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Investment Opportunities in Nigerias Downstream Oil and Gas Value Chain By Diezani Alison-Madueke (Mrs.) CON Honourable Minister of Petroleum Resources

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Investment Opportunities in Nigerias Downstream Oil and Gas Value Chain By Diezani Alison-Madueke (Mrs.) CON Honourable Minister of Petroleum Resources July, 2012 1 Slide 2 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Nigeria in Perspective Politics Presidential System (Democratic since 1999) Bi-cameral Parliament Federation: Three tiers of government (Federal, state and local government) 36 states and Federal Capital Territory Land Mass Area - 923,768 sq km Natural Resources (Capacity) Oil 37 Bln bbls Gas 187 TCF Coal & Lignite 2.7 billion tonnes Tar Sands 31 bln boe Hydro Power 14750 MW Solar 7.0 Kwh/m2/day Wind 2-4m/s at 10m height Biomass 320 mln hectars Economy GDP (PPP) - US$418 Bln (The 2 nd largest in Africa) Ranked 31 st largest in the world GDP growth rate 7.2% Ranked 27 th largest in the world Population 160 million (the largest market in Africa Electricity consumption per capita 120.51 kwh 2 Slide 3 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Scope of Investments in Nigeria 3 Investment Opportunities Exploration & Production Midstream & Downstream Refining & Petrochemicals& Fertilizer Plants Gas & Power Services Oil block acquisition Oil block acquisition Drilling Rig Leasing and drilling related services Drilling Rig Leasing and drilling related services Engineering services Engineering services Heavy Equipment leasing Heavy Equipment leasing Seismic Acquisition and processing Seismic Acquisition and processing Refinery optimization Refinery optimization Greenfield refineries Greenfield refineries engineering, construction engineering, construction New Petrochemical Plants New Petrochemical Plants New Fertilizer Plants New Fertilizer Plants Pipeline production and laying Pipeline production and laying Remote pipeline monitoring and control devices Remote pipeline monitoring and control devices LNG design, fabrication etc. LNG design, fabrication etc. Gas Metering and Monitoring devices Gas Metering and Monitoring devices Power Plant engineering, construction and operation Power Plant engineering, construction and operation Gas Processing Gas Processing Haulage and logistics services Haulage and logistics services Equipment leasing Equipment leasing Pressure vessel fabrication yards Pressure vessel fabrication yards Turbo-machinery procurement, servicing Turbo-machinery procurement, servicing Spare parts fabrication Spare parts fabrication Financial Services Financial Services Manufacturing of LPG cylinders/Accessories Manufacturing of LPG cylinders/Accessories 3 Slide 4 4 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Midstream & Downstream Refining & Petrochemicals Downstream Industrial Park / Gas Hub Concept Refineries Each facility to be an independently owned Venture Roll out of 3-Industrial Parks viz.: South West East Niger Delta Northern Area (Along Trans Nigeria Gas Pipeline Route & Excl. Refinery) Slide 5 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Nigerias Gas Resources Confers Significant Opportunities for Investment 5 Slide 6 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Nigerias Gas Resources Confers Significant Opportunities for Investment (2) 6 Slide 7 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Gas & Power Strategic Framework for Nigerias Gas Industry 7 The Gas Reform is anchored on a robust strategic framework that is focused on maximum economic impact through gas. Aims to drive linkages with agriculture, manufacturing and dispersed small enterprise through Power G AS TO P OWER By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol. G AS B ASED I NDUSTRIALISATION H IGH V ALUE E XPORT S TRATEGIC F RAMEWORK FOR N IGERIAN G AS Consolidate Nigerias position and market share in high value export markets Targeted LNG export opportunities Regional gas pipelines that help consolidate nations footprint and influence Deliver on Presidents Gas Revolution Agenda to: Position Nigeria as the regional hub for gas-based industries such as fertilizer, petrochemical and methanol Transform gas sector to value adding sector Significantly increase gas supply to the Power Sector Focused delivery plan to support existing and ongoing power plants by PHCN and NIPP Deliver Gas for at least 12GW by 2015 LNG Regional Pipelines Slide 8 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Midstream (Gas) & Downstream (Power) Policy Initiatives 8 To support the agenda, a set of enabling policies were approved by His Excellency, Dr. Goodluck Jonathan. These are being rolled out and have created a major boost and jumpstart for the sectors agenda Slide 9 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Gas & Power Investments in Nigerian Gas Infrastructure System Over 5,000km of gas pipelines to be laid Over 5,000km of gas pipelines to be laid At least 3 gas processing facilities (about 1bcf/d capacity each) to be designed and built At least 3 gas processing facilities (about 1bcf/d capacity each) to be designed and built Aggressive Timeline Anticipated for delivery Aggressive Timeline Anticipated for delivery Numerous gas utilization projects to be developed concurrently LNG, fertilizer, Power etc. Numerous gas utilization projects to be developed concurrently LNG, fertilizer, Power etc. Future of Nigerian Gas Infrastructure When Completed Slide 10 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Opportunities for Gas Investments In Nigeria Slide 11 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Midstream & Downstream Refining & Petrochemicals Downstream Assets - Historical Perspective Refining Capacity Current NNPC Supply & Distribution Infrastructure 5,120 kilometers Of Pipeline Network 21 Petroleum Products Depots 9 LPG Depots Atlas Cove Terminal PPMC Escravos Terminal Bonny Export Terminal MT Oloibiri/MT Tuma OPHR (60,000BPSD) WRPC (125,000BPSD ) KRPC (110,000BPSD ) NPHR (150,000BPSD ) 1963/1972 1978 1989 1979 Simple . Complex . State of the Art 445,000BPSD CRUDE 850,725m3 Downstream Infrastructural Growth Plateaued In The Early Nineties. FGN Is Re Strategizing To Face Current Consumption Challenges & Preparing For Additional Product Volumes From Envisaged New Refineries New Refineries Bayelsa RefineryKogi Refinery Lagos Refinery TOTAL PROPOSED NEW CAPACITY 750,000BPSD 0.81% PMS 1,202,01m3 DPK 578,238m3 AGO 748,398m3 Linkage To Existing Backbone Mandatory 11 Slide 12 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Midstream & Downstream Refining & Petrochemicals Refineries, Pipelines and Depot Infrastructure 12 Close to $3 Billion required in upgrading pipeline Infrastructure The PIB to prescribe the Commercial tariffing models for pipelines Slide 13 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Midstream & Downstream Refining & Petrochemicals Refinery Rehabilitation 13 Strategic objective of the TAM is to drive up average utilization of refineries to 90%, thus creating domestic self sufficiency in HHK and AGO, whilst significantly reducing imports of PMS Slide 14 Greenfield Refineries Build three (3) Refineries in Lagos, Bayelsa and Kogi States with a combined capacity of 750KBPD & Fertilizer plant along the Trans Sahara Gas Pipe line corridor, subject to Technical and Commercial viability. Near Term Impact Expected Investment estimated at US$23 billion. Save about US$10.0 billion spent annually on importation of White Petroleum Products. Engage about 15,000 construction workers at peak and 2,000 fulltime plant operators for the three Refineries. Status of Implementation Secured 1500 Ha of land in Lekki Free Zone from Lagos State Government for the Refinery and Industrial Park. Secured 324Ha of land in Oloibiri from Bayelsa State Government for Refinery. Location Studies for Kogi State ongoing. Negotiations for Project Funding from Chinese ongoing. Long Term Impact Achieve self sufficiency in supply of Petroleum Products by 2018, and eliminate importation of Petroleum Products completely. Save over US$2.5 billion annually in subsidies on Petroleum Products. Become a major exporter of PMS in the energy market Trigger the switch from firewood, charcoal and kerosene to LPG Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Greenfield Refineries Project 14 Slide 15 15 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Economic Benefits of Downstream Non-Fuels Industrial Developments Slide 16 Investment Opportunities in Nigerias Downstream Oil & Gas Value Chain Service Sector Service Sector Opportunities 16 Engineering Design Over $500 Mln/year will be spent on Engineering Design projects in the next 5 yrs Fabrication & Construction Over $8 billion/year earmarked for fabrication scope in the upstream for the next 5 years Need for new fabrication yards / dry docking facilities and expansion of existing yards Materials, Manufacturing & Equipment Leasing About $25bn to be spent on procurement of materials over the next 5 years Some equipments and materials to be assembled/manufactured in Nigeria are Valves, fittings, heaters, static equipment, pumps and other rotating equipment Banking & Insurance Financing of low risk Oil/Gas projects through direct funding and venture capital Partnering of Local insurance firms in the Insurance and Reinsurance of small Oil and Gas projects Shipping & Logistics Partnership with Nigerian shipping companies unlocks over $ 600 million annual spend on international transport of crude Slide 17 Investment Opportunities in Nigerias Downstream Oil & Gas Val

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