By ESTHER McWILLIS-IKHIDE & NINI NDUONOFIT-AKOH

Gas Flaring: FG Threatens Licence Revocation as Penalties Fail to End Waste

NIGERIA’S campaign against gas flaring is entering another difficult phase. The Federal Government now plans to revoke the licences of investors who fail to make sufficient progress on projects awarded under its gas flare commercialisation programme.

The warning comes after the country collected ₦521.87 billion in gas-flaring penalties in 2025. Yet the penalties have not stopped oil producers from burning large volumes of natural gas.

That contradiction has renewed debate over Nigeria’s strategy. If financial penalties can generate hundreds of billions of naira without eliminating routine flaring, stakeholders want to know whether stronger punishment alone can deliver a different result.

Regulation Enters a New Phase

The Nigerian Upstream Petroleum Regulatory Commission announced the proposed sanctions during a working visit by its Chief Executive, Oritsemeyiwa Eyesan, to the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, in Abuja.

Eyesan said the commission reviews each gas flare commercialisation award one year after granting it. Where investors fail to show meaningful progress, the regulator can take action.

That action, she said, could include revoking an award.

The warning puts pressure on investors participating in the Nigerian Gas Flare Commercialisation Programme. The programme initially identified 43 flare sites, while 27 sites have received awards for development.

However, implementation has encountered resistance and delays.

The Penalties Have Produced Money, Not an End to Flaring

The 2025 figures reveal the scale of the financial burden attached to gas flaring. They also expose the limits of using penalties as the main deterrent.

NUPRC collected only ₦839 million in January against a monthly target of ₦58.32 billion. February produced ₦10.29 billion, while March climbed to ₦55.20 billion.

Collections then fell to ₦30.41 billion in April before rising to ₦42.99 billion in May and ₦68.94 billion in June.

July produced ₦53.11 billion, while August generated ₦59.42 billion. September recorded the highest monthly collection at ₦69.08 billion. October followed with ₦61.90 billion.

Receipts dropped to ₦51.84 billion in November and ₦48.86 billion in December.

Overall, the commission collected ₦521.87 billion against an annual target of about ₦699.84 billion. That represented 74.57 per cent performance and left a shortfall of roughly ₦177.97 billion.

The figures show that flaring carries a substantial financial penalty. However, they also show that producers continue to flare gas despite those costs.

The Value of the Gas Still Being Burned

Nigeria’s production and utilisation figures make the problem even more striking.

Between January 2025 and June 2026, the country produced about 4.132 trillion standard cubic feet of gas. It utilised more than 3.823 trillion standard cubic feet.

During the same 18-month period, Nigeria flared approximately 301.60 billion standard cubic feet.

At a gas price of $2.84 per million British thermal units, the flared volume represents an estimated market value of about $888.24 million.

That figure does not mean Nigeria could immediately have converted the entire amount into revenue. Capturing associated gas requires gathering systems, processing plants, pipelines, transportation networks, reliable markets and other infrastructure.

Nevertheless, the estimate illustrates the scale of the opportunity being lost.

Nigeria is effectively burning a resource that could support power generation, industrial production, compressed natural gas and other forms of energy development.

Infrastructure Remains a Major Constraint

The World Bank’s Global Gas Flaring Tracker Report placed Nigeria among the nine countries with the highest gas-flaring volumes in 2025.

Nigeria’s flaring volume increased by eight per cent during the year. Oil production also rose by eight per cent.

The report linked the increase partly to inadequate infrastructure for moving associated gas to domestic and export markets. Ageing gas-processing facilities also remain vulnerable to operational disruptions.

This exposes a central weakness in Nigeria’s gas policy.

Producing gas is not enough. The country must also build the systems required to collect, process, transport and sell it.

Nigeria has more than 215 trillion cubic feet of proven gas reserves, according to NUPRC. Its estimated total resource base stands at about 600 trillion cubic feet.

The contrast is therefore stark. The country has enormous gas resources but still burns a significant volume because infrastructure and commercial opportunities have not kept pace with oil production.

Commercialisation Was Supposed to Change the Equation

The Nigerian Gas Flare Commercialisation Programme attempted to address that problem.

Instead of relying entirely on penalties, the government created a framework that allows investors to capture gas from flare sites and convert it into commercially useful products.

The logic is straightforward. If investors can make money from associated gas, they have a stronger reason to build facilities and stop burning it.

But the programme itself has faced delays. Its implementation has also encountered local and commercial obstacles.

Community Development Committees of Niger Delta Oil and Gas Producing Areas Chairman of the Board of Trustees, Joseph Ambakederimo, described infrastructure deficits, weak market incentives and enforcement challenges as major issues.

He also called for more local gas-to-power and off-grid projects.

Captured gas, he argued, could supply captive power plants and industrial hubs. Gas from remote fields could also support small-scale processing plants producing products such as liquefied petroleum gas.

Should Punishment Come Before Incentives?

Former President of the Nigerian Economic Society, Prof. Adeola Adenikinju, has raised a different question.

Why would companies continue paying penalties instead of investing in gas utilisation?

His question goes to the heart of the policy challenge.

A company may face a fine for flaring, but that does not automatically make a gas-capture project financially viable. Some marginal-field operators face difficult locations, limited infrastructure and uncertain markets.

Adenikinju therefore suggested a fund that companies could access to finance gas-utilisation projects.

He also proposed shared infrastructure. Where individual operators cannot justify the cost of a processing or transportation facility, several companies could pool resources and develop common infrastructure.

Such measures could complement regulatory enforcement.

The Environmental Cost Goes Beyond the Balance Sheet

The debate cannot focus only on lost gas and government revenue.

Gas flaring also carries environmental and public-health consequences, particularly for communities in the Niger Delta.

Environmental activist and Executive Director of Health of Mother Earth Foundation, Dr Nnimmo Bassey, argued that successive government deadlines have failed to produce a decisive end to routine flaring.

He described the repeated postponement of targets as shifting goalposts.

For communities living near oil-producing facilities, the issue extends beyond greenhouse-gas emissions. Persistent flaring forms part of a wider environmental burden associated with petroleum extraction.

The debate therefore involves two different calculations. One concerns the economic value of the gas. The other concerns the cost imposed on communities and the environment.

The 2030 Deadline

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, has urged regulators and operators to accelerate the commercialisation programme as Nigeria works towards ending routine gas flaring by 2030.

The government now faces a difficult balancing act.

It must enforce its rules strongly enough to discourage non-compliance. At the same time, it must ensure that investors have the infrastructure, financing and market conditions needed to make gas utilisation commercially realistic.

Revoking awards could remove investors who fail to act. However, replacing one investor with another will not automatically resolve infrastructure or market problems.

The larger test is whether Nigeria can turn its gas policy from a system that mainly penalises waste into one that makes capturing and monetising gas the more attractive commercial choice.

Until that happens, the country could continue collecting large penalties while simultaneously burning away a valuable energy resource.