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Emeka Unachukwu fsm,fidpm,fcia President. Port Harcourt Chamber Of Commerce

& Partnership in Nigeria Oil and Gas Industry. Future Outlook on Investment Potentials. Nigerian - Netherlands Economic Forum. 15-17 September, 2014. Hotel Novohotel. Hofweg 5-7 The Hague,. The Netherlands. Emeka Unachukwu fsm,fidpm,fcia President. Port Harcourt Chamber Of Commerce.

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Emeka Unachukwu fsm,fidpm,fcia President. Port Harcourt Chamber Of Commerce

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  1. & Partnership in Nigeria Oil and Gas Industry Future Outlook on Investment Potentials Nigerian-NetherlandsEconomicForum 15-17September,2014 HotelNovohotel Hofweg5-7TheHague, TheNetherlands Emeka Unachukwu fsm,fidpm,fcia President. Port Harcourt Chamber Of Commerce

  2. Welcome to Nigeria

  3. Welcome to Nigeria • With A rebased GDP of $510 Billion • 26th largest economy in the world, and the largest economy in Africa, of 160.3 million people and 923,678 Km2 land area. • Per capita income has risen from $1,555 to $2,688, • ranked 121st in the world from 135th position

  4. Welcome to Nigeria

  5. Welcome to Nigeria

  6. Building on a Solid Relationship Reviewing 2003 Trading Year Total Exports N14,245.3trillion Total Imports N7,015.8trillion Trade Surplus N7,229.5trillion Contributions… India N613.8 Billion Netherlands N393.7billion, Italy N310.7 Billion Brazil N289 Billion South Africa N218.9Billion

  7. Building on a Solid Relationship

  8. Our Historical Beginning • 1908 Nigeria Bitumen Company - • Activity terminated by 1st World War • 1937 Shell D’ARCY • Activity terminated by 2nd World War • 1951 First Well Drilled by SHELL • 1956 First Discovery (Oloibiri field) • 1958 First Exportation 5000B/Day

  9. Our Historical Beginning • Nigeria joined OPEC 1971 • Export Value of crude oil in 1958 1% • 2013 90% • 8th Largest producer of oil in the World

  10. Where do we have oil in Nigeria

  11. Where do we have oil in Nigeria Oil Producing States In Nigeria

  12. How much oil do we have? • No. 1 oil exporter in Africa • Large oil reserves • 30bln bbl • 6000 wells & > 600fields • 9th largest gas reserves in the • World ( 187 TCF)*

  13. How much oil do we have?

  14. Other Abundant Natural Resources • Coal & Lignite – 2.7 billion tonnes • Tar Sands – 31 blnboe • Hydro Power – 14750 MW • Solar – 7.0 Kwh/m2/day • Wind – 2-4m/s at 10m height • Biomass – 320 mlnhectars

  15. Structure of our Oil Industry Upstream Sector IndigenousOil Companies SummitOilInternationalLtd(OPL205), Sahara EnergyFieldLimited7(OPL274,286,284),andPeakPetroleumIndustriesNigeria Limited8(OML122).

  16. How they are doing Business

  17. How they are doing Business Joint Venture Operating Agreement

  18. How they are doing Business Production Sharing Contract (PSC)

  19. How they are doing Business

  20. Signature Bonus • Payment in advance of exploration activities for the right to develop an exploration area. • The size of the signature bonus is based on the exploration licence's presumed recovery potential and value.

  21. Understanding Fiscal policies • Petroleum Profit Tax • Onshore & Shallow offshore • First Five years (New comers) 65% • First Five years (Existing Companies) 85.5% • Subsequent Years (All Players) 85.5% • Deep Offshore & Frontiers 50.0% • Investment Tax Allowance • Land Operations 5% • Offshore Depth @ 100M 10% • Offshore from 100-200M 15% • Offshore more than 200M 20% • Deep Offshore 50% • Inland basin 50%

  22. Understanding Fiscal policies Royalties Onshore 20.0% 100m Water Depth 18.5% 101-200M Water Depth 18.5% 201-500M Water Depth 16.5% 501-800M Water Depth 12.0% 801-1000M Water Depth 8.0% Above 1000M Water Depth 0.0% Inland basins 10.0% Other Taxes VAT 5.0% NNDC and Education Tax Taxes to State and Local Governments

  23. Proven Confidence in our Industry

  24. Our Future is Bright

  25. Top investment choices Upstream • Oil block acquisition • Drilling Rig Leasing and drilling related services • Engineering services • Heavy Equipment leasing • Seismic Acquisition and processing

  26. Structure of Oil Industry Downstream stream Sector • Refineries • Transportation & Marketing of Petroleum • products

  27. Structure of Oil Industry-Downstream

  28. Structure of Oil Industry-Downstream Refining Capacity 445,000BSPD

  29. Structure of Oil Industry-Downstream National Daily Consumption

  30. Structure of Oil Industry-Downstream Invest & Partner with us! • 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 • 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. Implementation Model

  31. Investing in Our Gas Industry • 9th Largest proven Gas reserves in the world. • Estimated quantity of reserves 187 TCF • Reserves/production estimated to last 109 years

  32. Investing in Our Gas Industry The Gas Reform • Maximum economic impact through gas. • Aims to drive linkages with agriculture, manufacturing and dispersed small enterprise through Power “… By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.”

