The regulation aims to reduce the environmental and social impact caused by the flaring of methane/natural gas in Nigeria.
Sec. 2(1) gives the Federal Government ownership over associated gas at the flare, free of cost and without payment of royalty. [Note: This right is also set forth in Sec. 35(b)(i) of the Petroleum Act.] The government may then issue Permits to Access Flare Gas (Sec. 3(1)) to third parties incorporated in Nigeria (Sec. 8), through a competitive bid process. Access permits grant exclusive access to a flare site (Sec. 8). The permit holder must pay the Federal Government for data use, award fee for the Permit, and the Producer for gas handling (Sec. 11). The Minister can revoke access permits for, among other things, permit violations, inaccurate information, dissolution, or bond termination (Secs. 9, 22).
After an access permit holder uses their allotment of AG, producers may commercialise the remainder through a midstream subsidiary owned (Sec. 3(2)), or use AG for their own purposes (Sec. 3(3)).
Sec. 12(1) Producers may only flare gas as permitted under the provisions of the Associated Gas Re-Injection Act. Permit Holders (2) and greenfield projects (3) can’t engage in “routine flaring” or venting at all.
An operator that produces more than 10,000 or more barrels of oil per day, that operator must pay the government USD $2.00 for each 28.317 cubic metres of gas flared, irrespective of whether the flaring is routine or non-routine. Small facilities pay USD $0.50 per 28.317 m3 methane flared.
Reporting requirements: Producers must provide flare gas data within 30 days of an Agency request (Sec. 4(2)); Sec. 5 assesses penalties or possible imprisonment for inaccurate or incomplete data. Producers and access permit holders must keep a daily log of methane flaring and venting, based on metering (Sec. 14; Sec. 20 establishes specs), keep records for 36 months, and submit them monthly to the Department of Petroleum Resources. Producers must also keep a daily log of associated gas production, to be submitted monthly and in an annual report (Sec. 16), and an annual report (Sec. 17). Permit Holders must also file annual reports (Sec. 18). The Department then compiles an annual report, which includes (Sec. 19(e)) a ranking of producers by associated gas utilisation and (h) payments made by each producer.
Governed by Department of Petroleum and Natural Resources