LEGAL FRAMEWORK FOR GAS FLARING REDUCTION IN NIGERIA

Abstract

Gas flaring in Nigeria has continued unabated despite government‟s attempts to halt it. The command and control regulation have been largely employed to address the non-compliance with existing laws addressing gas flaring, with limited success, as about 800.59 million standard cubic feet per day was flared from September 2017 to September 2018. Previous studies on regulation of gas flaring in Nigeria had focused more on command and control regulation than on tradable permits. This study was designed to examine the existing policy and legal framework for gas flaring with a view to proposing tradable permits to reduce gas flaring in Nigeria. Environmental Justice and Market Failure theories constituted the theoretical framework, while a combination of doctrinal and survey design was adopted. The Constitution of the Federal Republic of Nigeria, 1999 (as amended), the Associated Gas Re-Injection Act Cap A25 and regulations pursuant thereto, Petroleum (Drilling and Production) Regulations, Nigeria Liquefied Natural Gas (Fiscal Incentives Guarantees and Assurance) Act Cap N87; all contained in the Laws of the Federation of Nigeria 2004, the Flare Gas (Prevention of Waste and Pollution) Regulations 2018, and other relevant statutes were the primary sources examined. Secondary sources included books, journal articles, conference proceedings, annual reports of multi-national oil companies, online materials and newspapers. A questionnaire addressing respondents‟ awareness on the policy and legal framework for regulating and discouraging gas flaring and the adequacy of the laws, was administered to 20 purposively selected oil and gas legal experts. Key informant interviews were held with two managerial staff of the Department of Petroleum Resources, Lagos, and two principal consultants of selected private firms. Data were analysed using descriptive statistics and content analysis. Sixty-five percent of the selected oil and gas experts were private practitioners and 35.0% were public servants. Fifty percent were legal consultants, 25.0% were of management cadre, 70.0% had 0 to 10 years work experience and others had above 10 years work experience. Existing policies and legislation have been used to discourage gas flaring. The legislation was, however, made ineffective because it allowed permissible and impermissible flaring of gas concurrently. iii Non-compliance of oil and gas companies with legislation and the non-implementation of the flare penalty regime evidenced weak regulatory enforcement. Defective licensing conditions at the commencement of oil and gas operations in Nigeria, inadequate infrastructure for utilisation of gas, non-deterrent sanctions and poor reporting and monitoring of flared gas are challenges limiting large-scale investment in the gas market. The significance of properly assigned property rights was recognised as the rationale for developing a legal commodity known as „gas flaring reduction obligation certificate‟ with a value attached thereto as an incentive for not flaring gas, while a penalty for non-compliance is imposed. The policy and legal framework for gas flaring in Nigeria has not been properly implemented. Government intervention cannot be jettisoned, while integration of the rule of law in Nigeria‟s environmental agenda is paramount. Tradable permits anchored on property rights are recommended for discouraging and reducing gas flaring in Nigeria