joshuaNigeria’s N891 billion loss: Oil and gas expert (Babalola) advocates stiff penalties
Ayo Ola
A retired Deputy Director of the defunct Department of Petroleum Resources, (DPR), Engineer Sunday Adebayo Babalola has urged the Federal Government to implement stiff penalties as a measure to stopping or reducing gas flare in Nigeria.
In an interview with journalists, he said the measure will be a big deterrent to companies as they will know that they will be spending more on penalties than on establishing strategies that will reduce or stop their gas flare.
Noting that gas flare is still a challenge in the country, he, however, said the government has initiated measures that would reduce gas flares in the country.
He recalled that he initiated some measures to address gas flare when he was still working with the DPR, adding that his current company, Green Energy has executed strategies that have substantially reduced its gas flare. He said that in a very short time, the company would achieve zero gas flare.
Fata released by the National Oil Spill Detection and Response Agency (NOSDRA) showed that Nigeria lost $1 billion, an equivalent of N891 billion, to gas flaring in 2023.
It explained that oil and gas companies operating in the country burnt 275.2 billion standard cubic feet, SCF, of gas in 2023, adding that the volume of gas flared in 2023 was 27.03 per cent higher than the volume flared in 2022.
Babalola said: “They (FG) are working towards that (gas flare reduction or stoppage) seriously because a number of policies they have put on ground will help to reduce it. For example, there is a domestic gas obligation there. People are paying highly for the gas they are flaring now and they do not like. So everybody is struggling to make sure that they do not flare and pay bigger. When it was cheap to flare gas. People preferred to flare it than engage in a gathering system. But now, it is no longer cheap to flare so everybody is doing their best to avoid gas flare. There are many other policies they are putting in place to discourage gas flare. They are moving in the right direction. Very shortly, you will see that Nigeria will be close to zero in gas flare.
“For example, my company, Green Energy, has its own gas plant that we are getting to the point of zero gas flare. We are not happy about the heavy penalty they imposed on us. I think it is about $350 per 1,000 scf or 1,000,000 btu. People do not like that. So people are doing their best.
“High penalty is a deterrent to companies involved in gas flare. I was an advocate of it. When I was in DPR, I wrote to all the companies that they will be paying $350 per 1,000 scf but there was no political will to implement my letter. But this government, starting with Buhari has started a gradual enforcement of penalty increments.
“I think they started with $2. For some people it is going to $350. And they are not happy about that.so many of them will start looking for ways, instead of burning or flaring gas and paying this huge amount, they will look for a way to make sure that they do not pay that. It is a huge deterrent.”
The oil and gas expert decried that Nigeria has suffered great financial losses and environmental degradation as a result of gas flare.
Babalola said: “History shows it is a deterrent. When it was N5k for 1,000,000 btu, people were flaring gas anyhow, then it came to N10, ofcourse, people started thinking how to reduce gas flare. When you imagine the exchange rate, then N10k was like 10 cent but when it came to N50, a lot of them started thinking of what to do about this flaring because N50 was almost equivalent to 50 cent that time. So flares were coming down based on that. Now that it is $350 or about that, companies have been forced to start thinking on how to invest in a gas gathering system that will ensure that I am not flaring any gas because the economies of flaring the gas is not as good as gathering it and monetizing it.
“Nigeria has suffered a lot of losses in terms of economic losses and environmental degradation because of gas flare. Honestly, Nigeria lost a lot of money by gas flare.it is just like taking your hard earned currency and setting it on fire. Basically that’s what we were doing. At that time, the military thought that they needed the oil money so they were very placid in relation to implementing all the policies that were enunciated by the then DPR. They did not want to stop the flow of oil and money, so we were gaining in the oil flow but we were losing in gas flare because the gas you lost you cannot gain it back. The then DPR came with the beautiful idea that you must re-inject the gas into reservoirs that can accept it. They even encouraged people to inject the gas into reservoirs that have water so that the gas will be stored there for future production. Those were done to ensure that we reduce gas flare in order for us to have these gas available for future monetization. Those experiments were done. I do not know their status now.
“However, burning the gas is losing the money totally and it cannot be regained. In addition to that you negatively impact and afflict the environment. You find that a lot of roofs in the Niger Delta do not last for one year before they start leaking because the acid rain that falls on them leads to roof leaking. You find that there is a lot of soot in the air impacting people’s health. You find that the acid rain that falls on their water kills their fishes and so many things.it was very bad but the powers that be then did not want to lose money from oil production and they would rather allow gas flaring to continue.
“DPR actually tried, proposing policies upon policies that would have minimize gas flare. But when those policies were not implemented, they started to say, “okay you cannot redevelop unless you gather your gas, you cannot do a new development without a proper gas gathering system. I am proud to say that I am one of the people who were issuing policies to stop gas flares and it helped to reduce.”
He added: “I was Head of Gas Exploration and Production. When I took over in gas exploration and production, we (Nigeria) were flaring 2.4billion scf per day but by the time I left, it had reduced to about 1billion scf per day because of those decisions we tool like you can not redevelop unless you are going to utilize the gas immediately and that a field that was already producing that is flaring the gas, if you want to do a redevelopment, you have also to include gas utilization which is gather the gas you are currently flaring along the ones you will produce from the redevelopment.
“Also you cannot start a redevelopment field without gas utilization being part of that development plan. So all those things we did helped to bring it down from 2.4billion scf per day to about 1billion scf per day. It came as low as 800,000,000 scf per day which is a tremendous achievement and we did that in eight years when I was Head of Gas Exploration and Production.
“Green Energy is almost achieving zero flare. We adopted some strategies. We established a gas plant. We do LPG now. The remaining gas, we send to the power plants and we produce power. We are expanding the power plant also. We inject the power we produce into the community where we operate. We have a very good relationship with the community because of that. We also use part of the power that is produced to run our system.”
