Oando- NGC Partnering for the development of Gas Supply Infrastructure in Nigeria Bolaji Osunsanya Managing Director, Oando Gas & Power March 6 th 008 1
Outline Background / Context Gas Infrastructure Blueprint Opportunities of Interest Possible Deal Structure Timeframe Next Steps
Context With the approval of the Gas Pricing regime and the publication of the infrastructure blue print, this is an auspicious time for a prudent investor to make its foray into the development of gas delivery infrastructure in Nigeria. NGC, the pioneer in the development of gas infrastructure in Nigeria must take it s rightful place at the vanguard of this movement Oando, with its history of cooperation with NGC, a proven ability to manage huge projects and mobilize funding is the ideal partner for NGC in this pursuit 3
History To date, Oando, through Gaslink has had an 8 year relationship with the Nigerian Gas Company, the success of which is demonstrated by the following achievements: Over 4km of gas pipelines in different parts of the country arranged by Oando subsidiaries $156m (NGN18.7bn) of investment mobilized by Oando to construct pipeline infrastructure The connection of over 90 industrial customers to the gas network including a possible UNICEM Income in excess of NGN14.1bn from the operation of the Greater Lagos Distribution Network 4
Players in the Gas Value Chain Local participation remains limited to low-value segments, even lower, when discounted for Government participation. Oilfield Services Oil and Gas E&P Gas Processing Transmission Distribution Markets Oando-Halliburton Schlumberger Petrolog Noble Mallard Trans Ocean Lonestar Oando Chevron Shell BG Shell Chevron NGC Shell Oando Shell NG Falcon Gasland NGC Power (Oando) Industrial Commercial Domestic Transportation Government is the dominant gas resource owner but has limited operatorship Most of the production is done by MOCs which although are 50-60% owned by NNPC are commercially driven Also controls transmission & distribution operated on behalf of the government by Nigerian Gas Company (NGC) The Government has now stated its commitment to domestic gas utilisation The new clarity on domestic gas pricing has made it possible to evaluate further opportunities Most of the gas field development today is geared towards the export market (LNG) Gas processing and more encompassing infrastructure is a clear gap Through partnering and Strategic Acquisitions, Oando is steadily establishing a footprint across the Gas value Chain 5
Gas in Nigeria today Issues New Regulation is advocating Open Access OGIC The role of and reporting path of NGC is unclear Security of Supply Appropriate Pricing? Domestic Priority Regulation / Policy Infrastructure Gas/Power Linkage (or lack) Opportunities Infrastructure / Network development Derivative Products (LPG, Petrochemicals, GTL ) Privatization? NGC is the largest investor today & therefore the most affected by any development NGC must drive the need to chart a holistic response 6
7
Gas Infrastructure Blueprint 8
Gas Infrastructure Blueprint ID Pipeline Project Length (km)/ Diameter(in) Capacity Description OB-OB to Oben 100 / 4 1700 Provides security of Supply to the West 3 Calabar to Ajaokuta 365 / (48,48,56) 3000 Provides Security of Supply to North. Serves as pre-investment for TSGP( Abia, Anambra en route) 4E East Loop Onshore East 188 /56 3500 Main Supply to Calabar CPF and the North 4W East Loop Onshore West 56 3000 Supply to Bonny from the East Onshore 5E East Loop Offshore East 3 1150 Supply to Calabar from offshore 5W East Loop Offshore West 09 /4 1700 Supply to Bonny from East offshore 11 Shagamu to Jebba 65 / (4,) 390 Secure supply to Ogun, Osun, Oyo and Kwara ELOPS Escravos to Lagos Offshore 00 / 4 150 Supply to Lagos via secure offshore route ID CPF Location Capacity COD Year Description A Escravos 395 010 Serves North and West. Several phases of expansion, bcfd by 01 B Ob-Ob 1700 010 Servers North and West. Several Phases of expansion. C Calabar 4500 010 Main supply to Calabar and North D Bonny 1500 013 Incremental capacity to LNG Plant F Forcados 350 00 1bcf required by 01, successive expansion phases G Brass 1700 011 Brass LNG Only H Olokola 000 01 No incremental capacity LNG only foreseen Source: IHS Gas Master Plan The infrastructure blueprint highlights a number of gas pipeline and Gas Central Processing Facilities (CPF) required to fulfil the domestic utilisation requirements 9
Specific Opportunities 3 B C 10
