MEMR Regulation No. 17 of 2021 on the Implementation of Flare Management in Oil and Gas Activities

In 2021, the Ministry of Energy and Mineral Resources ("MEMR") issued MEMR Regulation No. 17 of 2021 on the Implementation of Flare Management in Oil and Gas Activities (“Flaring Regulation”), which prescribes certain requirements with respect to flaring during oil and gas operations. Under the Regulation, oil and gas operators are required to develop a flare management plan (Article 2). A report must be submitted to the MEMR every six months regarding the implementation of the plan (Article 17). The Regulation also requires oil and gas operators to prioritize the utilization of gas that would otherwise be flared (Article 3). 

 

The Flaring Regulation also imposes restrictions with respect to routine flaring. Under the Regulation, operators that process oil and gas are prohibited from engaging in routine gas flaring (Article 5). Processors must design new refineries in such a way that they do not rely on routine gas flaring (Article 5). 

 

In contrast to processors, upstream operators are not outright prohibited from engaging in routine flaring. However, they must abide by the following limits when engaging in routine flaring:

• for natural gas fields, 2% of the daily volumetric flow rate of feed gas; 
• for oil fields, daily volume of two million standard cubic feet per day (MMSCFD) based on a six-month average for the oil field.

Despite the above limitations on routine gas flaring, the Flaring Regulation allows oil and gas operators to flare gas in various non-routine situations. In particular, the Flaring Regulation allows oil and gas operators (both downstream and upstream) to engage in flaring for safety or emergency reasons. The Regulation also allows oil and gas operators to flare gas during the following periods: exploration and appraisal; drilling, testing and well maintenance activities; depressurizing; startup and shutdown; commissioning and decommissioning; and malfunction incidents (Article 7). However, even when an operator engages in flaring for these reasons, the operator must still make efforts to stop the flaring (Article 9). The operator must report its efforts to stop the flaring to the MEMR, together with a plan to prevent the recurrence of gas flaring (Article 9). 

 

In addition, the Regulation allows upstream operators to flare gas if the operator is experiencing “commercialization constraints” (Article 10). However, before the operator can flare the gas due to commercialization constraints, the following conditions must be met: (1) the operator must provide an explanation to SKK Migas regarding obstacles for commercializing the gas; (2) SKK Migas must review the operator’s explanation and make a recommendation to the MEMR; and (3) the MEMR must approve the flaring (Article 10). 

The Regulation also requires oil and gas operators to quantify the volume of flared gas through measuring instruments, mass balance calculations or other engineering calculations that follow good technical rules (Article 11). However, for operators that engage in routine gas flaring, the volume of flared gas must be measured through a measuring instrument (Article 12). In addition, oil and gas operators are required to inform the MEMR of any gas flaring event that meets the following criteria: (1) the event lasts more than one day; and (2) the volume of flared gas exceeds twenty million standard cubic feet per day (MMSCFD). The operator must inform the MEMR within one day and must provide a written report to the MEMR within seven working days (Article 6). 

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