18 September 2018

Nigeria: Govt Gazettes New Gas Flaring Law

The federal government is set to stiffly penalise offenders of gas flaring in the country, after several years of leaving it at a meagre fine of N10 per thousand standard cubic feet of gas flared by oil companies in the country.

This was contained in a newly gazetted Flare Gas Prevention of Waste and Pollution Regulations 2018.

Obtained by THISDAY in Abuja, the new regulation was recently approved by President Muhammadu Buhari.

It would provide a legal framework to support the government's plan to reduce Green House Gas (GHG) emissions through flaring and venting of natural gas.

Under the regulations, the Nigerian Gas Flare Commercialisation Programme (NGFCP) would also be implemented. The NGFCP would in line with its objectives, introduce new payment regime or penalties for gas flaring.

According to the document, the operational principle adopted in the NGFCP was that of the 'polluter pays' principle which is similar to carbon tax. The regulations also imposed significant obligations on producers and gas flare out projects for the reporting of data in respect of activities related to gas flaring.

Within the objectives of the regulations, Nigeria would reduce the environmental and social impacts of flaring natural gas; protect the environment especially that of the Niger Delta region which has been the most impacted; prevent waste of natural resources; and create social and economic benefits from gas flare capture.

According to the regulation, its contents are consistent with the dictates of Nigeria's Petroleum Act which indicates that the government could take all flare gas free of cost at the flare and without payment of royalty.

An introductory note on the regulation stated that it now: "Prohibits flaring and venting of gas except further to a certificate issued by the minister (of petroleum resources) in limited circumstances."

It further explained that: "The current meagre flare payments (penalties) of N10 per thousand standard cubic feet is increased, in the case of any one producing 10,000 barrels of oil or more, to $2.0 USD per thousand standard cubic feet of gas and, in the case of anyone producing less than 10,000 barrels of oil per day, to $0.50 USD per thousand standard cubic square feet of gas."

Also, the regulation noted that there are mandatory additional payments by gas producers of $2.50 for failure to produce accurate flare data; failure to provide access to flares or flare sites; failure to sign a connection agreement.

It further stated that: "In the event of continuous or egregious breaches, there is a possibility of suspension of operations, or a termination of the producer's license."

With the NGFCP, the government plans to provide flare gas buyers with access and title to flare gas for fuel and or feedstock for their gas utilisation projects.

The programme will provide a structure and platform that will enhance the bankability of such projects; present a market-driven solution; reduce gas flaring; as well as provide benefits to Niger Delta communities and the Nigerian economy.

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