The Economic Impact of Natural Gas Flaring in Nigeria
The issue of natural gas flaring in Nigeria has had a significant economic impact, with recent statistics revealing substantial financial losses over the past decade. According to a report by The Tide’s source, the Federal Government lost an estimated $16 trillion to natural gas flaring over a period of 10 years, as indicated by the Energy Institute’s 72nd edition of the “Statistical Review of World Energy 2023.”
Between 2012 and 2022, upstream and downstream oil and gas firms in Nigeria flared an estimated 86.5 billion cubic metres of natural gas. This significant figure underscores the detrimental effects of gas flaring on the nation’s economy. The reported value of each 1 billion cubic metres of natural gas is approximately $183 million, highlighting the substantial financial loss experienced by the government due to this environmental challenge.
The severity of the issue has prompted the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to take action through the Nigerian Gas Flare Commercialisation Programme. In the 2022 auction process, the commission granted 42 firms gas flaring licenses with the aim of attracting investments and establishing a transparent market mechanism for allocating gas flares.
Furthermore, Engr Gbenga Komolafe, the Chief Executive of NUPRC, has emphasized the negative environmental and health consequences of gas flaring. He has highlighted the wasteful disposal of natural gas as detrimental to the environment, public health, and the significant waste and value erosion for the country.
In an effort to mitigate gas emissions, the government has pledged support for the United Nations 2050 zero gas emission agenda, with a commitment to halt gas emissions by 2060. However, the recent statistics on gas flaring underscore the urgency and importance of concrete actions to address this pressing issue.
In a related development, the Chartered Institute of Logistics and Transport in Nigeria has advocated for the implementation of the African Free Trade Agreement. President of the institute, Mfon Usoro, highlighted the need for solutions to address transport and logistics challenges and urged the Federal Government to prioritize the implementation of the agreement.
Additionally, the Federal Government is considering the restoration of the Malabu Oil Well to boost Nigeria’s crude oil output. The suspension of arbitration by Italy’s Eni regarding the oilfield dispute with the Nigerian government has opened opportunities for the restoration of this oil well, which is estimated to hold significant crude oil reserves.
Amidst these developments, there is growing potential for local product exports to thrive in Nigeria. The Customs Area Controller at Tin Can Island, Lagos State Command of the Nigeria Customs Service, Comptroller Dera Nnadi, has emphasized the thriving nature of local product exports. Nnadi has expressed optimism about the potential for exports to surpass imports in due time, highlighting the increasing demand for Nigerian products in international markets.
As the nation grapples with the economic implications of natural gas flaring and explores opportunities for export-led growth, the need for sustainable solutions and proactive measures to address these challenges cannot be overstated. The collective efforts of government agencies, industry stakeholders, and regulatory bodies are essential in driving positive economic and environmental outcomes for Nigeria.
