Engr. Simbi Wabote, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB) has said that the Petroleum Industry Act (PIA) 2021, which President Muhammadu Buhari just signed into law, would guarantee that gas flaring fines are enforced.
Wabote said this recently in Lagos at the National Association of Energy Correspondents of Nigeria (NAEC) 2021 Strategic International Annual Conference.
The comes as the United Nations Climate Change Conference, often known as COP26, in Glasgow is on to debate how to preserve the planet from the worst consequences of climate change.
Why is it important to impose sanctions for gas flaring?
Gas flaring is defined as the controlled burning of related gas produced during different operations such as oil and gas recovery, petrochemical processes, and landfill gas extraction.
Gas flaring releases hazardous chemicals into the atmosphere, such as sulphur dioxide, which may cause environmental issues such as acid rain and the production of greenhouse gases, which contribute to global climate change.
Nigeria has squandered at least seven opportunities to put a stop to gas flaring. The nation has set a goal of ending the ecologically unfriendly, health-damaging, and resource-draining practice by 2025.
Nigeria loses money and a chance to increase electricity production every time it misses the deadlines set to harness the gas erupting from its oil fields.
Oil firms burnt $1.24 billion worth of natural gas in 2020, enough to power the electrical needs of 804 million Nigerians for an entire year.
Experts say that the gas flared on Nigeria’s oil fields may be a big income source worth billions of dollars if properly used for liquefied natural gas, plastics, or fertilisers.
Wabote said the PIA would allow the development of host communities, alleviate financing strain on the government, increase capacity development in recognised skills shortages, and drive investment in Nigeria’s oil and gas sector.
He said that the PIA has 5 Chapters, 319 Sections, and 8 Schedules dealing with Rights of Pre-emption, Incorporated Joint Ventures, Domestic Best Price, and Pricing Framework, as well as providing legal governance, regulatory, and fiscal framework for Nigeria’s oil and gas sector.
According to him, the PIA would result in the establishment of NNPC Limited, its functions, Gas Flare and Gas Infrastructure, Midstream Operations, Fiscals, Taxes, and Royalties, and Host Community Development in order to participate in the renewables industry. Engr.
He also said that the PIA Petroleum Profits Tax (PPT) would take the place of the National Hydrocarbon Tax, with royalties for onshore, shallow water, deep offshore, and border basins, as well as natural gas, being cut.
In other areas of the oil and gas value chain, the Executive Secretary said that operators in the sector must assure the National Strategic Stock, improve the decommissioning and abandonment fund, and abolish government regulations on petroleum product pricing via midstream operations.
The Act would also assure gas flaring fines, the construction of Midstream Gas Infrastructure, and particular regulation for Midstream and Downstream Gas Operations, as well as Natural Gas Prices for critical industries, according to the NCDMB chairman. In conclusion, he said that the Act would help the oil and gas sector incorporate Local Content.