WORKSHOP COMMERCIAL FRAMEWORK FOR ENERGY INVESTMENT

Abuja, 1st & 2nd May 2008

THE WEST AFRICAN GAS PIPELINE AUTHORITY-WAGPA

A REGIONAL REGULATORY BODY

APPROACHS – PROBLEMS & SOLUTIONS

PRESENTED BY:

Engr. MAGBONDE Leonce

Director of Operations / WAGPA

CONTENT

1. OVERVIEW OF THE WAGP PROJECT WAGP PROJECT PURPOSE PIPELINE OWNERS & PARTICIPATING COUNTRIES INSTITUTIONAL & LEGAL FRAMEWORK

2. THE WAGP AUTHORITY MISSIONS DESCRIPTION OF THE ENVIRONMENT

WHAT WAGPA REGULATES

3. PROBLEMS & SOLUTIONS

1. OVERVIEW OF THE WAGP PROJECT

West African Gas pipeline ProjectWest African Gas pipeline Project

WAGP

Takoradi

Tema

Escravos

Cotonou

GHANA

TOGO

NIGERIA

Lomé

Lagos

Niger

Burkina Faso

Mali

BENIN

1. OVERVIEW OF THE WAGP PROJECT

WAGP PROJECT PURPOSE

Transport Nigerian Natural Gas through high pressure pipeline

Supply Natural Gas to commercially viable markets in Benin, Togo and Ghana.

1. OVERVIEW OF THE WAGP PROJECT(Cont’d)

• Pipeline Owner: West Africa Gas Pipeline Company (WAPCo):

• WAPCo Shareholders

Chevron (36.7%) Managing PartnerNigerian National Petroleum Corp. – NNPC (25%)Shell (18%)The Volta River Authority of Ghana -VRA (16.3%)Benin Gaz SA - BenGaz (2%)Société Togolaise de Gaz SA – SoToGaz (2%)

1. OVERVIEW OF THE WAGP PROJECT (Cont’d)

• Participating Countries

• Two French speaking • Two English speaking• Different legal systems• Four currencies• (Naira-cidi-Fcfa-US$)• Three of four countries without pipeline

experience English speaking• Common Law

GhanaNigeria

TogoBenin

French speaking• Civil law

1. OVERVIEW OF THE WAGP PROJECT (Cont’d)

Institutional & Legal FrameworkHarmonized fiscal, regulatory, legal and

investment regime3 mechanisms to achieve regime harmonization

• WAGP Treaty

• International Project Agreement

• Enabling Legislations passed in all countries

1. OVERVIEW OF THE WAGP PROJECT (Cont’d)

Regulatory Documents• Access Code • WAGP Technical Regulations • Pipeline Licenses • Pipeline Development Plan • Rule of Procedure• Environmental Impact Assessment &

Environment Management Plan

2. THE WAGP AUTHORITY

A REGIONAL REGULATORY BODY

2.THE WAGP AUTHORITY

2.1 MISSIONS : FIXED BY WAGP TREATY

REPRESENTATION OF THE STATES

FACILITATION

REGULATION

2. THE WAGP AUTHORITY (Cont’d)

2.2 DESCRIPTION OF THE ENVIRONMENT (key players) Gas Producers: Chevron, Shell, NNPC

Gas Marketers or shippers: N- Gas (established by gas producers)

Gas Transporters: NGC for ELPS WAPCo for WAGP

Customers in 3 buyer countries (Benin,Togo,Ghana) Foundation customers Standard customers Industrial customers

Local Distribution Companies (LDC’S)

WAGP Authority : Established by the States parties

2.THE WAGP AUTHORITY (Cont’d)

2.3 What WAGPA Regulates?Transportation Tariff in WAGP

(tariff methodology aproved by WAGPA)Gas quality – Dry gas

(Acces Code aproved by WAGPA)Acces to the Pipeline (Acces Code)Technical specifications of the pipeline

(WAGP Regulations) Dispute & Arbitration (Rules of Procedure &Treaty)

WAGP Tribunal & Fiscal Review Board) DG / BOG / COM

3. PROBLEMS & SOLUTIONS3.1 Problems

Gas availability Gas specifications Volume of free flow gas Limitation of the pipeline Capacity Security of the pipeline Deadline Completion Date Funding of the WAGP Authority

3. PROBLEMS & SOLUTIONS (Cont’d)3.2 SOLUTIONS

Improve Economic Envir. For Investors in gas production

Shell to provide facilities for wet gas processing NGC to increase pressure in ELPS (40 to 60 bars) WAPCo to implemente expansion program

(order at least 1 additional compressor) Adopt offshore Damage Prevention Program Agreement on a new completion deadline with

provisions for compliance Review of WAGPA charge for full compression Set WAGPA charge for free flow gas

EXPERIENCE OF REGIONAL REGULATIONEND

THANK YOU FOR YOUR ATTENTION