Page 5 - AfrOil Week 20 2020

AfrOil COMMENTARY AfrOil
 Christopher Onosode, SDN’s country director for Nigeria, stressed this point in April 2019, saying: “For the first time in Nigeria, the new gas flare tracker would enable anyone to see exactly where gas is being flared.”
This optimism appears to have been over- stated. The use of the GFT system has not ensured the clarity and transparency of data collected on gas flaring. Rather, it has raised new questions about how best to monitor the practice.
Data discrepancy
According to Justice Derefaka, the programme manager of Nigeria’s Gas Flare Commercialisa- tion Programme (NGFCP), the figures gener- ated by GFT are at odds with the figures reported by the oil operators that burn off associated gas.
Earlier this week, Business Day quoted Dere- faka as saying that the two datasets had diverged sharply since 2018. In that year, he said, GFT reported that oil producers had flared 472.4bn cubic feet (13.3776bn cubic metres) of associ- ated gas, or about 16.75% of the country’s total production.
At the same time, he noted, the oil produc- ers themselves said they had burned off 282 bcf (7.986 bcm), or 10% of output.
The discrepancy persisted in the following year, he added. Nigerian producers reported that they had flared 325 bcf (9.203 bcm) of gas in 2019, or 11% of total production, he said, while GFT put the figure at 475 bcf (13.451 bcm), or more than 16% of output.
Derefaka indicated that the gap may have arisen partly as a consequence of changing reg- ulations. Nigeria’s federal government adopted regulations that raised penalties for associated gas flaring 2018, he noted.
It thereby gave upstream operators an incentive to under-report their burn-offs and to contest the higher figures based on satellite observations.
Questions about accuracy
He also pointed out, though, that there were questions about the accuracy of GFT data. On the one hand, he said, the system may be record- ing gas flares at both legal and illegal refineries, as well as at oil wells. On the other hand, the sys- tem has quirks that may affect the outlook gen- erated from the data.
“The fact that satellite images are not contin- uous measurements but ‘snapshots’ represents a possible source of error,” he was quoted as saying by Business Day.
Derefaka did not say exactly how Nigeria’s government intended to address the matter. He did note, though, that federal authorities did have ways to apply pressure to companies that did not submit accurate reports. The 2018 legislation that provided for levying higher fines on gas flarers also lays the groundwork for imposing additional penalties on companies that do not provide accurate or complete data, he explained.
As of press time, Nigeria’s federal govern- ment had not commented on the matter or shed any light on the question of how it might ensure the accuracy of data on gas flaring. It ought to do so, however, given that associated gas plays an important role in its plans for promoting domes- tic consumption of gas and using the fuel as a means of supporting economic development.
That is, it needs accurate data in order to ana- lyse and understand production trends, monitor regulatory compliance and anticipate the flow of revenue into and out of gas-related projects. Without reliable numbers, its predictions and plans – such as, for instance, its expectations that the introduction of higher penalties for flaring will boost revenue this year – will be difficult to fulfil. If the data are wrong, Nigeria’s government may encounter unexpected shortfalls at a time when it can hardly afford to do so, in light of the coronavirus (COVID-19) pandemic’s disastrous impact on oil and gas revenues this year.™
“ gas plays an
important role in the Nigerian government’s plans for promoting domestic gas consumption
Associated
GFT data show higher levels of gas flaring than oil company data (Screenshot: Gas Flare Tracker)
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