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Gas Flaring: Can Oil Firms Meet 2012 Deadline?

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14 years ago

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It  is no longer news that gas is becoming much more important to Nigeria’s economy since its production began years ago. Since its discovery, many companies have set up operations in the country but the flaring of the product has posed a very high challenge as it is not properly utilised for the benefits of the economy.

It is against this backdrop that the Nigerian government deems it necessary to develop gas resources to supply it for the provision of sufficient electricity for domestic and industrial use as well as for exportation. The nation’s power plants are not functioning adequately to generate required electricity and cannot meet domestic demand to end blackouts which now become a political priority.

The government is currently planning to produce enough gas to export as soon as gas flaring is ended in the country and also bring the President’s gas-to-power scheme to fruition.

The last House of Representatives before exist perfected the legislative framework pegging the deadline for gas flaring in Nigeria’s petroleum sector at December 31, 2012 in realisation of the government’s plan to develop and capture gas that is being flared or burned off in parts of the country, especially the oil producing areas. Some million cubic feet of gas resources are being flared daily and the quality is sufficient to generate about 4, 500 megawatts of power. The House also imposed stiff penalties on oil firms that may flout new  regulation s on gas flaring.

The action of the House of Representatives followed the adoption of the report of its committee on gas resources on a bill for an Act to Amend the Associated Gas Reinjection Act No. 99 of 1999 Cap. A25 Laws  of the Federation of  Nigeria Further Amendment of the gas flare deadline is not among the many legislative responsibilities before the present House of Representatives.

Oil companies operating in the country had failed to meet the Federal Government’s umpteenth time shifted deadline for the anti-safety and environment Act, under which violators are meant to be penalised. The end of this year is the battle line for gas flaring to end in this country but the question now is, can the oil companies meet the deadline? It is gathered that the President Goodluck Jonathan-led administration which will be empowered by the Petroleum Industry Bill (PIB) may not allow the continuation of the flaring beyond this year, so it is in the best interest of oil companies to race towards meeting the deadline.

Nigeria is currently making progress towards optimising its gas and power industries and that has been the focus of the government. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Austin Oniwon is quoted as assuring that the Gas Revolution programme for the country would not be abandoned and that to this end, two Memoranda of Understanding (MoU) had been signed. One between Xenel and NNPC and the other among India’s Nagarjuna Fertilisers, NNPC and Chevron as well as the award of the Akwa Ibom/Calabar area gas Control  Progressing Facility (CPF) to Agip and Oando in Abuja, to show how serious and committed NNPC and government are to the Gas Revolution Programme.

In pursuance of the programme, the Brass Liquefied Natural Gas plant is put in place for the production of gas in greater quantity and transmission.

The president is very passionate about the project and the journey has started. We do know that we have large deposit of natural gas resources. Before now, most of the product was being wasted through flaring because of the system we adopted, but with what is happening now, that will change.

Just like the crude oil, natural gas is money, so there should be a concerted effort to commit this natural resources into money for the benefit of Nigerians. The status report of the Nigerian Gas Masterplan, if sincerely and optimally implemented in line with the gas-to-power framework, will support the president’s power agenda and make power available for many ‘dead’ industries to come back to life. Not only that, it will also provide gas as fuel for industries such as the textile mills in Kano and Kaduna that went down because of lack of fuel and they will be able to have clean, cheap and affordable fuel to run their business.

In its commitment to ending routine gas flaring and consolidating leadership position in the domestic gas market, the Shell Petroleum Development Company (SPDC) has said it will continue to make good progress in bringing projects that will reduce flares and boost gas supply to the domestic market as well as sustain economic growth and kick-start new industries that will provide jobs for Nigerians.

Ending gas flaring in the country should be a long-term programme and there must be continuing commitment on the part of the oil companies because the project will help the economy and generate billions of naira or dollars to enhance development funding.  Nigeria holds about 8 per cent of global proven natural gas reserves and about 10 per cent of proven oil reserves but for Nigeria to continue to attract international investments, it needs to sustain confidence and stability and respect the sanctity of contracts.

There is ambition and expectation in the gas sector, but there is also uncertainty about who is going to gain and who is going to lose now that the federal Government is gearing efforts towards optimal utility of our gas resources. Nigerians are scared at the rate things are going in the country and people are no longer interested in the way funds are managed as they want to see practical things on ground.

