Regulation for the Utilization of Associated Gas

On November 5, 2024, the Official Gazette No. 676 published the Regulation for the Utilization of Associated Gas, hereinafter referred to as “the Regulation”, which was issued by the Board of the Hydrocarbon Regulation and Control Agency through Resolution No. ARCH-003/2024 on September 25, 2024.

The Regulation aims to establish both the actions and technical parameters required to implement projects for the Utilization of Associated Gas, the gradual elimination of routine flaring, and the elimination of outdoor burning of Associated Gas using flares. It will apply nationwide to all oil exploration and extraction activities that produce Associated Gas, conducted by public or private, national or foreign companies, consortia, and associations, referred to as Subjects of Control.

To optimize the utilization of Associated Gas, Subjects of Control must submit an Associated Gas Utilization Plan, hereinafter “the Plan,” which can be used for self-consumption within the Subjects of Control’s contract area. The Plan aims to quantify the volume of associated gas usage and flaring during the exploration and extraction stages of hydrocarbons. Subjects of Control will request annual authorization for the use and flaring of associated gas from the relevant ministry within 30 days from the start of production tests on the first exploration well. The Plan must include the following information:

  1. Description of projects for associated gas optimization.
  2. Designs and project infrastructure plans.
  3. Schedule for the implementation of associated gas utilization projects.
  4. Measurement of gas flow produced and flared from wells in production.
  5. Methodology for estimating planned volume.

All Subjects of Control are required to submit an annual report on the integrity and operational safety of the systems for the safe disposal of relief gases in an environmentally friendly manner, referred to as “Teas.” For Subjects of Control to operate Teas, the Plan must include the following:

  1. Number of Teas, categorized by platforms.
  2. Geographic coordinates of Teas.
  3. Designs, plans, and specifications of Teas.
  4. Annual monitoring plan approved by the environmental authority.
  5. Inspection and maintenance program for Teas.

The deadline to replace flares with Teas is set for 2030. If the maximum capacity for Associated Gas Utilization cannot be reached by 2030, the Subjects of Control must provide technical justification and update the Plan.

Subjects of Control must measure the following volumes of Associated Gas:

  • Produced.
  • Designated for routine, non-routine, and gas safety flaring.
  • Used in the Subjects of Control’s gas utilization projects.

Once the maximum associated gas utilization capacity is reached according to the block operated by the Subjects of Control, they will not be allowed to flare Associated Gas except in authorized volumes.

Within 90 days of the Regulation’s entry into force, the Ministry of Energy and Mines will define contractual models for the industrialization and/or commercialization of surplus Associated Gas.

The first five-year plan for Associated Gas Utilization will come into effect upon the authorization for Associated Gas Use and Flaring in 2025.

 

Rafael Serrano, Partner at CorralRosales
rserrano@corralrosales.com
+593 2 2544144

Carlos Torres, Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2567676

 

© CORRALROSALES 2024
NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused by actions taken or not taken based on the information contained in this document. Any specific situation requires the specific opinion and advice of the firm.

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