Report: IOCs Under-Reporting Gas Flare Figures to Evade New Levies

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Chineme Okafor in Abuja
Oil companies in Nigeria are under-reporting the volume of gas they flare from oil fields to avoid paying the upgraded levy imposed on gas flaring by the federal government, a report has disclosed.

Presented to journalists during an online workshop conducted by the Facility for Oil Sector Transparency and Reform in Nigeria (FOSTER) and the African Initiative for Transparency, Accountability and Responsible Leadership (AfriTal), the report alleged the existence of significant discrepancies in reports of gas flared by IOCs since Nigeria reviewed its fiscal penalty from 50 cent to $3.50 per 1000 standard cubic feet (scf) of gas flared from 2018.

According to the report, data obtained from the NNPC and a World Bank supported Gas Flare Tracker (GFT) which were compared showed that between 2013 when the GFT was launched and 2017, flare data from the NNPC and GFT were almost perfectly in alignment, but subsequently changed significantly in 2018 when the fiscal penalty was reviewed upwards.

It noted that while data from the GFT – a satellite-based system – were within the previously existed numbers, that of the NNPC significantly reduced with a wide discrepancy level of reporting noticed.
The GFT though has been handed over to the National Oil Spill Detection Response Agency (NOSDRA), its satellite-generated data is reportedly safe from manipulation. It is equally said to collect information on gas flare in oil fields across Nigeria every 24 hours and sums them up every month.

In his presentation at the workshop, Mr. Jesse Martins Manufor of the Stakeholder Democracy Network (SDN), explained that the GFT as an environmental monitoring tool which was upgraded in 2019, uses remote sensing to determine the amount of gas flare in NIgeria.

“The US weather satellite moves across the Niger Delta every 24 hours, records and calculate the value of gas flared, emissions, fines and the energy that can be generated from the flares. The assumption underpinning its operation is that nothing burns consistently hot in the same isolated location as gas flare.
“The heat recorded from these flare sites is about 1400 kelvin and no bush fire can be this hot or be at the same location after 24 hours,” Manufor stated.

According to him: “Since 2013 when the GFT was launched, data from the tracker significantly matched that of the volumes declared by the oil and gas companies in the records of NNPC up until 2017. However, there has been a significant variation in volumes in the NNPC 2018 and 2019 data as compared to the GTF.

“These variations appear to be significantly high. According to the NNPC’s data in 2018, Nigeria flared 282bcf of gas which makes about 10 per cent of the total gas produced. On the other hand, GFT reported 472.4bcf of gas for the same year. Also, according to NGFCP, Nigeria flared 325bscf of associated gas in 2019, representing 11 per cent of gas produced in the country, while GFT recorded 475bscf as gas flared for the same year.”

He further mentioned that whilst there seems to be an accurate alignment between the gas reported to be flared before 2018 by GFT and NNPC, there was a significant difference between the figures from 2018.

“This might be as a result of gas flare regulations introduced in 2018, which imposes an increase in the fines to be paid for gas flaring. Prior 2018, it made more sense to flare and pay a penalty of 50 cent because there was no stringent enforcement. However, with the increase in the penalty to $3.50 for companies producing more than 10,000bpd, the new regulation might be responsible for the discrepancies,” he suggested.

He also noted that Nigeria current does not seem to know the accurate volume of gas flared from her oil field on a daily basis, adding that this would impact the country’s implementation of its Nigerian Gas Flare Commercialisation Programme (NGFCP).

“The NGFCP was able to auction only 48 flare sites out of over 180 flare sites in the country as a result of poor data at its just concluded bidding for prospective companies.
“Companies that wanted to bid for these sites did not know how much gas they will get, an information relevant in determining how much to invest or the possible profit from their investment.
“The disparities also show that Nigeria is far away from meeting its commitment towards flare out by 2020,” he added.