Our social set-up has been shaken and we are yet to come to terms with it. Other countries use their funds to develop the people by providing infrastructure and social amenities but Nigeria’s case is different and not sure to understand. President Goodluck Jonathan has launched the “Roadmap for the power sector reform, so great majority of Nigerians are waiting for dramatic improvements to their quality of life. More gas and more power will raise living standards and support the economy, so lessons should be drawn from countries that have successfully executed gas-to-power and gas industry optimisation reforms with a view to enabling Nigeria learn from and possibly replicate the best practices of these countries.

Because the expectations of government and the societies they represent evolve over time, it is inappropriate to expect that what was obtaining when the oil  and gas industry was at its infancy, 50 years ago would still be obtainable today. This follows that with both the socio-political climate and the oil and gas industry changing, the International Oil Companies/National Oil Companies relationship must also evolve. A lot of things are expected when changes occur. This is why the Federal Government should ensure that all recommendations made to it are fully implemented to engender growth and change in the oil/gas industry.

To make the whole dream come true, the partnership between international oil companies and national oil companies needs to be strengthened to enhance the full exploitation of natural resources and develop capability that will bring more value to the industry. The basis of mutual benefit should exist between the two or more parties.

Nigeria has been finding it difficult to maximize its gas-to power potential because of certain factors which create imbalances in the value chain, which include gas pricing. That is why the new price regime put in place by the federal government is commendable as it will give investors reasonable returns on their investments and allow those who build gas transmission infrastructure to achieve certain returns that would justify their investments. In Nigeria, the gas price before 2010 was put at less than $1 per million scf, but with the recent review of the price, which is about $2 per million scf for the domestic gas-to-power, the gap between the international and our local price has been narrowed and with that, people can now invest in gas development.

When there are opportunities  for people to invest in gas development and power distribution and generation then the private sector would be able to take control of gas and power, and that will be the right way to guarantee power supply in the country.

The government should try to address the issue of regulation for the downstream gas sector which has become the bane of the sector’s development. The regulation must take into consideration the non  and partial deregulation and closed access of gas infrastructure, while other issues bordering on security in operational communities should also be visited as well. There is the need to do this because it has been discovered that the problem of insecurity is causing extra expenditure for most oil and gas companies as most engineering, procurement and construction (EPC) contractors also use this as reason for their premium and prohibitive charges.

As soon as government’s increased focus on appropriate pricing is welcomed, it should further extend the focus to the full value chain rather than restricting it to the upstream argument alone. If there is gas in the country, which we know,we, the indigenes should benefit more than everybody else. The rate of economy growth is expected to double from what it has been over the years when gas flaring ends at the end of this year. Not just foreign or intentional oil companies should participate in the gas project but indigenous firms should be given priority consideration. The gas-to-power distribution is a boost the country badly needs, so there must be a corrupt-free national strategy for managing the gas revenues because the worry about monies generated from the oil and gas sector in the country is the ‘curse’ of embezzlement and misappropriation or mismanagement, ie, the judicious utilisation of funds accruing from the sector for the benefit of the ordinary citizens rather than using it to fuel conflict and corruption.

We hope we will avoid the mistakes.

Nigeria is a democracy and everybody is watching. So it is expected that there is going to be improvement when gas flaring will become a thing of the past by December 31, 2012.

With a proven reserves of 182 tonnes per cubic feet, Nigeria is adjudged the world’s seventh largest producers of  high grade gas with zero per cent sulphur and rich in natural gas liquids. Though the huge reserve has not translated to abundant domestic supply, investment in gas distribution is capable of helping to achieve the gas-to-power aspiration of the federal government and make gas readily available to industrial consumers and guarantee accelerated growth of manufacturing and power sectors.

