Flaring of associated petroleum gas is a major resource waste and causes considerable emissions of greenhouse gases and air pollutants. New environmental regulations are forcing oil industry to implement innovative and sustainable technologies in order to compete in growing energy market. A modern trend of introducing energy-effective cogeneration systems to the oil fields by replacing flaring and existing heat generation technologies powered by associated petroleum gas is discussed through material flow analysis and environmental impact assessment. The environmental assessment is based on the consequential life cycle assessment method and mainly primary data compiled directly from measurements on Serbian oil-fields or company-supplied information. The obtained results confirm that the utilization of associated petroleum gas via combined heat and power plants and heat boilers can provide a significant reduction in greenhouse gas emissions and resource depletion by displacing marginal production of heat and electricity. At the base case scenario, which assumes a 100% heat realization rate, the global warming potential of the combined heat and power plant and heat boiler scenarios were estimated at -4.94 and -0.54 kg CO2eq Sm-3, whereas the cumulative fossil energy requirements of these scenarios were -48.7 and -2.1 MJ Sm-3, respectively. This is a significant reduction compared to the global warming potential (2.25 kg CO2eq Sm-3) and cumulative fossil energy requirements (35.36 MJ Sm-3) of flaring. Nevertheless, sensitivity analyses have shown that life cycle assessment results are sensitive to heat utilization rate and the choice of marginal technology. (C) 2016 Elsevier Ltd. All rights reserved.