The federal government has increased the penalty for gas flaring to $2 for every1, 000 standard cubic feet of gas (scf) flared from oil fields in the country.
The gas flare penalty rate was increased from N10/Mscf (which is equivalent to $0.03).
The increase in the rate followed the approval by the Federal Executive Council on 28th of June, 2017 of the National Gas Policy, wherein the federal government made its intention to increase the penalty in order to end the practice of gas flaring.
The government in the document considered the old rate of N10/Mscf as too low, having been eroded in value over time, and not acting as a disincentive.
The announcement of 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.
In the document, made available by the Program Manager, Nigerian Gas Flare Commercialization Programme (NGFCP), Office of the Minister of State, Petroleum Resources Mr. Justice Derefaka, 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.
Derefaka explained that the new gas flare 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, irrespective of whether it is routine or non-routine flaring.
He said, 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 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.
