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Nigerian govt raises penalty for gas flaring

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Nigerian govt raises penalty for gas flaring

The Federal Government has increased the gas flare penalty from N10 per thousand standard cubic feet (SCF) of gas to $2 or N612.8 per thousand SCF of gas.

The increase, the Federal Government said, is in the case of any company that produces 10,000 barrels of oil or more, adding that for any company producing less than 10,000 barrels of oil per day, the penalty has been increased to $0.5 or N153.2 per thousand standard cubic square feet of gas.

This was disclosed in the gazette Flare Gas (Prevention of Waste and Pollution) Regulations, 2018 released by the Programme Manager, Nigerian Gas Flare Commercialisation Programme, Office of the Minister of State for Petroleum Resources, Justice Derefaka, in Abuja on Monday.

The upward review of the penalty came after several calls by experts in the Oil & Gas industry to raise the penalty in order to stem the tide of free flow of flares in the Niger Delta region of the country.

According to them, the penalty N10 per thousand SCF of gas was cheap when compared to what is obtainable in other countries and had given the companies the liberty to flare gas at will.

The report noted the government also announced a fine of N50,000 or six months jail term, or both, for anyone who provided inaccurate flare data.

“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 $0.5 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 licence,” the report stated.

Read also: CBN: Manufacturing sector grows at a slower rate in September

The document 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.

It added that in a situation where a producer failed to provide flare gas data to a request made under regulation four of the stipulated 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 or N766 for every 1,000 SCF of gas flared or vented within the oil field or marginal field.

The report further noted that the penalty of $2.50 per 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 (DPR), 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.

(Official Exchange Rate – N306.4/USD)

 

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