investment opportunities for private participation in...
TRANSCRIPT
Investment Opportunities for Private Participation in Gas Supply and
Infrastructure in Nigeria
March 2014 Lagos
Dr. David Ige Group Executive Director, Gas & Power NNPC
March 2014 Lagos
Engr. Sam Ndukwe General Manager, Gas Pipelines Infrastructure
NNPC, Abuja
Outline
Introduction
Our Aspiration
Enabling Policy
Status of Gas Master Plan
Investment Opportunities
3
Overview of the Nigerian Gas Industry
Gas Resource Base
Nigeria has a huge economic potential trapped in this vast natural gas resource. Currently
number 9th largest Proven gas reserves in the world.
4
SOURCE: BP Statistical Review of World Energy June 2011 600TCF Undiscovered Potential
Current Gas Utilisation in Nigeria
5
Source: NAPIMS, Daily Gas Production and
Utilisation Report (August 16, 2011)
The Gas Master Plan : Evolving Domestic Market
6
NNPC has played the most pivotal role in developing the Gas Master Plan in line with the President theme.
There is now an unprecedented domestic gas market opportunity.
Unprecedented Growth Requirement in Gas Sector
Delivering the aspiration translates to an aggressive growth which position Nigeria’s gas sector as number 5 in
Africa in terms of BOE. In reality, a brand new industry is being created from scratch.
868,000BOE
926,000BOE
7
Outline
Introduction
Our Aspiration
Enabling Policy
Status of Gas Master Plan
Investment Opportunities
8
Mr. President Theme for Gas
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GAS TO POWER “… By 2014, we would have
positioned Nigeria firmly as
the undisputed regional hub
for gas-based industries such
as fertilizer, petrochemicals
and methanol.”
GAS BASED INDUSTRIALISATION HIGH VALUE EXPORT
STRATEGIC THEMES OF GAS
MASTER PLAN
Consolidate Nigeria’s position and
market share in high value export
markets
• Regional gas pipelines – consolidate
national footprint and influence
Deliver on President’s Gas
Revolution Agenda to:
• Create regional hub for gas-based
industries – fertilizer, petrochemical and
methanol
• Transform gas sector to value adding
sector
• Deliver Gas for at least threefold
increase in generation capacity by
2015
LNG Regional Pipelines
The gas sector aspiration, though anchored around gas to power in the immediate term, is essentially much
broader. It is aimed at delivering Mr. President’s wider economic agenda of power and industrialization
Outline
Introduction
Our Aspiration
Enabling Policy
Status of Gas Master Plan
Investment Opportunities
10
The Nigerian Gas Master-Plan - 4 Step Plan to Full Market Driven Domestic Gas Sector
Willing
Buyer
Willing
Seller!!
11
Enabling Policy Thrust
12
The aspiration is supported by a set of enabling policy interventions which are already being
implemented
Domestic Supply Obligation
13
The gas supply to underpin agenda is from the Domestic Gas supply Obligation (DSO)
Bankable contractual framework for gas supply and appropriate revenue securitization for gas
purchased
14
Realistic and Enforceable
Domestic Supply Obligations
(DSO)
1 Gas Pricing / Bankable
Agreements (GSA/GTA)
2 Strategic Aggregator &
Transitional Arrangements
3 World Bank Partial
Risk Guarantee (PRG)
Agreements
4
A domestic supply
obligation framework
now in place
Suppliers now
developing supply
plans to meet
obligation
New and more
sustainable domestic
gas pricing to Power
and other sectors now
in place
Bankable Gas Sales &
Purchase Agreement /
Gas Transmission
Agreement now in place
Finalizing the first ever
Nigerian Gas Network
Code to govern pipeline
utilization etc.
