OREANDA-NEWS. March 01, 2012. The SKOLKOVO Energy Centre issued a new alert, which gave the analysis of the problematic issues of the associated gas (APG) utilization in the context of the new principles of the calculation of the payment for the emission of flared associated gas, which would come into effect on January 1, 2012.

The introduction of the step-up ratio will increase the payments for the air pollution by 50 times and amount to 16.7 billion rubles in 2012. The targeted five per cent index established for gas flaring in the industry will be achieved not earlier than in 2014, and the oil production at some fields may become unprofitable.

The alert notes that Regulation № 7 of the RF Government, entitled “Measures aimed to stimulate the Reduction of Air pollution by Substances Resulting from Burning Associated Gas in Flares”, which was issued on January 8, 2009, has a number of flaws that could adversely affect the development of the country's oil industry. The interdepartmental approval of the part of the revised draft of Regulation № 7 related to the specification of the calculation of the penalty for the burning of associated gas and the determination of the special terms for several types of problematic fields cannot be achieved for almost a year. In the near future, the “new rules” related to the payment for the burning of associated gas, which will be reduced for certain groups of problematic fields, will be determined.

The Regulation will not solve itself all the problems related to the utilization of associated gas. The 95% utilization level, set forth in a wide range of project documentation, does not provide for the specifics of particular fields and is not reachable from the economic point of view. The multiple violations of the license obligations by subsoil users have already led to lawsuits against subsoil users for their violating of the legislation on environmental protection and subsoil use. In the nearest future, the negative consequences may result in a revocation or voluntary surrender of licenses issued for problematic fields, and in the decline in the production and tax revenues.

According to the findings of the SKOLKOVO Energy Centre experts,  in order to remedy the situation prevailing in the industry , it is necessary to radically improve the regulatory and legal framework, i. e., to  adopt a special federal law on APG, to introduce the amendments to the Subsoil Law,  to the Tax Code and Regulation № 7, to develop necessary bylaws pertaining to the clarification of the principles for the assessment of  the associated gas burning ratio and mechanisms stimulating the utilization of associated gas, as well as to work out the procedure for the determination of the economically feasible levels of APG utilization at the licensed land lots  during the approval of the project documentation.

“It is necessary that the companies, the government and the society work out a consolidated approach to the issue of the determination of the rational level of associated gas utilization, which would reflect the specifics of each oil field. One of the mechanisms promoting the practicable use of associated gas may be the introduction of the procedure for redirecting the amounts paid for the air pollution to the investments made into the utilization of APG, but, without the introduction of the tax incentives, it would be problematic to achieve the 95% utilization at the most of the licensed areas,” noted Grigory Vygon, the Director of the SKOLKOVO Energy Centre.