October 2, 2018

FG increases gas flare penalty to $2 per 1000scf

gas flare

A gas flare site in Niger Delta

…Stipulates N50,000 fine for inaccurate flare data
By Michael Eboh
The Federal Government has increased the penalty for gas flaring to $2 per 1,000 standard cubic feet of gas, SCF, from N10 per 1,000 SCF of the commodity flared.

gas flare

A gas flare site in Niger Delta

At the current exchange rate of N306.35 to a dollar, the $2 penalty translates to N612.7 per 1,00 SCF, while the $0.50 penalty translates to N153.175 per 1,000 SCF.

In the gazetted ‘Flare Gas (Prevention of Waste and Pollution) Regulations 2018,’ released, yesterday, by the Federal Ministry of Petroleum Resources, the Federal Government also stipulated a fine of N50,000 or a six months jail term or both, for anyone who provides inaccurate flare data.
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The document was presented by Mr. Justice Derefaka, Program Manager, Nigerian Gas Flare Commercialization Programme, NGFCP, Office of the Minister of State, Petroleum Resources, Federal Ministry of Petroleum Resources, MPR.

Specifically, Derefaka stated that the new gas flare regulation stipulates that in the case of any organisation producing 10,000 barrels of oil or more, the gas flare penalty had been increased 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, it had been increased to $0.50 per thousand standard cubic square feet of gas, irespective of whether it is routine or non-routine flaring.

However, the new regulation stipulates 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.”

The new law further stated that in a situation where a producer fails to provide flare gas data to a request made under regulation 4 of these regulations or fail to supply accurate or complete flare gas data, such producer would be forced to pay a fine of $2.50 per day, for every 1,000 SCF of gas flared or vented within the oil field or marginal field.

Other ofences within this category include where the producer fail to provide a qualified applicant with access to any flare site; fail to provide a permit holder with access to any flare site or to flare gas as provided in the permit; fail to prepare, maintain or submit the logs or records or reports required by the regulation within the time required to do so by the DPR.

The penalty of $2.50 per day also applies to situation whereby the producer fail to instal metering equipment within the time required to do so by the DPR; or fail to agree to enter into a concession agreement with a permit holder.

It also added that, “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.”

The new regulation further 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 Department of Petroleum Resources, 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.