 

Shedie Okpara

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Oil & Energy

Abia Secures $145m Investment Commitment To Establish Solar Manufacturing Plant

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2 weeks ago

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July 20, 2026

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Abia State Governor Alex Otti has welcomed a proposed $145 million investment to establish a solar manufacturing plant in Isiala Ngwa South Local Government Area, describing it as a major boost to the state’s industrial and renewable energy ambitions.
The development was disclosed in a statement issued last week by the Chief Press Secretary to the Governor, Ukoha Njoku Ukoha, after Otti received the investors, led by their Team Leader, Dr. Oko Jaja, at the Government House in Umuahia.
During the meeting held on July 16, 2026, Otti said he was encouraged that the proposed project had reached the Final Investment Decision (FID) stage, with the investors committing up to $145 million to establish the solar manufacturing facility in the state.
What they are saying
Governor Otti welcomed the investors’ commitment, saying the project had progressed to the stage where they were ready to invest up to $145 million in Abia.
“I’m glad that at least you have reached the final investment decision where you are investing up to $145 million.”, he said.
He also assured the investors of the state’s continued support, noting that the government had already provided the land required for the project and remained willing to address any additional requirements needed to facilitate the investment.
“We had to do everything that was required to make the land available. And we would like to assure you that if there is any other thing that you need for this investment, do not hesitate to let us know”, the Governor said.
Speaking on behalf of the investors, Dr. Oko Jaja said the project, being developed with Chinese partners, had advanced significantly and that the first tranche of funding is expected to be released by September 2026, paving the way for implementation.
Also speaking, the Chief Executive Officer of MD NWAKANMA NIGERIA Limited, Dennis Madu Nwakamma, said construction of the plant is expected to commence by the end of September under a public-private partnership with the Abia State Government. He added that the project will manufacture solar panels and related products while creating jobs and providing technical training for young people in the state.
The proposed investment adds to Abia’s growing push into the renewable energy sector. The state is among the few in Nigeria with a regulated electricity market and is home to Geometric Power, whose integrated power system supplies electricity to Aba and surrounding communities.
The development also follows Governor Otti’s recent commissioning of an upgraded 5MVA power station at Abia State University, which doubled the facility’s capacity from 2.5MVA to improve electricity supply within the institution.
Earlier, in February 2024, he commissioned the 188MW Geometric Power Plant, a landmark project aimed at expanding power generation and improving electricity access in the state.
The proposed solar manufacturing facility is the latest in a series of investment projects announced for Abia as the state seeks to attract private capital into manufacturing and infrastructure.
In March, Governor Otti commissioned a $35 million industrial facility in Aba, part of a planned $100 million investment expected to deepen the city’s manufacturing base and attract additional private sector activity.
The state government has also completed the acquisition of Afro Beverages from the Asset Management Corporation of Nigeria (AMCON) after paying N500 million to facilitate the revival of the company.
Separately, the Federal Government and the African Development Bank have urged the Abia State Government to resolve administrative delays affecting the commencement of the $263.8 million Abia State Integrated Infrastructural Development (ABSIID) project, which is expected to strengthen infrastructure and support economic growth across the state.
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FG Urges Against Operators’ Actions That Could Distabilise Market

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2 weeks ago

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July 20, 2026

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The Minister of Power, Chief Joseph Tegbe, has called on operators in the Nigerian Electricity Supply Industry (NESI) to avoid actions that could affect the decentralised electricity market.
The minister made the call at the workshop on Legal, Policy and Regulatory Harmonisation between federal and state institutions on the Decentralisation of the Nigerian Electricity Supply Industry (NESI), in Abuja.
Tegbe said the Federal Government retains an important leadership role, while state governments now have expanded responsibilities; the Nigerian Electricity Regulatory Commission (NERC)continues to regulate areas within its jurisdiction; and state regulators are emerging to supervise their respective markets.
He further stated that transmission remains a national asset; distribution companies continue to serve millions of customers; generation companies continue to supply energy into the grid; private investors provide capital; development partners provide technical support; while consumers remain at the heart of every decision.
Nothing that  none of these institutions exists in isolation, he said: “Our success is interconnected. This is why collaboration must become the defining principle of our decentralised electricity market. We must ensure collaboration rather than competition between institutions. We must build alignment instead of regulatory conflict. We must practice mutual respect instead of jurisdictional rivalry.”
He said the Electricity Act did not establish parallel electricity industries, but complementary electricity markets, operating within one national framework.
“Our objective must therefore be regulatory coherence. Investors should not encounter conflicting rules. Developers should not navigate contradictory approval processes. Consumers should not become casualties of institutional uncertainty. Market participants should enjoy clarity, predictability and confidence wherever they choose to invest,” he stated.
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Fuel Imports Surged By 207% In June — NMDPRA report

