Code "On subsoil and subsoil use" No. 125-VI (as amended)

The Subsoil Code establishes the regime for subsoil use, procedures for exercising the state management and regulation in subsoil use,  and provisions regarding the exercise and termination of rights to subsoil plots .Under Article 20, exploitation of subsoil resources requires a license or a contract for subsoil use. 

Article 122 of the Code defines the requirements for the exploration and production of hydrocarbons. This provision requires the maximum use of raw gas by processing it in order to obtain strategically important energy carriers or raw materials for the petrochemical industry and minimise environmental pollution.

In accordance with article 146-1 of the Code, the flaring of raw gas in flares is prohibited except in the following cases:

1)      the threat or occurrence of emergency situations, the threat to the life of personnel or public health and the environment (at the same time, the subsoil user is obliged to notify the authorized bodies in the field of hydrocarbons and environmental protection in writing about such combustion within ten days);

2)      during testing of the well facilities (for a period not exceeding 90 days for each well);

3)      during trial operation of the field (for a period not exceeding 3 years);

4)      during technologically inevitable flaring of raw gas (burning of raw gas to ensure an uninterrupted hydrocarbon production process during commissioning, operation, maintenance and repair of process equipment, as well as technological failures and deviations in the operation of process equipment).

In the cases provided for in paragraph (1), it is allowed to burn raw gas in flares without permission. For all other cases, the permission of the authorized body is required, provided that the subsoil user complies with the project documents and the program for the development of raw gas processing (Article 146-4).

 

Article 147-2.  The subsoil user engaged in the production of hydrocarbons is obliged to carry out activities aimed at minimising the volume of raw gas flaring.  A field development project shall obligatorily contain a section on the processing (utilisation) of raw gas.

Article 147-3. Subsoil users are obliged to develop a program for the development of raw gas processing, which is subject to renewal every 3 years, according to the form approved by the authorised body in the field of hydrocarbons. Reports on the implementation of programs for the development of raw gas processing should be sent by the subsoil user annually to the authorised body in the field of hydrocarbons.

Article 147-4. It is prohibited to extract hydrocarbons without processing of the entire volume of produced raw gas, except for volumes of raw gas:

1)      flared in cases and under the conditions established by Article 146 of this Code;

2)      used by the subsoil user for its own process needs;

3)      sold by the subsoil user to other persons for the purpose of processing and (or) disposal.

At the same time, in the fields where raw gas processing is economically unjustified, a field development project and a raw gas processing development program may envisage the utilisation of the entire volume of produced raw gas, with the exception of gas used for own needs, by pumping into the reservoir for storage and (or) maintain reservoir pressure.

Article 153 of the Code considers the specifics of the exploration and production of coalbed methane. Thus, it is prohibited to develop coal fields with an increased level of natural methane content of coal seams without carrying out the necessary measures for advance degassing, ventilation and reservoir degassing programs with subsequent utilisation of the resulting methane, which ensure the reduction of the methane content in coal seams to the established standards (Article 153-2).

 

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