Gas flaring, permits and compliance: What the NUPRC’s latest approvals mean for energy companies

1. Introduction
Nigeria sits atop Africa’s largest natural gas reserves but has for decades, opted to flare large quantities of gas that could otherwise be captured and commercialised. This practice, largely driven by infrastructure gaps and legacy regulatory frameworks, has contributed to significant environmental and economic losses. In 2025 alone, Nigeria flared over 4 billion cubic meters of gas, ranking among the top ten gas flaring countries globally, despite ongoing national and international pressure to reduce emissions and commercialise gas assets.

Recent developments, however, indicate a decisive shift. The Petroleum Industry Act (PIA) 2021 and the Gas Flaring, Venting and Methane Emissions (Prevention of Waste and Pollution) Regulations of 2023 move to treat associated gas as a commercial resource and not a disposable by-product. This shift crystalised in December 2025, when the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued Permits to Access Flare Gas to 28 companies under the Nigerian Gas Flare Commercialisation Programme (NGFCP). These permits marked the transition from regulatory intent to implementation, repositioning what would ordinarily have been disposed off as flare gas (unutilised associated gas that is burned off at the stack), as a source of power generation and industrial input.

This article explores what the latest approvals mean for upstream operators, the new compliance thresholds, and how this regulatory posture is opening new commercial, legal, and strategic possibilities across Nigeria’s energy landscape.

2. The Current Regulatory Posture on Gas Flaring
Before the Petroleum Industry Act (PIA) 2021, Nigeria’s regulatory approach to gas flaring was defined by a complex framework of overlapping statutes. The foundational Associated Gas Re-Injection Act of 1979 established a system where gas flaring was permitted through Ministerial exemptions, which became a necessary operational standard due to lack of existing gas-gathering infrastructure. The 2018 Flare Gas (Prevention of Waste and Pollution) Regulations represented a modern attempt to improve enforcement and introduce a market-based solution by allowing third-party access to associated gas. However, implementation was slow, and penalties remained cheaper than investing in gas capture infrastructure. There was also no unified enforcement structure to hold operators accountable across environmental, commercial, and operational fronts.

The Petroleum Industry Act changed this, it introduced a coherent legal and regulatory framework for gas flaring, backed by clear obligations and penalties. Under Section 104 of the Act, routine flaring is now explicitly prohibited, except in the case of emergencies, approved safety practices, or a specific exemption granted by the Commission. Any flaring outside of these conditions is now treated as an offence. Penalties are to be paid in the same manner as royalties, but cannot be recovered as an operating cost or deducted for tax purposes. Revenues from these penalties are directed toward environmental remediation and community relief.

The PIA goes further by embedding a mandatory forward-looking compliance mechanism. Section 108 requires all producers to submit a Natural Gas Flare Elimination and Monetisation Plan within 12 months of the Act’s commencement. These plans must show how companies intend to capture or commercialise associated gas, and they form part of the licensee’s broader operational obligations. Failure to comply could attract regulatory and financial sanctions. Additionally, section 105 empowers the Commission to take, at no cost, any gas destined for flaring and redirect it for approved use. The Gas Flaring, Venting and Methane Emissions Regulations 2023 was subsequently issued to operationalise these statutory provisions, provide detailed compliance, measurement and framework by which the Commission can implement the NGFCP and enforce flare elimination obligations.

3. NGFCP and the Shift to Structured Compliance
The Nigerian Gas Flare Commercialisation Programme (NGFCP) has emerged as the government’s operational tool for enforcing gas flaring compliance in the upstream sector. In essence, NGFCP provides a mechanism through which the Commission can take custody of associated gas that would otherwise be flared and reallocate it to third-party developers through a competitive bidding process. Implementation officially commenced in December 2025, when the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued Permits to Access Flare Gas (PAFG) to 28 companies under the NGFCP. While 42 entities were originally selected to manage these sites, either as standalone developments or as part of specialised clusters, the 28 firms that received permits in December 2025, represent the first wave of implementers to successfully execute the full suite of commercial and milestone development agreements required to begin physical work on-site.

Importantly, the new Permits to Access Flare Gas are mandatory and enforceable instruments rather than voluntary guidelines. Each permit carries binding obligations for the holder, including connection agreements, milestone development agreements and gas sale agreements (“the agreements”), which are all executed prior to issuance to ensure bankability and regulatory compliance .
To ensure compliance, specific responsibilities are allocated between producers and permit holders in the agreements. The responsibilities for upstream operators include making associated gas available in accordance with permit requirements and providing safe access to gas infrastructure. Permit holders on their end are responsible for designing, financing, constructing and operating gas capture and utilisation facilities to approved technical and safety standards, meet flare-out milestones, maintain robust health, safety and environmental systems and manage fair relationships with host communities.

4. Opportunities and Benefits emerging from the New Gas Flaring Regime
NUPRC’s transition from a passive collector of fines to an active market maker has unlocked a tiered ecosystem of opportunities. These range from immediate commercial gains to public health advantages.

4.1. Commercial and Industrial
The most immediate opportunity created by the new gas flaring regime is the emergence of a decentralised and modular gas utilisation market, built around flare sites. Instead of large and centralised infrastructure, the NGFCP enables permit holders to deploy small-scale capture and processing facilities directly at production locations, converting previously wasted gas into commercially viable energy products. This model creates localised supply chains, reduces logistics inefficiencies, unlocks new revenue streams from stranded gas, and introduces private investment into areas previously defined by environmental loss. The commercial framework also supports flexible downstream use across domestic fuel markets, virtual gas distribution, and industrial value-add.

In addition to direct gas utilisation, flare capture projects also create an emerging climate finance opportunity. Gas that would ordinarily be flared represents avoidable greenhouse emissions. Where permit holders capture and process this gas under the NGFCP, the avoided emissions can be measured and verified under recognised carbon accounting standards, allowing project developers to generate tradable carbon credits. These credits can be sold in the voluntary carbon market to companies seeking to offset their environmental footprint and strengthen their ESG reporting. This introduces a parallel revenue stream for investors and further enhances the commercial attractiveness of modular gas capture investments at upstream sites.

4.2. Public Health
The most significant benefit created by flare elimination is the improvement in public health and living conditions within host communities located near flare sites. Reduced exposure to flare-related emissions and environmental disturbances supports better respiratory health, strengthens community welfare, and lowers the long-term healthcare burden on affected populations.

5. Conclusion
Nigeria has moved from passive tolerance of gas flaring to active, commercially driven enforcement of gas flaring regulations. The regulatory focus is no longer limited to penalties for non-compliance but now centres on compulsory gas capture, third-party access, and monetisation through enforceable permits under the NGFCP. The PIA, the Gas Flaring, Venting and Methane Emissions (Prevention of Waste and Pollution) Regulations of 2023, and the NGFCP permits impose clear obligations on producers and delivery duties on permit holders. Effective compliance will require reliable data, operational readiness at flare sites, and disciplined execution of utilisation projects. Companies that adapt quickly will reduce regulatory risk and unlock both commercial and climate value from associated gas.

Contributors:
1. Augustine Okafor – Partner, KENNA
2. Chimezie Ugwuoke – Associate, KENNA
3. Chimeremeze Nwachukwu – Associate, KENNA

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