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2 weeks ago

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July 20, 2026

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Nigeria’s petrol importation surged by 207 per cent in June 2026, even as domestic Premium Motor Spirit supply fell by 22 per cent, according to the latest data released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
The development marked a sharp reversal from the pattern recorded at the beginning of the year when domestic refining was supplying the bulk of the country’s petrol requirements.
The NMDPRA’s June 2026 Fact Sheet, obtained by our correspondent on Saturday, showed that average daily PMS imports rose from 5.9 million litres in May to 18.1 million litres in June.
The 12.2 million-litre daily increase represented a 206.8 per cent month-on-month rise.
In contrast, domestic PMS receipts fell from 41.5 million litres per day in May to 32.5 million litres per day in June, representing a decline of 9 million litres or 21.7 per cent.
Despite the sharp drop in domestic supply, total PMS receipts rose from 47.4 million litres per day in May to 50.6 million litres per day in June. This represented an increase of 3.2 million litres per day or 6.8 per cent.
The report read, “Total PMS receipts rose by seven per cent from 47.4 million litres per day in May to 50.6 million litres in June, driven by a 207 per cent surge in imports to 18.1 million litres, even as domestic supply fell by 22 per cent to 32.5 million litres per day.
“Domestic daily receipts include DPRP gantry and all coastal evacuation receipts. Consumption data is based on volumes trucked out from all facilities into the domestic market.”
The figures suggest that the increase in imports more than compensated for the decline in domestic supply during the month.
The development is significant because Nigeria entered 2026 with a much stronger domestic supply position. In January, domestic PMS supply was reported at 40.1 million litres per day, accounting for about 61.8 per cent of the country’s petrol supply, while imports averaged 24.8 million litres per day.
However, imports fell sharply to 3.0 million litres per day in February before rising to 5.9 million litres per day in March. The country’s dependence on imports then remained relatively low through the following months before the sharp increase recorded in June.
Compared with January, June’s domestic PMS receipts of 32.5 million litres per day were 7.6 million litres, or 19 per cent, lower than the 40.1 million litres recorded at the beginning of the year.
Conversely, June’s import volume of 18.1 million litres per day was 6.7 million litres, or 27 per cent, below January’s 24.8 million litres per day.
However, the composition of supply changed considerably. While domestic supply accounted for the larger share of the market in January, the June figures showed a much greater reliance on imports to supplement local production.
The June data also showed that the country’s crude oil receipts by domestic refineries improved during the month.
Crude oil receipt by domestic refineries rose from 0.578 million barrels per day in 0.632 million barrelsMay to  per day in June, an increase of 0.054 million barrels per day, or 9.3 per cent.
The NMDPRA rounded the increase to 10 per cent in its fact sheet.
The rise in crude receipts occurred at a time when domestic PMS supply decreased, indicating that higher crude deliveries alone did not immediately translate into higher petrol receipts in the domestic market.
The figures could also reflect changes in refinery operations, product yields, maintenance activities, evacuation arrangements and the balance between domestic production and imported products.
The June fact sheet further showed that average daily PMS consumption increased marginally from 46.3 million litres in May to 47.4 million litres in June.
The 1.1 million-litre increase represented a 2.4 per cent rise.
The increase in consumption, however, was far smaller than the 207 per cent jump in petrol imports.
As a result, the country’s petrol stock position improved during the month. PMS stock sufficiency rose from 16.2 days in May to 19.7 days in June.
This represented an increase of 3.5 days, or 21.6 per cent.
The improvement means that the country entered July with almost 20 days of petrol stock sufficiency, despite the increased reliance on imports.
The increase in petrol stocks is significant against the background of the supply disruptions and price volatility that have characterised the downstream petroleum market since the removal of petrol subsidy.
At the beginning of 2026, the NMDPRA reported that PMS stock sufficiency had risen to 33 days in January, compared with 29.2 days in December 2025. However, the stock position subsequently declined before recovering to 19.7 days in June.
The June data also showed a dramatic increase in imported Liquefied Petroleum Gas, popularly known as cooking gas.
