Country
Assessment
According to the ANP’s interpretation of Article 2 of Law 9847/1999 and subsequent decisions, infractions involving flaring or venting are subject to fines or nonmonetary sanctions. Article 3 states that the monetary penalty ranges from R$5,000 to R$2,000,000 (about US$960–US$3,800 as of September 2021). The ANP determines the monetary penalty for flaring or venting according to the seriousness of the infringement and the operator’s previous infraction history under ANP Ordinance 397/2018. Article 13 provides for the right to appeal.
Decree 2953/1999 sets forth the administrative procedure for applying penalties for infractions committed in activities related to the oil industry and the national supply of fuels. Administrative sanctions may take the form of fines and nonmonetary sanctions (see the next section). According to Article 26, the fine should be paid within 30 days of the date of acknowledging the infraction. Failure to pay the fine within the specified period will subject the offender to a default interest rate of 1 percent and a late payment penalty of 2 percent a month or a fraction thereof.
Section 3 of Resolution 806/2020 states that the operator is subject to a sanction each month the volume of gas flared or vented exceeds the level authorized in the most recently approved PAP. Articles 1 and 2 of Resolution 774/2019 allow operators to make the penalty payment in up to 60 monthly installments, in accordance with the conditions to be negotiated with the ANP.
Data on fines imposed by the ANP during 2011–15 are available for download on the ANP website; information on fines for flaring and venting after 2015 has not been posted. During 2011–15, 177 fines were imposed, of which 94 were for flaring gas in volumes higher than authorized. These fines totaled R$121,700,000 (about US$23 million). The fines applied from 2016 onward have been published, but there is no specific information on flaring and venting during that period.
In October 2014, the ANP fined Petrobras a total of R$6 million (about US$1.1 million as of September 2021) for flaring violations committed in the production of the onshore field of Fazenda Santa Luzia in the north of the Espirito Santo state. According to the ANP, Petrobras flared associated gas in April, May, September, October, and November 2010 in an amount higher than provided for in the Annual Production Plan. The company asked for the suspension of fines. On October 15, 2020, the courts upheld the fine imposed by the ANP. In another action, Petrobras requested the suspension of the collection of fines, totaling about R$16 million, for irregularities found in the measurement system of the Zephir I Platform in the Santos Basin. The irregularities were detected during an inspection by the ANP in March 2012.
According to the ANP’s interpretation of Article 2 of Law 9847/1999 , infractions involving flaring or venting may be subject to suspension of operation. Article 13 provides for the right to appeal.
Under Decree 2953/1999 , nonmonetary sanctions can take the form of suspension of product supply; temporary suspension, total or partial, of the facility or installation; cancellation of registration of an installation; and revocation of authorization to carry out the associated activity. Sections 1 and 2 of the decree provide administrative penalty procedures; Sections 3 and 5 describe the appeal procedures. The defendant has 15 days to present evidence to contest the charges, and the ANP has 30 days to evaluate and decide on the case. If the decision rules against the operator, a second appeal can be mounted within 10 days. The ANP director will decide on the appeal within a maximum period of 30 days, starting from the date of the submission of the appeal.
No evidence regarding performance requirements could be found in the sources consulted.
According to Law 9847/1999, the volume of gas flared under the responsibility of the concessionaire will be included in the total volume of production used for calculating royalties. The royalty rate is typically 10 percent but can be as low as 5 or as high as 15 percent. Royalties on oil and gas production are fully tax-deductible.
No evidence regarding the use of market-based principles to reduce flaring, venting, or associated emissions could be found in the sources consulted.
Petrobras was instrumental in creating Brazil’s gas sector, but the company’s control over the industry discouraged new investors from entering the sector and constrained its growth. The New Gas Market is a government program intended to create an open and competitive natural gas market in Brazil. It aims to make the most efficient use of existing infrastructures, attract new investments, and promote competition in the natural gas market. The program has reduced Petrobras’ market power and end-user prices.
Petrobras held a monopoly in Brazil’s oil and gas industry until 1995, when Constitutional Amendment No. 9 was approved, making it possible to introduce competition. The Petroleum Law, 1997 , implements the constitutional amendment. In the case of natural gas, however, it did not promote a significant change in the market structure, with Petrobras remaining the dominant player and a monopolist by default. Law 11.909/2009, Gas Law , was adopted to address issues specific to the natural gas industry and attract new investments. It did not achieve the desired objectives.
