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THE FLARE GAS (PREVENTION OF WASTE AND POLLUTION) REGULATIONS 2018

The Gazetted Flare Gas (Prevention of Waste and Pollution) Regulations 2018 recently approved by His Excellency, Muhammadu Buhari (GCFR), the President of the Federal Republic of Nigeria provides a legal framework to support the policy objectives of the Federal Government for the reduction of Green House Gas (GHG) emissions through the flaring and venting of natural gas.

The Regulations provide the legal basis for the implementation of the Nigerian Gas Flare Commercialisation Programme (NGFCP), introduces a new payment regime (penalties) for gas flaring which adopts the “polluter pays” principle and mimics a carbon tax. The regulations also imposes significant obligations on producers and gas flare out projects for the reporting of data in respect of activities related to gas flaring.

The objectives of these Regulations are:

  • The reduction of the environmental and social impact caused by the flaring of natural gas;
  • Protection of the environment;
  • Prevention of waste of natural resources; and
  • Creation of social and economic benefits from gas flare capture.

As a synopsis, the thrust of the regulations is as follows:

  1. Consistent with the Petroleum Act, Government takes all Flare Gas free of cost at the Flare and without payment of royalty;
  2. All flares taken by the government to be subject to competitive bids;
  3. Creates the Permit to Access Flare Gas with right to enter Flare Site & take Flare Gas;
  4. Compels the installation of meters and the production and report of Flare Gas data;
  5. Prohibits flaring and venting of gas except further to a certificate issued by the Minister in limited circumstances;
  6. The current meager 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.
  7. There are mandatory additional payments by the producer of $2.50 USD for:
    1. Failure to produce accurate flare data.
    2. Failure to provide access to flares or flare sites
    3. Failure to sign a Connection Agreement;
  8. In the event of continuous or egregious breaches, there is a possibility of suspension of operations, or a termination of the producer's license.

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On behalf of the Federal Government of Nigeria, this programme seeks to attract investments and develop a transparent market mechanism through a competitive procurement process for allocating gas flares, under clear and transparent criteria, to competent third party investors using proven technologies in commercial application globally. The Nigerian Gas Flare Commercialization Programme (NGFCP) is an opportunity for Government, industry, State Government, ethnic nationalities, and local communities to work together to resolve an oil field unacceptable practice.