Total LPG receipts rose from 4.1 kilotonnes per day in May to 5.1KT per day in June, representing a 24.4 per cent increase.
Domestic LPG receipts, however, fell from 4.0KT per day to 3.6KT per day, a decline of 0.4KT per day or 10 per cent.
Imports rose from 0.1KT per day in May to 1.5KT per day in June.
That represented an increase of 1.4KT per day, or 1,400 per cent.
The sharp increase in LPG imports helped push total receipts higher, even as domestic supply declined.
The figures indicate that LPG supply exceeded consumption during the month, potentially supporting inventory replenishment.
The supply of Automotive Gas Oil, commonly known as diesel, declined by 14 per cent in June.
AGO receipts fell from 18.8 million litres per day in May to 16.2 million litres per day in June, a decline of 2.6 million litres or 13.8 per cent.
The decline was entirely recorded in domestic receipts as the country recorded no AGO imports in either May or June.
The NMDPRA data showed that diesel consumption remained unchanged at 16 million litres per day in both months.
Consequently, June’s total AGO receipts of 16.2 million litres per day were only marginally above consumption.
Despite the lower supply, AGO stock sufficiency improved from 31 days in May to 37.1 days in June.
That represented an increase of 6.1 days or 19.7 per cent.
The rise in stock sufficiency, despite lower daily receipts, suggests that existing inventories continued to provide a substantial buffer for the diesel market.
The supply of Aviation Turbine Kerosene also fell during the month.
ATK receipts declined from 3.6 million litres per day in May to 2.5 million litres per day in June.
The 1.1 million-litre decline represented a fall of 30.6 per cent.
ATK consumption also fell from 3.1 million litres per day to 2.9 million litres per day, representing a 6.5 per cent decline.
The drop in consumption was, however, significantly smaller than the decline in receipts.
Domestic gas supply rose marginally during the period under review.
The NMDPRA reported that domestic gas supply increased from 4.984 billion standard cubic feet per day in May to 5.116Bscf/d in June.
The increase of 0.132Bscf/d represented a 2.65 per cent rise.
The authority said its domestic gas supply figure includes volumes supplied to the Nigeria LNG Limited.
The modest improvement came as the Federal Government and industry stakeholders continued to focus on increasing gas availability for power generation, industrial production and other domestic uses.
The January-to-June 2026 trend points to a petroleum market that has remained heavily influenced by the changing balance between domestic refining and imports.
Nigeria began the year with domestic PMS supply accounting for the majority of total supply. January’s 40.1 million litres per day from domestic sources compared with 24.8 million litres per day from imports.
By June, however, domestic supply had fallen to 32.5 million litres per day, while imports stood at 18.1 million litres per day.
Although the absolute volume of imports in June remained lower than January’s figure, the sharp increase from the May level showed how quickly the market could turn to imported products when domestic supply weakened.
The trend also highlights the continuing importance of domestic refining capacity to Nigeria’s fuel security.
In May, the Dangote Petroleum Refinery supplied an average of 41.5 million litres of petrol daily, according to reports based on the NMDPRA’s monthly data. The figure was significantly higher than the 40.1 million litres per day recorded in January. However, June’s domestic PMS receipt fell to 32.5 million litres per day.
The development comes amid the gradual transformation of Nigeria’s downstream petroleum sector, with the Dangote refinery increasingly supplying the domestic market while imports continue to act as a balancing source.
The figures also demonstrate that increased refinery crude supply does not automatically guarantee a corresponding increase in domestic petrol receipts. In June, crude receipts rose by about 9.3 per cent, while domestic PMS receipts fell by 21.7 per cent.
For consumers, the most immediate implication is that the country’s petrol supply system remains dependent on a combination of local refining and imports.
The June data therefore presents a mixed picture: domestic refining received more crude, total petrol supply increased and stock levels improved, but local PMS receipts fell sharply while imports surged.
In the wider downstream sector, diesel supply remained entirely domestic, LPG imports increased dramatically to supplement weaker local receipts, aviation fuel supply declined and gas availability recorded modest growth.
The data underscores the continuing transition of Nigeria’s petroleum market from an import-dependent system to a mixed supply structure in which domestic refineries are expected to provide the bulk of demand while imports fill supply gaps.
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