The Federal Government reported on Friday that the entire gas flare fines collected from oil and gas businesses since January 2023 is $85.1 million, or N44.4 billion at the time’s average exchange rate of N521.2 to the dollar.
According to the Punch, as flare fees were intended to serve as a deterrent to encourage greater compliance and the development of money from gas monetization rather than flare payment, it was stressed that the flare gas administration should not be seen as a sustainable revenue stream.
This information was provided by NUPRC in a paper that it released in Abuja. The publication provided some fundamental details on gas flare measurement and fines from oil and gas businesses operating in Nigeria.
“The commission has received a total of $85.1 million from gas flare penalties since January 2023,” it said, adding that efforts are being made to eliminate flares rather than impose penalties.
The upstream regulator claimed that it had spearheaded the effort to ensure that the Federal Government’s intention to end gas flaring throughout the nation was timely realized.
According to the paper, “All companies currently flaring gas are charged gas flare fees in accordance with the applicable legal regulations, thus decreasing oil and gas companies’ desire to continue flaring gas and increasing government take from the industry.
“For the avoidance of dispute, the commission, as the only regulatory authority for Nigeria’s upstream oil and gas industry, maintains records of daily, weekly, and monthly gas volumes from all oil and gas fields of operation.”
It stated that the reason for the discrepancy frequently observed in the figures provided by some industry participants was that theirs were derived from satellite estimates, whereas the ones from the commission were from fiscal grade metering systems, and in some cases, material balance, with due consideration for gas oil ratios of the produced and associated gas.
Regarding the source of flare gas information, the NUPRC said that organizations utilize various technologies and systems, depending on their objectives and capabilities, to measure flares.
It said, “These include the Fiscal Grade Metre, Gas to Oil, and Material Balance, which is used to measure what goes to flare. However, not all can be utilized to gauge actual gas flare for accounting purposes.”
Regarding the methodology used to calculate the gas flare penalty, it was explained that, according to the Gas (Prevention of Waste and Pollution) Regulations 2018, the penalty was divided into two tiers, with the higher tier being $2 and the lower tier being $0.5 per thousand standard cubic feet, depending on the average daily production of crude oil.
Regarding the methodology used to calculate the gas flare penalty, it was explained that, according to the Gas (Prevention of Waste and Pollution) Regulations 2018, the penalty was divided into two tiers, with the higher tier being $2 and the lower tier being $0.5 per thousand standard cubic feet, depending on the average daily production of crude oil.
The commission emphasized the need to know NUPRC as the custodian of accurate data as it stated that putting out false data from sources that might be construed to have genuine data or from erroneous data sources can mislead stakeholders and undermine the mandate of the commission in the dispensation of its functions.