Gas Aggregation
Company of Nigeria
established to manage
DSO and price
aggregation
World Bank revenue
securitization scheme in
place to mitigate risk of
payment failures for gas
supplied
Commercial Framework
15
Gas Pipeline Infrastructure Blueprint
- Aggressive Expansion in Progress
Positioning for Sustained Growth
– Gas Infrastructure Blueprint
3 Backbone Gas Transmission
Networks Over 2000km of pipelines with
about 2bcf/d flow capacity
3 World Scale Gas Processing
Hubs Scope to extract over 1mtpa of
LPG each
To be developed on a Private
sector Build, Own and operate
basis
Initial capacity to process
about 250-300mcf/d increasing
to 1.5 – 2.5bcf/d
Numerous Gathering and Spur
Lines
Outline
Introduction
Our Aspiration
Enabling Policy
Status of Gas Master Plan
Investment Opportunities
17
Our efforts in Power are focused on meeting a projected 3 bcf/d of gas demand by about 37
existing and proposed power plants which have a collective potential to generate about 12GW by
2015
18
PHCN
818 mmscfd
1
NIPP
1,297 mmscfd
2
JV IPP
322 mmscfd
3
3rd Party IPP
531 mmscfd
4
• Egbin + AES • Delta IV • Sapele • Olorunshogo • Omotosho
• Geregu • Afam I-V
• Olorunshogo • Sapele • Alaoji • Geregu • Omotosho
• Ihovbor • Egbema • Gbaran • Omoku • Calabar
• NAOC, Okpai • Shell, Afam VI • Chevron Agura • Total, Obite • ExxonMobil, QIT
• 3rd Party IPP
0
500
1000
1500
2000
2500
3000
3500
Q4 2011 2012 2013 2014 2015
mm
scfd
Power Sector Gas Demand PHCN NIPP JV IPP 3rd Party IPP
Gas to Power
Domestic Gas Price Transition
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Pricing reform is taking hold, creating a more robust basis for investment in supply
Status Update on Gas Pipeline Infrastructure
Development
20
24” x 31km;
Project has been completed
and currently supplying gas
to Olorunshogo power plant
Addresses permanently the
challenge of supply delivery
to Olorunshogo PHCN/NIPP
Plants
36” x 196km; from Oben to Geregu
Project completed in Nov ‘11
Addresses supply deliverability to Geregu
power plant and future expansions
ELPS 2 – Oben-Lagos
Itoki- Olorunshogo
ELPS A Escravos – Warri – Oben
Oben – Geregu
24”/30” x 104km;
Project has been completed
Addresses stranded gas in Escravos – additional
80mmcf/d (300MW) is currently available to the
domestic market and a further 70mmcf/d(250MW)
36” x 324km;
Ongoing project will double
pipeline capacity from
1bcf/d to 2bcf/d by end 2015
Project is ongoing
Enable expanded supply to
support all future power and
industry expansion
1
2
3 4
1 2
3
5
Obiafu/Obrikom - Oben (OB3)
48” x 127km; Contract was awarded in April
2012 Detailed engineering has been
completed and procurement of line pipes is ongoing
Construction has commenced Completion Date – Early 2016
5
Gas Pipeline Infrastructure
21
Gas Based Industrialization Agenda
- The Ogidigben Industrial Park
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▪ 2800 Hectares ▪ Desirable location by the
ocean and the Escravos River, for inland access
▪ Dedicated gas based industrial park with FTZ & Port Status
▪ Proximity to existing ELPS gas infrastructure enables relatively easy gas access with less pipeline infrastructure development cost
▪ Dedicated Power Plant, CPF, Petrochemical, Fertilizer and Methanol Plants
▪ Centralized utilities provision, world class Integrated fibre optic network (broadband and telecoms)
NLNG
Ogidigben
East-West Interconnector
Existing LNG Plant
Ogidigben CPF & Gas-Based Industrial City
Existing Pipelines
L A G O S Benin
City
Port
Harcourt
Warri
ELPS
WAGP
REPUBLIC
OF BENIN
CAMEROON
NIGERIA
Proposed Industrial Park –
Model of Africa’s Largest Gas City
23
The Park will be developed in Phases – Phase 1
comprises of……..
---- but more importantly, the Park will be developed for rapid expansion to attract in subsequent phases, many gas based primary and secondary industries such as Aluminium Smelters, Methanol, Plastics Conversion and other related industries. It will be a major regional industrial hub
Work has commenced – Government through NNPC
spending about $1bn over the next 2-3 years
25
▪ Secured 2800 hectares of land from Delta State Government with all documentation
▪ Progressed critical site related pre-construction data gathering (EIA, Geotechnical Study, Hydrology, Bathymetry, Marine Study, Sand Search, etc.)
▪ Finalized gas supply agreement (GSAA) for Nagarjuna Fertilizer plant. Investor about to award EPC contract for plant
▪ Commenced pre-FEED for the Gas Central Processing Facility by KBR in Houston
▪ Julius Berger construction company has commenced site preparation activities i.e. site clearing
We have completed key pre-construction data
gathering on site
26
Fugro activities in Ogidigben – Study Reports Available Shortly
Conducted the following surveys / investigations at site
▪ Soil Investigation
▪ Hydrology Study
▪ Hydrogeology Study
▪ Sand Search
▪ Bathymetry Survey
▪ Environmental Impact Assessment EIA (Onshore & Offshore)
Investors can access at no cost, significant technical data in respect of the site in order to fast track technical evaluation and design of their projects
Julius Berger has commenced early works on site for
Phase 1…..
