Nigeria’s flared gas moment has finally arrived, execution will decide if it lasts

Nigeria has been trying to stop routine flaring since the late 1970s. The first major shot at the challenge was made via the Associated Gas Re-Injection Act (1979), which tried to force gas reinjection and restrict flaring. The Act failed because it criminalised gas flaring without fixing the economics, infrastructure gaps, or lack of a domestic gas market. It also made compliance more expensive than non-compliance, with low penalties and routine ministerial waivers that made it near-useless.

Fast forward to the mid-2010s. The Federal Government tried again with a more commercial framework that focused on creating a sustainable market and not just penalties. In 2016, the Nigerian Gas Flare Commercialisation Programme (NGFCP) was launched, and it set 2020 as the end year for all routine gas flaring. We didn’t achieve that target. This was then followed by the Flare Gas (Prevention of Waste and Pollution) Regulations 2018, which tightened flare payments and clarified who can take flare gas for commercialisation under a defined process.

In later years, it became clear that NGFCP and the 2018 regulations still had gaps. These gaps were designed to be filled by the 2022 NGFCP, which was re-engineered to align with changes in market realities and tweaked to facilitate bankability and execution/delivery discipline. This 2022 redesign was a quiet but important acknowledgement: it showed that Nigeria’s inability to solve its gas flare problem has never been about a lack of policy but about weak commercial plumbing and inconsistent execution.

Why earlier gas flare-out efforts struggled to land

The older flare regime leaned heavily on “stop flaring” as a compliance instruction, without properly solving the critical commercial questions: who pays for the infrastructure, who owns the flare gas, who takes the risk, and what is the predictable route to revenue? The 2018 regulations improved legal clarity, but more work needs to be done to move from idea to reality.

The other problem was coordination. Flares are small, scattered, and often located in operating environments where access, security, and community dynamics can eat your project Gantt chart for breakfast. Then you add the Nigerian financing reality: local currency weakness, FX uncertainty, long-term debt scarcity, and promoters who must raise money for projects that sit beside legacy oil operations they don’t control. You find yourself where the uncontrollable variables were plentiful enough to scare any potential financier.

How these challenges were unblocked to set the scene for delivery: the OML 17 angle

This month, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued Permits to Access Flare Gas to 28 companies under the NGFCP, through a competitive process. This involved 250 to 300 MMscf/d of potential gas capture, almost 3 GW of potential power, roughly $2 bn in cumulative investments, and a key LPG element aimed at solving critical clean-cooking access challenges.

The flagship among these was the NNPCL/Heirs Energies OML 17 Joint Venture Gas Flare Commercialisation Agreements signed with offtakers to monetise flare gas at OML 17 in Rivers State. Among the offtakers for the gas are companies like AUT Gas, Twems Energies, Gas and Power Infrastructure Development Limited (GPID), PCCD, and Africa Gas and Transport Company (AGTC).

This deal matters for three key reasons:

1.  First, it anchors gas flare monetisation inside an operating asset with an operator that is visibly pushing brownfield execution and gas development. Many gas flare-out projects have died quietly in the past due to feedgas instability or unavailability, or due to changes in the operator’s priorities. Heirs has positioned the OML 17 play as part of a broader gas-led strategy, where the flares solution is a key part of the plot and not an isolated CSR badge.

2.  Second, it shows the value of specialisation. We don’t have five companies all building the same thing. You need complementary capabilities, deployed in sequence and tied to one operational backbone. With the Heirs’ deal, some parties focus on gas capture and processing, others on the gas-to-power linkage, and others on the gas logistics and evacuation play via CNG. In Nigeria, this “stacking” approach is not a nice-to-have but is critical to survival. It ensures the underlying project is robust and integrated enough to deliver value.

3.  Third, the deal is perhaps the clearest sign of the NGFCP model moving from regulatory approval to commercial execution agreements around a defined asset. Many NGFCP projects I’ve worked on and seen in the media are generic and often never see the light of an agreement-signing day. OML 17 has a name, an operator, defined counterparties, and a declared pathway to products like LPG, CNG, and power.

What must happen in 2026 for this to become molecules, electrons, and real products?

Now that a major milestone has been met, the NGFCP and OML 17 deals now need to be delivered. This is where the rubber meets the road. To achieve this, the following must happen, and quickly too:

1.  The parties must keep complementing each other: cluster logic must remain the default. Once it becomes separate islands working separately, you get duplicated capex, slower delivery, and higher unit costs, then failure. This structure works only because it is integrated. Retaining that is critical.

2.  Timelines must be synchronised consistently and with patience: a gas flare capture skid ready in March is useless if the evacuation, offtake, and permitting are only ready in December. NGFCP needs ruthless sequencing discipline, plus real consequences for chronic slippage. The regulators must help here. This is their baby. It must not fail.

3.  Financing orchestration must become critical: though integrated, each offtaker is a separate company or SPV, with separate financing needs but with an interdependent technical chain. If one off-taker cannot raise money, the shared system will suffer. 2026 will therefore require a deliberate capital stack: bank debt where tenors fit, equity where risk is real, guarantees where bankability is thin, and blended instruments where climate and energy access outcomes can truly reduce risk. The positive ambitions behind this programme can only become reality if financiers can understand, appreciate, derisk and underwrite the deals with clear contracts, serious promoters and credible delivery governance.

4.  Solve for non-technical risks early & properly: Community alignment, security, ROW issues, and local permits – these are the kinds of issues which, when combined, can kill a project’s delivery momentum faster than any compressor failure. Scoping this out early and working on them will be critical to success. Where possible, heirs, being the operators that know the terrain, can help the operators with best practices and ideas on how to best manage these risks.

We must study what works, standardise, replicate and deliver faster.

If OML 17 and the wider NGFCP cohort start delivering, Nigeria should treat the first wave as a learning factory. Contract templates that work must be standardised. The same must be done for tie-in requirements. Milestone scorecards must be published to give the market confidence, and repeatable financing templates that work must be standardised to facilitate faster and easier financing.

That is how we move from a few gas flare “pilot projects” to an enhanced and deeper domestic gas value chain that feeds cooking, transport, SMEs, and power. We move from convenient ESG language into crafting a flare gas monetisation system that contributes significantly to national industrial policy and ambitions.

 

About the writer:

Afolabi Akinrogunde is a senior energy professional with over 20 years of experience spanning upstream oil and gas, gas commercialisation, energy economics and renewable energy investment and development. He currently serves as a Senior Deal Lead at Shell Energy Nigeria, driving gas infrastructure, power and commercial strategy across multiple value chains.