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GAS FLARING AND VENTING: WHAT CAN KAZAKHSTAN LEARN FROM THE NORWEGIAN EXPERIENCE? GULZHAN NURAKHMET ∗ gnurakhmet@yahoo.com ABSTRACT: Production of oil is accompanied by associated natural gas. Being an “unwanted” by-product of the oil production, a large amount of energy is being wasted mostly in the developing countries by contributing to the emissions of greenhouse gases. Recently Kazakhstan made amendments to its Petroleum legislation towards abatement of gas flaring and venting into the atmosphere. However, this positive governmental attempt reveals gaps in the national legislation, lack of efficient and effective regulatory procedures. This paper evaluates the regime for the successful implementation of a gas utilization program in Norway, a country that has considerably reduced gas flaring through a number of regulatory measures. This paper seeks to analyse the main provisions of the gas flaring and venting and address to the question, what the Norwegian experience could bring to Kazakhstan. This research paper intends to bring recommendations from the ‘first hands’ that will contribute to the improving associated gas utilization policy in Kazakhstan.



Gulzhan Nurakhmet, a Kazakh qualified lawyer. She has practiced as a lawyer in Natural Resources Group in one of the leading commercial law firms in the Central Asia and the Caspian Region. She has work experience with the Parliament of the Republic of Kazakhstan and White & Case Law Firm in London, UK.

LIST OF ABBREVIATIONS AG BCF BCM GDP GHE GTL MPE MEMR Associated Gas Billion Cubic Feet Billion Cubic Meters Gross Domestic Product Green House Effect Gas-To-Liquids Ministry of Petroleum and Energy (Norway) Ministry of Energy and Mineral Resources (Kazakhstan) Ministry of Environment Protection (Kazakhstan) The Norwegian Continental Shelf The Norwegian Petroleum Directorate

MEP

NCS NPD

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1. INTRODUCTION Every year when crude oil is brought to the surface, most oil-producing countries flare and vent large volumes of gas, which is equivalent to the combined annual natural gas consumption of Central and South America 1 or Germany and France 2 . According to the World Bank estimation the annual volume of this associated gas (AG) that is being flared and vented is about 110 BCM 3 . There is also a basis to make a statement that 10-13 BCF is flared daily4 . This is more than enough to meet the gas needs in the UK. Flaring of gas in Africa alone would be sufficient to produce twice more electricity that the Norwegian hydroelectric power system supplies annually 5 . It is widely recognized that flaring and venting of “valueless by-product”6 and “unwelcome stepchild” 7 of oil, leads to the pollution of environment by contributing to greenhouse effect (GHE) 8 . However this product that was historically disposed and wasted could potentially bring economic benefits, especially for the developing countries. Utilization of AG could be considered as a solution for different problems: it reduces the greenhouse emissions and simultaneously improves country’s economic condition due to the tendency of increase of the natural gas prices 9 . Recently Kazakhstan has enacted amendments to its petroleum legislation 10 that prohibits gas flaring and venting into the atmosphere by July 1, 2006. This research paper reveals the gaps in the national legislation, lack of efficient and effective regulatory procedures of flaring and 1

Gerner, F., Svensson, B., and Djumena S., Gas Flaring and Venting. A Regulatory Framework and Incentives for gas Utilization, in the Public Policy for Private Sector Journal, No. 279, the World Bank, October 2004 “Regulation of associated gas flaring and venting. A Global Overview and Lessons from International Experience”, the World Bank Report, No 3 Id

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Johnston, D., International Exploration Economics. Risks and Contract Analysis (Tulsa: PenWell, 2003) and Haugland, T., Results of Stakeholder Discussions, Conference on Global...
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