Associated Gas Framework Agreement Nigeria

The Guidelines for Associated Gas Utilization Project guidelines define the following framework: the recently published guidelines have now defined the framework for the commercialization of torch gas in Nigeria in common and more clearly. In addition, these guidelines reflect the FGN`s commitment to reduce the environmental and social impact of gas torches and to develop the gas market in Nigeria by facilitating access to new economic opportunities that may result from the separation of gas torches. In 1991, the Framework Agreement on Associated Gas (AGFA) was developed, which provided tax incentives to improve the efficiency of gas use projects to encourage the implementation of gas use projects. This agreement allowed the IOC to offset the cost of capital from gas projects on oil revenues. This agreement has encouraged the development of many gas projects, including most of the projects mentioned above. Prior to the AGFA regime, gas investments were not considered attractive by IOCs because they required much more resources and products had a lower market value than crude oil. Currently, the Associated Gas Framework Agreement (“AGFA”) allows the costs of associated gas (AG) and unsusced gas (NAG) to be covered by cross-subsidies for oil projects on gas projects based on oil yields. This new fiscal framework aims to eliminate distortions within the AGFA by establishing a proper and optimal tax system with the “Fiscal Rules of General Application” scope (FRGA). While the FRGA is good for the development of the gas sector and the oil industry as a whole, we see that the AGFA (which wants to eliminate it) is codified in sections 11 and 12 of the Oil Profits Tax Act. Therefore, the FRGA born in the NPP can only take effect when the separate oil and gas taxation regimes envisaged are implemented until the PIRB or other legislation transposing the FRGA comes into force. Efforts to commercialize and commercialize gas began in earnest with the proclamation of the 1991 Framework Gas Agreement.

The agreement provided tax incentives to improve the profitability of gas projects and aimed to reduce or eliminate fire by allowing oil companies to offset their investments in gas projects from oil revenues. These guidelines essentially provide an operational framework for the implementation of the flare-gas regulations that have already been adopted to ultimately encourage the monetization of gas from torches while avoiding the adverse environmental effects resulting from these gas flares and aerators. Separate oil and gas regimeThe plant provides for a new fiscal framework separating oil and gas. For the most part, gas projects are developed on the basis of their profitability and are not subordinated or consolidated to the taxation of oil. Early gas marketing programs have focused on the recovery of low- and medium-pressure gas from oil separators, which have so far been burned.