Nigeria’s $16 trillion loss to gas flaring amidst soaring debt

The Federal Government of Nigeria has incurred an estimated loss of $16 trillion due to natural gas flaring over the past decade, despite the country grappling with a rising debt profile reaching N87.38 trillion in the second quarter of 2023. The shocking revelation comes from the Energy Institute’s 72nd edition of the ‘Statistical Review of World Energy 2023,’ disclosed on Monday.

Analysis of the data reveals that upstream and downstream oil and gas firms operating in Nigeria flared a staggering amount of gas, reaching its peak in 2012 with an estimated 12.9 billion cubic meters, followed by 9.2 billion cubic meters in 2013, 8.3 billion in 2014, and 7.5 billion cubic meters in 2015.

The trend saw a gradual decrease over the subsequent years, hitting 7.2 billion cubic meters in 2016. A notable rise occurred in 2017, reaching 7.5 billion cubic meters before dropping to 7.3 billion in 2018, and rising again to 7.8 billion cubic meters in 2019. The menace dropped significantly to 7 billion cubic meters in 2020, further decreasing to 6.5 billion cubic meters in 2021, and finally resting at 5.3 billion cubic meters in 2022.

In the cumulative span of ten years, the total gas flared amounted to an estimated 86.5 billion cubic meters. Hebrew Energy estimates the value of each billion cubic meters of natural gas at about $183 million, resulting in a staggering $16 trillion lost to gas flaring during the reviewed period.

As a form of penalty for gas flaring, the National Oil Spill Detection and Response Agency (NOSDRA) reported that oil companies were liable to fines totaling $25.3 million in July, equivalent to N19.4 billion based on the Central Bank of Nigeria’s current official exchange rate of N768.77/$.

Addressing the issue, the Chief Executive of the Nigerian Upstream Regulatory Petroleum Commission, Engr Gbenga Komolafe, emphasized that the wasteful disposal of natural gas poses not only environmental and health risks but also results in significant resource waste and value erosion for the country. The findings underscore the urgent need for effective measures to curb gas flaring and its detrimental impact on Nigeria’s economic landscape.