A lot has changed since our original post in 2016 about flaring regulations in Nigeria. Here’s the latest on all you need to know.
Nigeria remains the largest oil producer in Africa and is currently ranked 13th in the world, producing around 1,999,885 bbl/day. This production leads to over 4 billion standard cubic feet (scf) of gas being produced per day. According to the authorities, 80% of this gas is utilised. However, this means the remaining 700 million scf is still burnt every day across the approximately 180 flare sites in Nigeria.
There have been multiple attempts in the past to crack down on flaring, with an aim of ending gas flaring by 2020, 10 years earlier than the World Bank’s zero-flaring by 2020 initiative.
Although success has been limited, there has been improvement. Nigeria has dropped in the table from 6th largest natural gas flaring country in 2017, to 7th in 2018, flaring around 7.4 billion m3 of natural gas in 2018 compared to 2017’s 7.6 billion m3. There is work still to be done to further reduce these figures and meet Nigeria’s ambitious target.
In a bid to eliminate flaring, the government has recently introduced several flaring regulations. These are outlined in their ‘Flare Gas (Prevention of Waste and Pollution) Regulations, 2018’ and the ‘Nigerian Gas Flare Commercialisation Programme’ (NGFCP) memorandum, from January 2019.
The new regulations can be broken down into three key strategies:
- The introduction of the Nigerian Gas Flare Commercialisation Programme
- Stricter flare gas penalties enforced
- Accurate metering & data regularly reported, with fines if this is not done
The Nigerian Gas Flare Commercialisation Programme
According to the NGFCP memorandum, ‘The NGFCP is designed to offer a series of auction rounds, wherein the Federal Government of Nigeria takes the flare gas at the flare and auctions it to third parties for commercialisation’ (p.12). In enabling gas that would normally be flared to find a way to market, it is given value and means producers are saved from paying flaring fines for that gas. As well as reducing flare gas, the programme is estimated to generate around $3.5 billion of inward investment.
The scheme is going well so far. As of July 2019, the federal government had approved 205 applicants for allotment in the NGFCP. The next stage is to determine which of the 205 successful applicants achieve preferred bidder status, and which are reserved bidders. Applicants then submit their proposals for utilising gas flare.
For the gas that is still being flared, new fines have been introduced.
Fines for Flaring
Although fines had been previously introduced, £3.50 for every 1,000 scf flared, a simple error in the wording allowed companies to receive tax relief on these. By defining these fines as a ‘charge’, instead of a ‘penalty’, these costs were tax deductible. This meant they were much more affordable than initially intended, and companies simply continued to flare while paying these insubstantial costs.
As outlined in the July 2018 regulations (p.B103), fines are now $2 per 1,000 SCF where 10,000 barrels of oil or more is produced per day and $0.50 per 1,000 SCF where less than 10,000 barrels of oil are produced a day. These fines are now labelled ‘flare payment’.
Whether the gas is being sold or flared, the Nigerian government, as stated in the Federal Republic of Nigeria Official Gazette, has requested that ‘a producer shall maintain a daily log of the flaring and venting of natural gas…and shall submit the logs to the Department of Petroleum Resources within 21 days following the end of each month’ (p.B104). It then goes on to say, ‘where a producer fails to…supply accurate flare gas data…the Producer shall…be required to pay an additional sum of $2.50 per 28.317 scm of gas flared or vented’ (p.B106).
Details regarding accuracy and what needs to be measured are further outlined in the NGFCP memorandum. This document states that meters used for measuring flare gas must have an accuracy of +/- 3%. This is a much more stringent condition than the 5% that is typically required. In their monthly data reports, companies must provide data on: gas volumes, oil volumes, flow rates, gas oil ratio and flow pressure temperature.
The most accurate way to measure flare gas is with ultrasonic technology. Fluenta’s FGM 160 ultrasonic flare meter can measure with accuracies as low as ±1%.
The combination of two signal types (a variable “chirp” signal and a continuous sine wave signal) enhances the accuracy and stability of the meter readings, preventing signal loss at high and low velocities.
To find out more about Fluenta’s meters and how they can help you meet the most stringent regulations, click here.