Country
Assessment
Article 11 of ESDM 17/2021 requires contractors or processing business permit holders to identify flared volumes. They can do so using measurement instruments, mass balance calculations, or other engineering calculations that follow good technical rules.
No evidence regarding monetary penalties could be found in the sources consulted.
Article 19 of ESDM 17/2021 calls for administrative penalties in case of noncompliance with these regulations (Article 19, Paragraph 1, lists specific clauses). Administrative penalties start with a written warning and escalate to cancellation of the appointment of the offending firm’s head of engineering if the written warning is not followed up within a month, and then to temporary suspension of production activities if the head of engineering remains in place after another month. Article 10 of ESDM 32/2017 allows SKK Migas to revoke the flare gas allocation from the selected bidder if it fails to commence work within three months following the award or fails to start production within 12 months. However, there are no known cases of revocation.
The only performance standard identified is to start production and the utilization of flare gas within 12 months of the award date in the bid rounds conducted by SKK Migas (for gas being flared). There is no mention of an emission standard to be achieved.
No evidence regarding fiscal and emission reduction incentives could be found in the sources consulted. According to Article 20 of ESDM 17/2021 , the minister gives annual awards to contractors or processing business permit holders that optimize flare gas management. The award criteria is stipulated by DG Migas (Article 21).
ESDM 30/2021 calls for contractors to pursue the utilization of flare gas by signing agreements with flare gas buyers, processing business permit holders, or natural gas trading permit holders, which will use flare gas in commercial applications such as power generation fuels (e.g., compressed or liquified natural gas) (Article 2). Contractors must submit an application for flare gas utilization to SKK Migas or BPMA. The application must include documents on the flare gas source and the corresponding contracted volumes, the delivery point, contract duration, flare gas buyer and infrastructure descriptions, and a copy of the price agreement. Based on an evaluation of the bid parameters, SKK Migas or BPMA will make recommendations to the ESDM, which (through DG Migas) will approve or reject the application.
Several regulations relate to the transport and pricing of gas that is sold to other sectors further downstream (see section 3 of this case study). Downstream activities are supervised by a separate regulatory agency, BPH Migas. Article 31 of Government Regulation 36/2004 requires midstream and downstream license holders to make surplus facility capacity available to third parties, which would help integrate flare gas commercialization projects.
No evidence regarding overarching targets and limits could be found in the sources consulted. However, Article 146 of the Law on Subsoil and Subsoil Use, 2017 , prohibits the flaring of raw gas. According to Article 147, operators must “carry out activities aimed at minimizing the volume of raw gas flaring.” The Ministry of Energy calculates permissible volumes of gas that can be flared (see section 7 of this case study). Field development plans must include a section detailing how raw gas will be processed and utilized.
The Ministry of Energy is the “authorized body” (regulator) of hydrocarbons. The Ministry’s Department of State Control in the Sphere of Hydrocarbons and Subsoil Use (DSCHS) regulates flaring. The Ministry of Ecology, Geology, and Natural Resources (MEGNR) is the environmental regulator and has jurisdiction over flaring emissions. Territorial divisions of MEGNR and local executive bodies play roles in implementing environmental regulations.
According to Article 146 of the Law on Subsoil and Subsoil Use, 2017 , a permit is not required for flaring under emergency conditions. The operator must report the reasons for and volumes of flaring to the Ministry of Energy and MEGNR within 10 days. An emergency is defined as a threat to the lives of personnel, public health, or the environment.