Notable Provisions Of The Midstream Gas Flaring Regulations Of Nigeria
Gas flaring is an issue in the Nigerian Oil & Gas sector serious enough to be heavily regulated, moreso at the Midstream level by the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) through its recent Gas Flaring regulations which will be the focus of this article.
What are the objectives of the Gas flaring regulations?
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– Reduction of the environmental and social impact caused by excessive flaring and venting of flare gas.
– Protection of the environment.
– Prevention of waste of natural resources.
– To set criteria for gas flaring in Midstream petroleum operations for safety purposes, which includes emergency shutdown with depressurization.
What is the applicability scope of the gas flaring regulations?
– These regulations shall apply to flaring and venting of flare gas in Midstream petroleum operations.
What are the categories of Midstream flaring as identified by these regulations?
– Flaring in Midstream petroleum operations may occur in the categories of –
a). Safety Flaring –
(i). Initial start-up flaring during commission and start-up phases of a plant or process unit.
(ii). Pilot gas, and
(iii). Relief devices
b). Continuous flaring when the plant or process unit is in operation.
c). Non-continuous operational flaring on a planned or unplanned basis for scheduled maintenance, equipment shutdown & mechanical equipment failures.
What are the provisions of the regulations regarding access to flare gas?
– The NMDPRA shall have the right to take, free of charge or any payment, natural gas at the flare in Midstream petroleum operations.
– The NMDPRA may, upon application by a licensee or permit holder to repurpose flare gas from Midstream petroleum operations, grant a permit to access flare gas subject to terms and conditions as the NMDPRA may determine.
– A permit to access flare gas shall be valid for a term of one calendar year and renewable for a further term of One year.
– The NMDPRA may, upon application by a 3rd party to repurpose flare gas from Midstream petroleum operations grant a permit to access such flare gas subject to payment of prescribed fees and service charges, and the submission of an investment proposal by the 3rd party.
What are the provisions of the Regulations regarding the revocation of access to flare gas?
– The NMDPRA shall revoke any permit to access flare gas where the :-
a). Permit holder fails to comply with the terms and conditionsofthe permit.
b). Permit holder intentionally provides inaccurate information in connection with the issuance of the permit.
c). Permit holder is dissolved or enters into bankruptcy proceedings.
d). Purposes for which the permit was obtained would negatively impact health, safety, environment or public interest.
– A revocation of a permit to access flat gas shall not release the permit holder from any obligation arising from these regulations.
What are the provisions of the regulations concerning assignments?
– A permit holder may assign or transfer its interest or rights under the permit provided that the :-
a). Transferee satisfies the minimum technical and financial requirements necessary to become a permit holder.
b). Transferee complies with the provisions of the assignment or transfer of license and permit regulations and other relevant NMDPRA regulations.
What are the provisions of the regulations concerning venting and executive flaring of flare gas?
– A person engaged in Midstream petroleum operations shall not flare or vent flare gas beyond limits set by the NMDPRA.
– A licensee or permit holder shall, prior to the issuance of a license to operate, engage with the NMDPRA to determine the maximum number of major flaring events and quantity of gas flared.
– The quantity of gas flared and number of major flaring events mentioned above, shall include all planned maintenance, facility start-up or strategic operational reasons including testing.
– The NMDPRA may exempt a license or permit holder who vents flare gas during a declared nationalities emergency from the payment of penalties.
What is the provision of the regulations on conflicts with other regulations on gas flaring?
– Where there is a conflict it inconsistency between the provisions of these regulations and provisions of any other regulation in relation to the flaring of gas in Midstream petroleum operations, the provisions of these regulations shall take precedence and supercede any other regulation to the extent of the conflict or inconsistency.
What is the provision of the regulations regarding offences and penalties?
– The Regulations prescribe a fine of not more than $100,000.00(with a 20% surcharge penalty for each day of non-compliance where it is not paid within 14 days of the date of the penalty demand order by the NMDPRA) as well as license suspension, cancellation or termination for violations of its provisions contained therein.
Notable Provisions of the Midstream & Downstream Gas Trading & Settlement Regulations of Nigeria
This article is focused on the provisions of the Regulations on Gas Trading & Settlement as released by the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) , particularly its objectives, applicability, and gas exchanges.
What are the objectives of the regulations?
– The objectives of these regulations are to :-
a). Regulate the establishment and operations of gas trading & settlement exchange platforms.
b). Establish the principles for the secure, reliable and efficient trading and settlement of natural gas and other gas commodities.
c). To promote & sustain the efficient and robust gas trading, exchange and settlement of natural gas and other gas commodities.
What is the applicability scope of the regulations?
– These regulations shall apply to activities connected to the establishment of secure, reliable and efficient trading and settlement systems for natural gas commodities on exchange platforms regulated by the NMDPRA.
Who are the persons qualified to participate in gas trading & settlement exchanges as identified by the regulations?
