…Losses reach $345.9m
Nigeria, Africa’s largest exporter of natural gas, flared 98.8 million standard cubic feet (scf) of natural gas in the first quarter (Q1) of 2025, the highest volume recorded in the same period in five years, despite growing environmental and commercialisation concerns and government pledges to curb emissions.
Data obtained from the National Oil Spill Detection and Response Agency (NOSDRA) show that Nigeria lost $345.9 million to the volume of gas flared between January and March 2025, as oil and gas companies continued to waste rather than capture the resource.
This development marks a sharp increase compared to 83.5 million scf of gas flared in the same period of 2024 and is the highest Q1 figure since 2020. This highlights a setback in Nigeria’s efforts to achieve its climate commitments and commercialise the resource.
“If it costs the same or less to pay flare penalties than to aggregate, treat and transmit gas, companies will simply opt to flare and pay penalties,” said Kelvin Emmanuel, an economist, who argued that gas flaring persists in Nigeria due to poor pricing incentives.
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According to him, the pricing model under the Domestic Gas Delivery Obligation (DGDO), pegged at 30 percent of export parity, offers little incentive for operators to invest in gas capture and processing. “What’s the incentive to trap gas if the pricing doesn’t justify the cost?” Emmanuel asked.
Data from NOSDRA showed that about 5.3 million tonnes of carbon emissions were released into the atmosphere, a development that could translate into a health hazard for residents near the flaring sites.
Also, the flared gas could have powered millions of Nigerian homes, reducing the reliance on diesel generators and easing the financial burden on households that spend a chunk of their income on energy.
Gas flaring, the controlled burning of natural gas during oil production, has long been a major source of greenhouse gas emissions in Nigeria, the largest oil producer in Africa. The activity not only contributes to environmental degradation but also costs the country valuable energy resources.
Industry analysts have said that without stronger regulatory enforcement and investment incentives, oil companies will continue to flare gas as a cheaper alternative to processing or reinjection.
Jide Pratt, country manager of TradeGrid, expressed concern over the persistent rise in gas flaring, despite government interventions. According to him, weak penalties and the high cost of infrastructure are the main reasons companies continue to flare gas.
“Most companies take the cheaper option of paying fines rather than investing in extraction and piping,” he added.
Pratt, who also serves as the COO of AIONA, said incentives such as those in Executive Order 40, which targets non-associated gas investments, could drive progress. “Fines for flaring should be increased to make reinjection more attractive.”
NOSDRA revealed that $197.7 million was the penalty payable by oil and gas companies for flaring in Q1 of 2025, indicating a 57 percent of the value of gas wasted.
Various legislative measures to curb gas flaring in Nigeria have been in place since 1969. Since 1984, it has been illegal to flare gas in Nigeria without the written permission of the Minister of Petroleum Resources.
Current penalties for gas flaring in Nigeria officially stand at $2 per 1,000 scf. Currently, companies producing more than 10,000 barrels per day (bpd) pay a fine of $2 per 1,000 scf of gas flared, while companies producing less than 10,000 bpd pay a fine of $0.5.
“Associated Gas (AG) is what leads to flared gas in most cases, and AG holds a portion of the gas utilised in Nigeria. Hence, any hindrance to oil flow/transportation in real time leads to either the shutting down of oil wells or its storage, leading to excess produced gas. The same applies to grid failure,” a top manager in the industry said in confidence as he was not authorised to speak on the matter.
According to the manager, integrating a detailed data analysis of oil and gas production (associated gas and non-associated gas) with historical trends of events in the overall energy space will draw out salient conclusions invisible at first glance.
“Possibly, pipeline failure due to third-party damage, corrosion or mechanical induced failure in Q1 and grid failure that may have reduced the intake of gas for power generation,” the manager said.
On his part, Elijah Wisdom, CEO/Founder of Creek Transitway Ltd, said the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) should allow International Oil Companies (IOCs) to choose their own flare gas off-takers.
He also downplayed the pricing argument, saying, “Gas prices in the US vary widely depending on location. The key issue is infrastructure and cost-reflective tariffs.”
Wisdom added that recent DGDO adjustments have made pricing more reasonable, but outstanding debts like the Nigeria National Petroleum Company (NNPC) Limited’s debt to the Niger Delta Power Holding Company still affect operations.
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Dents $2.5bn revenue plan
The surge in flaring comes despite ongoing efforts under the Nigerian Gas Flare Commercialisation Programme (NGFCP) to harness previously wasted gas for power generation, industrial use, and export, potentially unlocking billions in revenue and reducing greenhouse gas emissions.
In February, Gbenga Komolafe, NUPRC’s chief executive officer, said the NGFCP had the potential to unlock as much as $2.5 billion investments in the Nigerian oil and gas sector, thereby creating a boost for government revenues.
The NGFCP was launched as a strategic initiative by the Nigerian government with the primary goal of eliminating gas flaring through economically viable solutions, transforming a wasteful environmental challenge into a substantial economic opportunity.
The programme is also being promoted as one of the critical pathways to achieving Net Zero Carbon Emissions. According to him, as countries shift focus toward a low carbon future, the commission is embedding sustainability measures, including NGFCP, into the upstream operations to mitigate environmental risks and to protect communities.
