Oil companies in Nigeria increased gas flaring in the first half of this year, with a penalty payment of N36 billion, down from N37.75 billion in the same period in 2022. The penalty for flaring gas declined despite an increase in the amount of gas flared. Analysts emphasize the need for more stringent enforcement of existing policies and laws to curb gas flaring further and increase penalty collection. Nigeria’s gas flaring activities have reduced over the years due to government policies, but concerns remain about the consistent enforcement of penalties and regulations.
Key Points:
- Penalty Payment Decline:
- Oil companies in Nigeria paid a penalty of N36 billion for gas flaring in the first half of 2023, compared to N37.75 billion in the same period in 2022.
- Gas Flaring Increase:
- Data from the Oil Spill Detection and Response Agency (NOSDRA) revealed that 138.8 billion standard cubic feet of gas was flared in H1 2023, up 10.1% from 126.1 billion scf in H1 2022.
- Enforcement Challenges:
- Analysts highlight the need for more stringent enforcement of existing policies and laws to curb gas flaring and increase penalty collection.
- Legislative Measures:
- Various legislative measures to curb gas flaring in Nigeria have been in place since 1969. Penalties for gas flaring were increased in 2018 to $2 per 1,000 scf.
- Deregulation Proposal:
- Some suggest that addressing the challenge of gas flaring requires the government to deregulate gas prices and allow pricing to follow a formula that tracks diesel by 40%.
- Regulatory Commitment:
- Regulators, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and NOSDRA, emphasize their commitment to ensuring the right quality and quantities of gas production and adherence to environmental standards.
Conclusion:
The increase in gas flaring and the decline in penalty payments in Nigeria highlight the ongoing challenges in enforcing regulations and curbing environmentally harmful practices in the oil and gas sector. Strengthening enforcement mechanisms and addressing the root causes of gas flaring are crucial for sustainable and responsible energy practices.
