Abuja, Nigeria – In a major step toward curbing gas flaring, the Nigerian government has granted licenses to 42 companies to capture and monetize gas that is currently being wastefully burned off at oil production sites across the country.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced the issuance of letters of award on Wednesday, following a competitive bidding process under the Nigerian Gas Flare Commercialization Programme (NGFCP).
Out of the 42 successful bidders, 38 companies won rights to develop 40 flare sites individually, while 4 were awarded clusters of 9 sites. Several reserve bidders were also selected in case any preferred bidder failed to meet permit requirements.
Gas flaring is a decades-old problem in Nigeria’s oil industry, resulting in billions of dollars in lost revenue and significant environmental damage each year. The practice involves the controlled burning of natural gas associated with oil extraction when infrastructure is lacking to capture it.
The NGFCP aims to incentivize investment in gas-gathering facilities so this wasted resource can be commercialized. Successful bidders will build facilities to collect the gas, then process and market it domestically or for export.
The program aligns with Nigeria’s Gas Master Plan and the Petroleum Industry Act which prioritize gas-based industrialization and reduced carbon emissions.
NUPRC Chief Executive Gbenga Komolafe said the strong interest from over 300 applicants and intense competition demonstrates the commercial potential of flare gas. The rigorous evaluation process ensured only competent firms with solid technical and financial capacity were selected, he noted.
The latest licensing round attracted a diverse mix of local and international oil companies, technology firms and industrial gas players. Industry experts predict it could eliminate routine flaring at dozens of sites and recover billions of cubic feet of gas over the next decade.
NUPRC will work closely with KPMG to oversee implementation and monitoring. The successful firms will now negotiate final agreements and obtain permits to proceed.