  33. Gas Demand, Utilization & Export

  34. Gas Demand, Utilization & Export

  35. Reforms vs Opportunities • HIGH VALUE EXPORT • Consolidate Nigeria’s position and market share in high value export markets • Targeted LNG export opportunities • Regional gas pipelines that help consolidate nation’s footprint and influence • GAS TO POWER • 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 Regional Pipelines LNG Gas to Power

  36. Reforms vs Opportunities AfricaandRegional WestAfricanGasPipeline Nigeria–AlgeriaPipeline WestAfricanGasPipeline National Gas Infrastructure Blueprint layout Nigeria–AlgeriaPipeline

  37. Exploring opportunities in the Gas value Chain

  38. FiscalPolicies in the Gas Sector

  39. Mouthwatering Incentives in the Gas Sector • Tax Free period of three years Renewable • Additional period of two Years • Accelerated Capital Allowances • Import duty exemption on plant, machinery and equipment.

  40. Reserved Areas for Oil & Gas Business • Onne Oil & Gas Free Zone • Amazing Incentives

  41. World Class Logistics Bases @Kidney Island. Port Harcourt. Nigeria. Ready 2017

  42. Relevant State Agencies • Ministry of Petroleum Resources • Department of Petroleum resources • Nigeria National Petroleum Corporation • Ministry Of Environment • Niger Delta Development Company • Federal Inland Revenue Service

  43. 5 Year Expenditure plan • Engineering Design • Over $500 Mln/year • Fabrication & Construction • Over $8 billion/year • Materials, Manufacturing & Equipment Leasing • About $25bn • 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

  44. Understanding our Laws

  45. Nigeria Content Act Quantum of composite value added to or created in the Nigerian economy, through a systematic development of capacity and capabilities through the deliberate utilisation of Nigerian human and material resources and services in the country’s oil and gas industry. The ACT enacted 22nd April 2010. Giving priority to Nigerian independent operators in the award of oil blocks, oil field licenses, oil lifting licenses and all projects, subject to the fulfilment of such conditions as may be specified by the Minister

  46. Nigeria Content Act • Aim & Justification • To increase national wealth • through: • Economic growth • More employment of locals • Value creation in the country • Local Participation/ Investment • Induced expenditure in the local economy • Enhanced human capacity • Technology transfer • After 50 years, percentage of local content in the oil & gas industry is only 5-15% • Of the average US$8 Billion spent annually in the petroleum industry, only about 5% is retained in Nigeria.0

  47. Nigeria Content Act FOCUS • Develop local capacity in key areas such as manufacturing fabrication, engineering etc • Promote indigenous ownership of assets and utilization of indigenous assets in oil and gas operations 1 Maximize utilization of Nigerian made goods • Develop indigenous skills pool across oil and gas value chain • Provides mandatory training requirements on the back of projects • Creates JQS to manage and track available skills 2 Maximize utilization of Nigerian human resources Link the oil and gas industry with other sectors of the Economy 3 • Promote establishment of support industries that will sustain oil and gas industry operations • Enhance multiplier effect of oil and gas investments in economy Focus on community participation in the supply chain • Develop pool of competitive supply chain rooted in oil bearing communities • Create customized training and sustainable employment opportunities • structured awareness and enlightment campaigns 4 5 • Institutionalize inter-agency collaboration on local content development • Integrate NCDMB into planning and contracting process to ensure Nigerian Content COUNTS • Dedicated NCDF for capacity building Foster institutional collaboration

  48. Nigeria Content Act The Act establishes the Nigerian Content Monitoring Board and charges it with the responsibility of providing guidelines, monitoring, coordinating and implementing the provisions of the Act. The Act further provides for exclusive consideration to be given to Nigerian companies with at least 51 per cent equity holding by Nigerians for all oil and gas projects in inland and swamp water areas, subject to proof of acquisition or lease of the equipment to be utilised during the project, verifiable by satisfactory evidence of such acquisition or lease. Compliance with the Act is mandatory for the award of all necessary licenses and permits in the industry.

  49. Nigeria Content Act The Act makes it mandatory for operators to submit a Nigerian Content Plan to the Board in the bidding stage and prior to executing any project. The Act provides for minimum percentage specifications of Nigerian content in any project to be executed in the Nigerian oil and gas industry The Act also provides for domestic provision of insurance, legal and banking services, except where it is impracticable to do so.

  50. Nigeria Content Act The Act further provides for operators to establish their offices within the catchment areas/host communities and to submit an employment and training plan, capacity building and succession plan where there is no immediate local capacity. The Act also establishes a fund to be known as the Nigerian Content Development Fund (‘the Fund’), for purposes of funding the implementation of Nigerian content development in the Nigerian oil and gas industry. Every operator, contractor, subcontractor, alliance partner or any other entity involved in upstream activity shall contribute one per cent of the contract value to the Fund.

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