Investment Opportunities in Nigeria’s Downstream Oil and Gas Value Chain By

1. Investment Opportunities in Nigeria’s Downstream Oil and Gas Value Chain By DiezaniAlison-Madueke (Mrs.) CON Honourable Minister of Petroleum Resources July, 2012

2. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value ChainNigeria 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 Blnbbls • Gas – 187 TCF • 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 • Economy • GDP (PPP) - US$418 Bln (The 2nd largest in Africa) • Ranked 31st largest in the world • GDP growth rate – 7.2% • Ranked 27th largest in the world • Population – 160 million (the largest market in Africa • Electricity consumption per capita – 120.51 kwh

3. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Scope of Investments in Nigeria Investment Opportunities Exploration & Production Midstream & Downstream – Refining & Petrochemicals& Fertilizer Plants Gas & Power Services • Pipeline production and laying • Remote pipeline monitoring and control devices • LNG design, fabrication etc. • Gas Metering and Monitoring devices • Power Plant engineering, construction and operation • Gas Processing • Refinery optimization • Greenfield refineries • engineering, construction • New Petrochemical Plants • New Fertilizer Plants • Haulage and logistics services • Equipment leasing • Pressure vessel fabrication yards • Turbo-machinery – procurement, servicing • Spare parts fabrication • Financial Services • Manufacturing of LPG cylinders/Accessories • Oil block acquisition • Drilling Rig Leasing and drilling related services • Engineering services • Heavy Equipment leasing • Seismic Acquisition and processing 3

4. Investment Opportunities in Nigeria’s Downstream Oil • & Gas Value Chain • Midstream & Downstream – Refining & Petrochemicals • Downstream Industrial Park / Gas Hub Concept • 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) Refineries

5. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value ChainNigeria’s Gas Resources Confers Significant Opportunities for Investment

6. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value ChainNigeria’s Gas Resources Confers Significant Opportunities for Investment (2)

7. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Gas & PowerStrategic Framework for Nigeria’s Gas Industry 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 Strategic Framework for Nigerian Gas High Value Export Gas to Power Gas Based Industrialisation “… By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.” Regional Pipelines LNG • 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 • 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 • Deliver on President’s 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

8. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Midstream (Gas) & Downstream (Power)Policy Initiatives 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 sector’s agenda

9. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Gas & PowerInvestments in Nigerian Gas Infrastructure System Future of Nigerian Gas Infrastructure When Completed • 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 • Aggressive Timeline Anticipated for delivery • Numerous gas utilization projects to be developed concurrently – LNG, fertilizer, Power etc.

10. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value ChainOpportunities for Gas Investments In Nigeria

11. Investment Opportunities in Nigeria’s Downstream Oil • & Gas Value Chain • Midstream & Downstream – Refining & Petrochemicals • Downstream Assets - Historical Perspective Current NNPC Supply & Distribution Infrastructure Refining Capacity DPK PMS CRUDE AGO • 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 1989 1979 1978 1963/1972 445,000BPSD Simple …. Complex …. State of the Art NNPC Current National Holding Capacity 1,202,01m3 578,238m3 748,398m3 850,725m3 New Refineries 0.81% Linkage To Existing Backbone Mandatory Bayelsa Refinery Kogi Refinery Lagos Refinery 750,000BPSD TOTAL PROPOSED NEW CAPACITY 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

12. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value ChainMidstream & Downstream – Refining & PetrochemicalsRefineries, Pipelines and Depot Infrastructure • Close to $3 Billion required in upgrading pipeline Infrastructure • The PIB to prescribe the Commercial tariffing models for pipelines

13. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value ChainMidstream & Downstream – Refining & PetrochemicalsRefinery Rehabilitation 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

14. Investment Opportunities in Nigeria’s Downstream Oil& Gas Value Chain Greenfield Refineries Project • 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. • 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 • 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.

15. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Economic Benefits of Downstream Non-Fuels Industrial Developments

16. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Service SectorService Sector Opportunities • 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

17. Investment Opportunities in Nigeria’s Downstream Oil & Gas Value Chain Conclusion • Nigeria as the largest market in Africa offers unique opportunities for investment in refining, storage, transportation, distribution and marketing of petroleum products. • The downstream oil and gas value chain is the focus of government intention in creating the necessary business environment through price liberalisation and strong independent regulation. • The PIB offers fiscal rules of general application and open access regulations for the domestic oil and gas activities. • Nigeria plans to upgrade existing refineries, build new refineries, build new gas infrastructure (pipelines and central processing facilities), power plants, petrochemicals, fertiliser etc. in order to enhance linkages between the oil and gas sector and the wider Nigerian economy. • Nigeria is open for business.