By John Ikani
The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has disclosed that the Petroleum Industry Act (PIA) 2021 recently signed into law by President Muhammadu Buhari will ensure gas flaring penalties.
Wabote made this known while speaking at the National Association of Energy Correspondents of Nigeria (NAEC) 2021 Strategic International Annual Conference held recently in Lagos.
The disclosure comes at a time that deliberations are ongoing at the United Nations Climate Change Conference, otherwise known as COP26 in Glasgow to save the world from worst effects of climate change.
Why is the imposition of penalties on gas flaring necessary?
It is worthwhile to note that gas flaring is the controlled combustion of associated gas generated during various processes including oil and gas recovery, petrochemical process, and landfill gas extraction
Gas flaring introduces toxic pollutants such as sulfur dioxide into the atmosphere, which can lead to environmental problems such as acid rain, as well as the generation of greenhouse gases that contribute to global climate change.
Nigeria has missed out on ending gas flaring on at least seven occasions. The country is now targetting 2025 to end the environmentally unfriendly, health-damaging and resource-losing act.
Each time Nigeria misses out on the deadlines set to harness gas belching from its oil fields, it loses revenue and an opportunity to ramp up power generation.
In 2020 alone, natural gas valued at $1.24 billion was burned by oil companies, one which could generate the annual electricity use of 804 million Nigerian citizens.
Experts believe the gas Nigeria flares on its oil fields could be a huge revenue trove worth billions of dollars if well harnessed for use as liquefied natural gas or for plastics or fertilizers.
Other impacts of the PIA
Speaking further, the NCDMB boss who was represented by the Board’s Director, Monitoring and Evaluation, Mr. Tunde Adelana, said the PIA will enable the development of host communities, reduce funding pressure on Government, boost capacity development in identified skills gaps, and stimulate investment in the oil and gas industry in Nigeria.
While noting that the PIA provides legal governance, regulatory and fiscal framework for the oil and gas industry in Nigeria, Wabote disclosed that the Act, contains 5 Chapters, 319 Sections, and 8 Schedules dealing with Rights of Pre-emption; Incorporated Joint Ventures; Domestic Best Price, and Pricing Framework.
According to him, the PIA will bring about the formation of NNPC Limited, its Functions; Gas Flare and Gas Infrastructure; Midstream Operations; Fiscals, Taxes, and Royalties; and Host Community Development with a bid to engage the business of renewables. Engr.
He added that the PIA Petroleum Profits Tax (PPT) replaces the National Hydrocarbon Tax, alongside royalties reduced for onshore areas, shallow water, deep offshore and frontier basins, and natural gas.
Speaking on other aspects of the oil and gas value chain, the Executive Secretary indicated that the midstream activities behove operators within the sector to ensure the National Strategic Stock, enhance the decommissioning and abandonment fund and eliminate government’s regulation on pricing of petroleum products.
The NCDMB boss went on to note that the Act will ensure gas flaring penalties, establishment of Midstream Gas Infrastructure, and special regulation for Midstream and Downstream Gas Operations as well as Natural Gas Prices for strategic sectors. In summary, he maintained that the Act will boost Local Content implementation in the oil and gas industry.