– Exchange operators
– Natural gas & transmission line operators
– Gas producers
– Gas aggregators
– Gas shippers
– Wholesale gas suppliers, gas distributors, gas retailers & wholesale gas consumers
– Network operators
– Clearing houses
– Participants of the exchange
– Members of clearing houses
– Gas transporters
– Gas storage providers
– Gas exporters
– Potential exchange participants
Is there any provision on the extension of the applicability of these regulations?
– The NMDPRA may extend applicability of these regulations,with or without modifications, to derivatives, forward & future contracts in respect of such commodities and services and such type of contracts as specified in the regulations.
What is the provision of the regulations concerning Gas exchange contracts denominations?
– Subject to compliance with applicable laws, the NMDPRA may allow contracts at the gas exchange denominated in foreign or local currencies.
What are the provisions of the Regulations on the approval or suspension of contracts by the NMDPRA?
– The NMDPRA shall approve new contracts introduced by the gas exchange in these regulations.
– For the approval of new contracts, the NMDPRA may be examine the following and other parameters of the new contracts as may be considered appropriate –
a). Type of contract such as intra-day, day-ahead, term-ahead contracts and other like contracts.
b). Price discovery methodology and proposed matching rules.
c). Transaction period.
d). Risk Management mechanism.
e). Margin mechanism.
f). Final price settlement mechanism.
g). Gas delivery mechanism.
h). Delivery duration.
i). Penalty for contractual deviation.
The NMDPRA, after granting the gas exchange an opportunity of being heard, may by order, suspend or withdraw transactions on any contract from the gas exchanges and issue any consequential directive as deemed necessary.
What are the category of members of gas exchanges under the regulations?
– The NMDPRA shall, after due diligence, approve qualification requirements for membership and participation in a gas exchange.
– The categories of participants or members on an exchange are :-
a). Trading members
b). Clearing members
c). Trading and clearing members
d). Proprietary members
e). Transportation, transmission and storage providers.
This is provided that the NMDPRA may authorise the introduction of new membership categories to perform other functions as may be required.
Notable Provisions of The Midstream & Downstream 3rd Party Access/Open Access Regulations of Nigeria
This article will be looking at the regulations governing 3rd party access & open access regarding existing infrastructure, facilities and services in the Midstream & Downstream Petroleum Industry as outlined by the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA).
What are the objectives of the regulations?
– To foster a competitive environment in the Midstream & Downstream petroleum sector by ensuring equitable and non-discriminatory access to facilities, infrastructure and services for 3rd parties.
– To optimize the utilization of existing petroleum infrastructure, minimise duplication of investments and facilitate the efficient movement of petroleum products within the supply chain.
– To facilitate the availability of affordable and diverse petroleum products to consumers by reducing transportation costs and promoting market driven pricing.
What is the applicability scope of these regulations?
– These regulations shall apply to activities relating to 3rd party access to facilities, infrastructure and services in the Nigerian Midstream & Downstream petroleum industry as well as the movement of Petroleum products within the supply chain.
What are the provisions of the regulations regarding the obligation to provide 3rd party access?
– A licensee with significant market power in the Nigerian Midstream & Downstream petroleum industry shall be obligated to :-
a). Provide 3rd party access to its facilities, subject to the provisions of the NMDPRA regulations and any guidelines that may be used by the Authority.
b). Adhere to the open access Provisions of the Petroleum Industry Act, ensuring 3rd party access to its facilities and services in a non-discriminatory and transparent manner.
What do the regulations say regarding applications for 3rd party Access?
– A 3rd party seeking access to the facility of a licensee shall submit a written application to the NMDPRA, providing details which include :-
a). Relevant information about the facility to be accessed.
b). The type of services required.
c). The intended purpose of access.
– Upon receipt of a complete application form the 3rd party, the NMDPRA shall within 30 days afterwards through a written notice, cause the licensee & the 3rd party to engage in a transparent & good faith negotiation to determine the terms and conditions of access.
– The negotiations between the licensee and 3rd party shall cover matters which include :-
a). Technical specifications
b). Operational procedures
c). Safety standards
d). The financial term of the access
– The parties shall finalize the access agreement not later than 60days upon receipt of the notice to commence negotiations from the NMDPRA.
What is the tariff for 3rd party access?
– A licensee with significant market power in the Midstream & Downstream petroleum industry, shall within a time period of not later than 60 days after the commencement of these regulations, submit to the NMDPRA its proposed tariffs for 3rd party access for review and approval.
– The tariffs shall :-
a). Be cost-effective
b). Take into account legitimate costs
c). Ensure reasonable returns on investment for the licensee
d). Be transparent, fair, reasonable
e). Promote market competition
What are the provisions of the regulations regarding dispute resolution?
– A dispute between the parties shall be expected to be subjected to an amicable dispute resolution process which will be escalated to the NMDPRA where it fails.
What are the provisions of the regulations regarding offences and penalties?
– Any violation of these regulations through any means including disregard of a requirement or submitting false information to the NMDPRA as the authority charged with their enforcement will be subject to a daily fine of 250,000.00 Naira.