Specific Opportunities Pipeline Project Length (km) Diameter (in.) Capacity (mmscf/d) COD Year OB-OB to Oben 100 4 1700 01 Calabar to Ajaokuta Phase 1 (Okopedi Ito) 55 56 3000 009 Phase (Umuahia) 65 48 00 010 Phase 3 (Ajaokuta) 45 48 00 011 Total 365 CPF Capacity COD Year Calabar CPF Phase 1 500 008 Phase 900 011 Phase 3 500 01 CPF Capacity COD Year OB/OB CPF Phase 1 700 011 Phase 1,000 01 Total 1,700 Phase 4 600 013 Phase 5 1,500 015 Phase 6 500 018 Total 4,500 Source: IHS Gas Master Plan NGC must proactively collaborate with a sound investment partner 11
Immediate Opportunities Development of OB/OB CPF Purpose of this CPF is to assure security of supply to the West Construction of OB/OB to Oben Gas transmission Line Primary purpose of this pipeline is to assure security of supply to Lagos Oando (Gaslink) is the primary private sector off-taker from the ELPS and is best placed to benefit from this project In addition, we are downstream beneficiaries along the West Coast of Africa Development of Calabar CPF Oando already has gas assets and infrastructure in the Calabar Area OML 36 currently under development, but already with 690bcf of proven reserves 14km of 18 gas transmission line from Ukanafun to Mfamosing Along with additional assets being developed, Oando is able harness its assets and provide input to the CPF Construction of Calabar to Ajaokuta Pipeline A major step in fulfilling Oando s commitment to developing the national gas grid 1
Peculiarities of CPF/Pipelines ISSUES Capital Intensive Technical Capabilities Assured Supply / Throughput Size (length), Scalability Shared Utility TSG backbone MITIGANTS - Partners with deep pockets - Capital Markets & International financial markets - Technical Partners with proven experience - Access to cutting edge technology - Assured O&M capabilities - Leverage domestic gas & flare down policies to enforce patronage - Reconfirm cluster commitments - Execute in phases - Find foundation customers en-route - Reasonable transportation/throughput tariff - Swaps - Assured Supply - World Class Construction - Align with on-going TSG Discussions 13
Partnership Model ISSUES Capital Technical Capabilities Assured Supply / Throughput Size (length), Scalability Shared Utility TSG backbone ACTIVITIES - NGC / Oando & Highly capitalized institutions - Leverage JSE & NSE - Oando is currently mobilizing to raise the required financing through o o o Seed Equity Guarantees Development Finance Institutions - LOI with business/technical partners - Access to learning points on recently concluded regional CPF and pipelines - Access to Canadian Operators - Leverage 630bcf OML 36 - Discussions ongoing with others within cluster 5 - WAGP experience quick execution; phased approach - Credible foundation customers (some of whom we have had discussions) - Leverage OML 36 for phase 1 - Leverage work already done by NGC and the Ministry - Leverage political support 14
Deal Structure Project Make up Model OB/OB Pipeline OGP NGC x% y% OB/OB Limited BOT Calabar CPF OGP NGC x% z% y% Calabar CPF NEWCO OC Mobil? Addax? Moni Pulo? Multi-Party JV Calabar North Pipeline OGP Multi-party Investors N-South NEWCO NGC x% z% y% Multi-Party JV OB/OB CPF OGP NGC OC Total? Multi-Party x% z% y% JV OB/OB CPF NEWCO 15
Time Frame OB/OB Pipeline Development (6 months) Construction (1 months) Development (9 months) Construction (4 months phase 1) Calabar CPF Calabar North Pipeline Development (1 months) Construction (36 months) OB/OB CPF Development (9 months) Construction (4 months) 16
Next Steps Formal response in 30 days MOU with NGC Collaboration MOUs with other partners Presentation to Minister/President Joint Task Force : Program Management per Investor? 17
We have positioned ourselves to capture maximum value along the entire energy chain and harvest synergies between subsidiaries Oil and Gas E&P Refining Trading Primary Distribution Storage Secondary Distribution Channels Consumer Production & Dev. Co. Refinery Division Supply & Trading Marketing Energy Services Gaslink / East Horizon Power Synergies 18
Oando an Integrated Energy Company Oando Plc Marketing No. 1 marketer of Petroleum Products Supply and Trading Dominant local player Expansion into other West African Markets Gas (Pipeline Transmission of Natural Gas) 0-year BOT Franchise Agreement with NGC New Industrial customer connects Energy Services Offering Product service lines through strategic alliances (e.g. Baroid, Halliburton) Exploration and Production Assets Acquisition and Monetization Refining New Build Power A Significant option play for Oando Further pipeline expansion into un-served markets 6 19
Thank you http://www.oandoplc.com 6 0