” he said. “The commercialisation process should stimulate investment in well-designed, efficient modular processing facilities.”

Orodu said these facilities would capture flared gas at well sites, creating profitable clusters both at well sites and flow stations.

Success hinges on setting appropriate gas pricing for local consumption and capitalising on additional benefits throughout the value chain beyond LPG, he said.

Nigeria lost $22.9 billion to gas flaring in 10 years, from 2011 to 2021, according to NOSDRA.

Last July, the House of Representatives vowed to recover the sum of over $9 billion in gas flaring fines imposed by the Federal Government on erring local and foreign companies operating in the oil and gas industry.

Ahmed Munir, chairman of the ad-hoc committee investigating gas flaring, vowed that the 10th National Assembly will do everything within its powers to ensure the recovery of all unpaid levies as well as compliance with extant legislations and regulations.

For Kelvin Emmanuel, an energy sector expert and co-founder/CEO at Dairy Hills, to commercialise the gas being flared, there is a need for the deregulation of gas prices.

“The reason this is critical is because if the cost of gas per standard cubic feet is lower than the cost of penalty for flaring, the operators will reject re-injection and opt for the fines,” he said.

He recommended “the development of FLNG vessels to minimise the cost of building standard trains, reduce the incidence of vandalisation that happens from hot pressure tapping as well as enable the easy offtake of associated gas from well-heads to eliminate the need for flaring or rejection of re-injection”.

Emmanuel said the government needs to amend the PIA to provide clarity to operators in terms of rights to associated gas in the deep offshore between the joint venture that forms the Nigeria LNG Limited and the joint venture that is forming emerging FLNG vessels.

“The Nigerian Midstream and Downstream Petroleum Regulatory Authority also needs to produce capability ratios to show the presidency the imperative of deregulating gas prices, which will incentivise the supply chain to invest in infrastructure to trap, pipe, transport, treat, separate, process, measure and deliver gas to generating companies midstream,” he said.