Oge Obi,

The Federal Government has increased the penalty on gas flaring from N10 per thousand standard cubic feet of gas to $2 – equivalent of N612.8 at the current official exchange rate of N306.4 to one dollar per thousand standard cubic feet of gas.

The new rate was contained in the gazette “Flare Gas (Prevention of Waste and Pollution) Regulations 2018”, circulated yesterday in Abuja by the Ministry of Petroleum Resources.

The report was made available by the Program Manager, Nigerian Gas Flare Commercialization Programme (NGFCP), Office of the Minister of State, Petroleum Resources, Mr. Justice Derefaka. It also disclosed that the Federal Government has also stipulated a fine of N50, 000 or a six months jail term or both, for anyone who provides inaccurate flare data.

It stated that the new regulation stipulates that for any company producing 10,000 barrels of oil or more, the gas flare penalty has now been increased to $2 per thousand standard cubic feet of gas and, for a company producing less than 10,000 barrels of oil per day, the rate had been increased to $0.50 per thousand standard cubic feet of gas, whether it is routine or non-routine flaring.

According to the new regulation, a producer would not be liable in a situation “where the flaring was caused by an act of war, community disturbance, insurrection, storm, flood, earthquake or other natural phenomenon which is beyond the reasonable control of the producer.”

“The current meagre flare payment (penalty) 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 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 per thousand standard cubic square feet of gas.

“There are mandatory additional payments by the producer 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; in the event of continuous or egregious breaches, there is a possibility of suspension of operations, or a termination of the producer’s license”, it stated.

Also, the new regulation, however, stated that the producer would not be liable in a situation “where the flaring was caused by an act of war, community disturbance, insurrection, storm, flood, earthquake or other natural phenomenon, which is beyond the reasonable control of the producer.”

Also, that in a situation where a producer failed to provide flare gas data to a request made under the regulation, or fail to supply accurate or complete flare gas data, such producer would be forced to pay a fine of$2.50per day for every 1,000 SCF of gas flared or vented within the oil field or marginal field.

It further stated that a penalty of $2.50per day also applies to a situation whereby the producer fails to install metering equipment within the time required to do so by the Department of Petroleum Resources, or fail to agree to enter into a concession agreement with a permit holder.

“In the event of the continued failure of the producer to comply with any of the requirements of this regulation, the minister may direct the producer to suspend the operations or revoke any Oil Mining Lease or marginal field awarded to the producer,” it added.

The new regulation requires gas producers to maintain daily log of flaring and venting of natural gas produced in association with crude oil and submit same to the DPR within 21 days following the end of each month.

According to the document, all gas flare logs must be based on data retrieved from metering equipment installed at the various producers’ facilities, while the logs must be kept by the producers in safe custody for no less than 36 months.

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