27
Outline
Introduction
Our Aspiration
Enabling Policy
Status of Gas Master Plan
Investment Opportunities
28
Investment Opportunities
29
GAS PROCESSING FACILITY / GAS BASED MANUFACTURING INDUSTRIES
FINANCIAL SERVICES
UPSTREAM GAS DEVELOPMENT
GAS TRANSMISSION PIPELINES
LNG & LPG PLANTS
PIPE MILLING AND FABRICATION YARDS
$16 Billion
Investment
Opportunity
1
2
3
4
6
OGIDIGBEN FTZ INFRASTRUCTURE, PORT INFRASTRUCTURE & REAL ESTATE DEVELOPMENT
5
7
Gas Transmission Infrastructure
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Opportunity Description
• Over 2000km of gas pipelines will be installed over
the next 5 years
• Construction and operation of 3 backbone gas
pipelines − Obiafu-Obrikom-Oben pipeline (OB3) (48” x 127km)
− Calabar to Ajaokuta pipeline (CAP) (48” x 490km)
− Ajaokuta to Kano pipeline (AKK) (48” x 853km)
Investment Scope
• Investment in the Trans- Nigeria Gas pipeline
system made up of the following pipeline
segments;
• OB3 - 48” x 127km pipeline investment,
with related compressor stations
• CAP - 48” x 490km pipeline investment
• AKK - 48” x 853km pipeline
• Scope exists for Engineering, Procurement and
Construction of pipelines; Pipe surveillance
systems, Pipeline Operations and Maintenance
Rationale
• Gas utilization growth from less than 1bcf/d
currently to at least 5bcf/d by 2016, underpinned
by growth in Power sector as well as gas based
industries
• Significant deficit in gas pipeline infrastructure
31
Upstream Gas Development
Description:
Growth in gas sector will result in
significant upstream development
activity to support production decline
and growth
Opportunities exist for
Drilling services
Engineering services and
operations
Petroleum Engineering Services
Procurement services
Logistics support
Equipment leasing
LPG & LNG Plants
32
Opportunity Description
• Full LPG value chain investment comprising LPG receiving
terminal at Ogidigbe (and/or Ob/Ob), storage, bulk transportation,
bottling and distribution)
• Portable LNG plants for small scale liquefaction
Investment Scope
• LPG Storage Facilities
• Jetties and Loading Bays
• Bottling and Distribution Networks (Filling Plants, LPG Trucks, LPG
Bottles, etc)
• Domestic/Industrial Burners and other accessories
• LNG plant
Rationale
• Forecast significant boost in LPG production from the Western
CPF estimated at about 500KTPA additional supply capacity by
2015
• Underserved domestic LPG market and underpenetrated market
• Current usage of LPG in Nigeria is 96,000 MT with potential
to grow – lowest per capita consumption in region
Gas Processing Facilities & Gas Conversion
Industries
Three CPFs will be constructed in the Western, Central and Eastern Areas
33
Opportunity Description
• Develop and run gas processing facilities
• Develop gas conversion industries – fertilizer, methanol,
petrochemicals
Investment Scope
• Development and operatorship of at least 2.4bcf/d gas processing
facility with full NGL extraction capacity
• About 150km of associated gas gathering pipelines
• NGL primary storage facility
Rationale
• Attractive and competitive feedstock pricing for gas conversion
industries
• Investments underpinned by GSPAs
• Scope to Co-investment with key stakeholders such as NNPC, and
key gas supply IOCs’ in the area
Ogidigben FTZ Infrastructure Development
34
Opportunity Description
• Exclusive right to develop the Ogidigben FTZ infrastructure
and provide utilities to all tenants of the FTZ on a long term
concession basis. Revenue from Tariffs and service fees
Investment Scope
• FTZ base Infrastructure – access roads, jetties, drainage
• Utilities − Over 300 MW IPP to serve the FTZ and residential complex
− De-mineralised, potable and process water
− Integrated fibre optic network (broadband and telecoms)
• Waste water treatment
• Development of Port
• Real estate development
Rationale
• Highly strategic FTZ location, Coastal location, proximity to
existing gas infrastructure and gas sources
• Portfolio of planned highly credible anchor tenants namely; − 1.3MTPA Polyethylene and 400 KTPA Polypropylene plants
− 2 x 1.3 MTPA Urea Fertilizer plant
− 2.4 bcf/d Central Processing Facility
− LPG terminal
• Potentially Nigeria’s largest gas based industrial park, with
scope for growth
Ogidigben
Africa’s largest gas industrial park to be located in Delta State, Nigeria.
35
Development of Pipe Mills & Fabrication Yards
Description:
Over 2000km of gas pipelines and
about 1000km of oil related pipelines
will be required over the next 3-6 years
in Nigeria
National Content law supports the
fabrication of the pipes locally
Opportunity:
Co-invest in the development of local
pipe mills and related pipe services
e.g. pipe coating
Preferential market access for local
pipe mill capacity
36
Financial & Related Services
Opportunity Description
•Over $16bn of investments anticipated
over next 10yrs
•Scope exists for syndication of
competitive finance
•Concessionary Government to
Government loans
•3rd party commercial loans
•Financial services
37
NNPC…….Defining a holistic vision
for the Nigerian gas industry