Gas Flaring in Nigeria: Is a 'Carrot and Stick' Approach the Panacea to Ending Flaring in Nigeria's Oil and Gas Sector?

Abstract

Gas Flaring is the burning of associated gas discovered during the exploration and production of oil from reservoir rocks in the absence of facilities to utilize this gas. Flaring releases CO2 and Methane into the atmosphere with its attendant environmental impact on the growing problem of global warming and also constitutes economic waste in view of the various productive uses to which this gas can be put and revenue derivable therefrom. Nigeria is the second largest gas flaring nation in the world and this has had significant environmental and health impacts on the oil producing communities in the country as well as constitute massive economic loss for the country. Several penalties, fines and deadlines imposed by the government over the years have proved abortive as the practice has continued unabated. This paper considers the feasibility of the adoption of a unique approach to ending gas flaring in Nigeria – the 'Carrot and Stick' approach – which combines a mixture of legal and economic mechanisms and aims at achieving a win-win situation for the oil companies and the government. The methodology employed is a comparative analysis of mechanisms employed in countries with high success rate in tackling flaring such as Norway and Canada and analyzing the applicability of these mechanisms in Nigeria’s situation. The paper finds that the adoption of the 'Carrot and Stick' approach addresses the root causes of the problem in Nigeria and represents a bright chance of putting an effective end to this harmful environmental practice.