Federal Government has given reasons for its decision to review its strategy on the aspiration to eliminate all forms of gas flaring in the operations of the oil companies doing business in Nigeria.

Before now, the government has always relied on the issuance of deadlines to be met by multinational companies, coupled with threats of stiff sanctions against defaulters.

Until recently, companies that failed to ensure compliance with the stipulated deadlines were made to pay a fine of N10 per 1000 standard cubic feet (SCF) of gas flared.

But, Director, Department of Petroleum Resources (DPR), Tony Chukwueke, said in Lagos that the government decided to change its strategy from stipulation of deadline and imposition of sanctions because it has since found out that it was cheaper for the multinational oil companies to pay the penalties for defaulting than take steps to develop infrastructures for harnessing the gas resources for economic value.

Chukwueke said government's new approach to addressing the problem is to find a way of providing incentives to those operators that take steps to initiate projects designed to harness the gas produced from their operations.

The director said though government has initiated a buy-out deadline for flare-down to December 31, 2008, it is currently holding discussions with the operators on the prospects of including in their gas supply obligations a clause for a penalty of $3.50 per million SCF for those who refuse to initiate the process of utilizing the volume of gas produced from their fields.

He said the oil and gas industry regulator is currently discussing with the operating companies with a view to revising the agreeable flare-out targets in the light of the new penalty.

On efforts to provide a legal framework for the development of the nation's natural gas resources, Chukwueke said the review of draft National Gas Regulation has bee undergoing with stakeholders, while a new National Domestic Gas Supply and Pricing Regulations has already been approved along a National Gas Pricing Regulations.

Besides, he disclosed that the agency has developed up to 2007 an updated database on the nation's gas reserves, production, utilization and flared, while working with the Nigerian Gas Company (NGC) and the multinational oil companies to put together an accurate database on existing gas pipeline and other infrastructure as well as existing and proposed power plants and their gas sources/requirements.