HomeEnergyOil & GasGas Flare Penalty Hits N44.4bn In Six Months

Gas Flare Penalty Hits N44.4bn In Six Months

The Federal Government has revealed the total gas flare penalty collected from oil and gas companies from January 2023 till date which falls at $85.1m, representing N44.4bn at the average exchange rate of N521.2/$ in 2023.

NUPRC disclosed this in a document released in Abuja on Friday by the Nigerian Upstream Petroleum Regulatory Commission, detailing some basic information on gas flare measurement and fines from oil and gas companies operating in Nigeria.

The statement explained that the flare gas administration should not be viewed as a sustainable revenue stream, as the flare fees were to serve as a deterrent to drive the industry to greater compliance towards eliminating gas flaring, and generation of revenue from gas monetisation rather than flare payment.

“While efforts are towards flare elimination and not penalty, the commission has collected a total of $85.1m from January 2023 to date from gas flare penalty,” it stated.

The upstream regulator said it had led the effort in ensuring that the Federal Government’s drive to eliminate gas flaring in the country was achieved in a timely manner.

“All companies currently flaring gas are charged gas flare fees in line with the relevant provisions of the law, thus driving down the appetite of oil and gas companies to continue gas flaring, while increasing government take from the sector.

“For the avoidance of doubt, the commission, being the sole regulatory body in Nigeria’s upstream oil and gas industry keeps a record of daily, weekly, and monthly gas volumes from all oil and gas fields of operation.” The statement reads.

On the source of flare gas data, the NUPRC explained that organisations use different technologies and systems to measure flares according to their mandates and capacities.

“These include the Gas Flare Tracker system, Fiscal Grade Metre, Gas to Oil, and Material Balance which is used to measure what goes to flare. However, not all can be used to measure actual gas flares for the purpose of accounting and fines.

“For instance, while the GFT used by some monitoring agencies might be useful for monitoring emissions in remote areas, or for geo-locating of flare sites, it has some limitations such as cloud covering and atmospheric interference.

“Its accuracy range is to the tune of thousands. Even bushfires and other terrestrial fires are misconstrued by the satellite as gas flares (except where such sites are confirmed by ground truthing), thus making the result inaccurate and unreliable.”

It stressed that it was important to note that the flare payments or any taxes thereof could not rely on uncertain estimates since it was a matter of huge financial commitment.

On the basis for the compilation of the gas flare penalty, it explained that based on the provisions of the Gas (Prevention of Waste and Pollution) Regulations 2018, the flare penalty was not a flat rate of $2 per thousand standard cubic feet, but a two-tier regime of $2 and $0.5 per thousand SCF, depending on the average daily crude oil production.


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