Resolution 16/2019 established guidelines for an energy policy aimed at promoting competition in the natural gas market and reducing the influence of Petrobras over the market. A Term of Commitment of Assignment (Termo de Compromisso de Cessão) was signed between Brazil’s competition authority and Petrobras. It ended the de facto monopoly of Petrobras. Tax amendments were made providing incentives for gas pipeline transport (Ajuste SINIEF nº 03/2018 and Ajuste SINIEF nº 17/2019).
One of the objectives of Resolution 16/2019 was to improve the recovery of associated gas in the pre-salt basin. The discovery of pre-salt gas could double the potential of natural gas supply in Brazil in the next 15 years. However, pre-salt gas fields are more than 1,500 meters below sea level and about 300 kilometers from the coast. In addition, the pre-salt gas is rich in carbon dioxide, the release of which would increase GHG emissions substantially. The delivery of associated gas will require significant investments in capture and gas treatment infrastructure and offshore pipelines.
Directive 060, 2020 , follows the CASA recommendations, and defines limits on the total annual volume of gas flared, incinerated, and vented at all upstream wells and facilities. If flaring and venting of solution gas exceed the limit in any year, the AER will impose reduction limits for individual operating sites based on analysis of the most recent annual data available.
Section 2.1 of the directive sets an annual solution gas flaring limit of 670 million m³ (50 percent of the 1996 baseline) for the upstream oil and gas industry. As per Section 2.3, the combined flaring and venting volume is limited to no more than 900 m³ a day. Operators must follow the decision tree approach recommended by CASA and demonstrate the economics of conservation options (see sections 12 and 21 of this case study).
According to Section 5.2, for gas plants processing 1 billion cubic meters (m³) of raw gas annually, flaring, incineration, and venting must not exceed 0.2 percent of raw gas receipts or 5 million m³ per year. Limits are slightly higher for smaller processing plants. Acid gas volumes from gas sweetening (which are typically continuously flared) are excluded. As per Section 5.3, gas plants must not conduct more than six major nonroutine flaring events in any consecutive (rolling) six-month period.
The AER does not accept venting as an alternative to flaring or incineration, if gas volumes are sufficient to sustain stable combustion. When venting is the only feasible option, Section 8 of the directive sets an overall vented gas (routine and nonroutine) limit at a site of 15,000 m³ or 9,000 kilograms (kg) of methane a month. The limit on the volume of routinely vented gas at a site is 3,000 m³ or 1,800 kg of methane a month. Section 8.6 prescribes equipment-specific limits on venting.
Facilities that emit more than 100,000 tonnes of GHG a year are required to reduce their emissions intensity by 12 percent under the Climate Change and Emissions Management Amendment Act, 2003.
The AER is the sole, independent regulator responsible for upstream and midstream oil, gas, and oil sands activities in the province, including flaring and venting. The AER’s governance structure is designed to provide both strong corporate oversight and independent adjudication. The Alberta Environment and Protected Areas regulates the air quality and emissions generated during oil and gas activities.
Section 3 of Directive 060, 2020 (“Temporary and Well Test Flaring and Incinerating”; see footnote 1) does not require a permit for unplanned nonroutine flaring and incineration, such as during process upsets and emergencies. In addition, the AER does not require permits for flaring at oil and bitumen batteries. Under certain other conditions (for example, compliance with the percentage of hydrogen sulfide limits or with the Alberta Ambient Air Quality Objectives), permits are not required. These conditions are confirmed by the decision-tree tool adapted from CASA recommendations (Section 3 of AER Directive 060, 2020).
According to Section 3 of Directive 060, 2020 , planned nonroutine flaring and incineration events require a temporary flaring or incineration permit from the AER, with advanced filing of proper documentation. Section 3 lists the conditions that require a temporary flaring permit and describes the requirements for obtaining the permit. All permit applications are published on the Public Notice of Application webpage. The AER may issue a single “blanket” permit to cover several flaring events at different sites in an area if requested by the licensee. Companies may request a variance from the requirements if they have sufficient justification. Licensees must provide specific engineering, economic, and operational information to justify flaring or incinerating gas volumes above the volume allowance threshold. The AER does not consider venting an acceptable alternative to flaring or incineration (except for inert gases subject to certain requirements; see Section 8.9). It requires that gas be flared if gas volumes are sufficient to sustain stable combustion or conserved.