FG approves new gas policy, hike gas flare penalties
The federal government has approved a National Gas Policy drafted by the Ministry of Petroleum Resources.
The approval was granted at the Federal Executive Council (FEC) meeting held last week in Abuja and presided by Acting President Yemi Osinbajo.
The document made available on Wednesday to newsmen by the ministry disclosed that the intention of government was to increase the gas flaring penalty to an appropriate level sufficient to de-incentivize and eventually end the practice by 2020.
The current gas flare penalty which stands at N10/ thousand standard cubic feet (Mscf) has been described as is too low and is not acting as a disincentive, as intended.
The low penalty has made gas flaring a much cheaper option for operators compared to the alternatives of marketing or re-injection. The flaring of natural gas that is produced in association with oil is one of the most egregious environmental and energy waste practices in the Nigerian oil industry.
Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu while speaking at a recent oil workers conference in Abuja said the gas policy was approved following his presentation.
He said that the new gas policy intends to move Nigeria from an oil-based to an oil and gas-based industrial economy.
The main aspects of the policy covers: Governance (Legislation and Regulation), Industry Structure, Development of Gas Resources, Infrastructure, Building Gas Markets and Developing National Human Resources.
According to the document, in order to achieve the successful achievement of the strategic objectives and the elements, the Ministry of Petroleum Resources will work with the National Assembly, states and other Federal MDAs.
The government, the approved policy also said, will pass new legislation to address gas issues, remove the anomalies and distinguish the up, mid and downstream.
An important principle of the gas policy is that there will be a full legal separation of gas infrastructure ownership and operations, and trading, such that separate companies will carry out the different activities.
The policy states that gas transportation companies will not be allowed to engage directly in the purchase and/ or sale of gas, and vice versa for trading companies, except through separate corporate vehicles.