Gas flaring to attract stiffer penalties from next year ― Senate

A Bill, Gas Flaring (Prohibition and Punishment) Bill, 2020, scaled second reading on the floor of the Red Chamber on Thursday.

The bill, which proposed stiffer sanctions for International Oil Corporations and indigenous upstream operators in the oil and gas industry, was sponsored by Senator representing Akwa-Ibom North-East, Albert Bassey Akpan.

According to Senator Akpan, “the Bill seeks to increase the gas flaring penalty to an appropriate and commensurate level sufficient to de-incentivise the practice of gas flaring, whilst introducing other market measures to encourage efficient gas utilisation.

“The Bill equally makes it mandatory for operators to submit gas utilisation plan within 90 days of the commencement of the Act for effective monitoring and makes provision for a two year periodic: review of the Minister’s powers granted under the Act.”

Clause 11(a) of the bill provides that: “Any person who flares gas after December 31, 2020, contrary to section 4 of this Act, commits an offence under this Act, and shall be liable on conviction to pay a fine which shall not be less than the cost of gas at the international market.”

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Senator Akpan, in his lead debate, said the Bill sets to promote guaranteed rapid infrastructural development of the oil and gas sector, enhance revenue accruable to government and ensure environmental improvement for the people of the oil-producing states.

He said: “The flaring of natural gas produce in association with crude oil is one of the most dangerous environmental and energy waste practices in the Nigerian petroleum industry.

“Gas flaring affects the environment and human health, results in economic loss, deprives the government of associated tax revenues and trade opportunities, and deprives consumers of a clean and cheaper energy source and environment.”

Quoting available data from the Nigerian National Petroleum Corporation (NNPC), the former Akwa Ibom State Commissioner for Finance lamented that Nigeria lost over N217 billion in revenue in 2018 “as oil and gas companies flared a total of 244.84 billion standard cubic feet (scf) of natural gas within the same period.”

He added that with the average price of natural gas put at $2.90 per 1,000 scf as of February 16, 2017, the 244.84 billion scf flared translates to a loss of $710m or N217 billion – using the official exchange rate of N305.25/ dollar.

“The volume of flared gas according to analysis, is sufficient to feed 3 LNG trains or generate 3.5GW of electricity.”

Bassey expressed confidence that when passed into law, it would stimulate the achievement of the National Flares-out target of January 1, 2030.

“The current gas flare penalty of N10 per 1,000 scf is too low, and not in line with current economic realities and encourages continuous gas flaring by operators with its attendant negative effect on our environment instead of encouraging investment in infrastructure by the operators to make gas available for our domestic use.”

President of the Senate, Ahmad Lawan, referred the bill to the Senate Committee on Gas for further legislative inputs.