Africa Oil & Gas: Nigeria seeks flaring solutions, ignores Finance Minister

Nigeria oilsA new Nigerian bill, before the national assembly, seeks to introduce new warnings to firms that flare gas. But it doesn’t appear to penalise them financially.

A key Nigerian National Petroleum Corporation (NNPC) official has insisted that factors other than weak tax laws are holding back the reduction of flaring at the country’s oilfields.

He hinted though that the ineffectual imposition of gas flaring ‘charges’ may be overhauled, but another source has contradicted this.

Nigerian finance minister Kemi Adeosun in January 2018 had criticised how international oil companies receive tax relief on gas flaring ‘charges’ imposed by the state, saying they would not be able to do so if such fines were reclassified as ‘penalties’. She added that the state’s failure to do so was costing Nigeria billions of dollars in revenues and urged the National Assembly to change the law.

NNPC senior technical adviser for upstream and gas, Gbite Adeniji, during an interview with CNBC Africa April 24,however said that structural and legal factors have also contributed to the country’s long-standing problem of flaring. In many flare sites, he said, there is no infrastructure in place to transmit the gas for other uses like gas to power. He also said that some flares are so small that operators do not have the necessary business model to tackle the flares, whereas some specialist third-party investors do but, due to policy drawbacks, that the necessary collaboration to tackle the issue is non-existent.

He agreed with minister Adeosun that gas flaring fines are currently so low as to be ineffective.

Adeniji said a gas flaring prohibition bill, first introduced in 2017 and currently in the National Assembly, has passed its second reading. He said that the bill would prohibit licensees from flaring or venting gas within its lease or licence area or from any facility within its control, except in accordance with a specific authorisation granted by the petroleum minister pursuant to the act.

Companies that flare will pay “surcharges”, subject to the petroleum minister’s recommendations, rather than ‘charges’, indicated Adeniji, although licensees may be permitted by the petroleum minister to flare if necessary for the health and safety of persons, or to prevent damage to property, in the exploration or production area.

But NNPC affiliate NGC this week told NGW that the ‘surcharges’ in the proposed bill will not directly address the issue raised by minister Adeosun. Non-compliance on flaring could however eventually lead to the forfeiture of a licence or lease, the NGC source added. Under the Nigerian gas flare commercialisation programme, the federal government intends to grant licenses to third parties to access and collect gas that might otherwise be flared by oil producing companies.source: NGW

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