Investing in The Extractives

Transcription

1 NIGERIAN NATIONAL PETROLEUM CORPORATION Investing in The Extractives UK-Nigeria Trade and Investment Forum 2018 Presentation by Nigerian National Petroleum Corporation London, April 2018

2 Nigeria welcomes foreign investors to invest in the oil and gas industry 2

3 Key messages 1 SUSTAINED AND INCLUSIVE GROWTH. ERGP energy sufficiency focus, MPR 7BW and NNPC BUFAs in place. Resource landscape is fundamentally changing, attracting investment is crucial to ensure longterm economic prosperity 2 NIGERIA OVERVIEW Oil and gas dominates the extractive sector in Nigeria. The state-owned petroleum company (NNPC) is dynamic in its response to the oil & gas environment 3 INVESTMENT OPPORTUNITIES NNPC is pursuing a growth plan which will require USD 40+bn over the next 5 years. 3

4 As the most populous country and the largest economy in Africa, Nigeria has full potential Most populous country in Africa, 7 th largest population globally with ~195million inhabitants Largest economy in Africa, with $405 billion GDP in th largest country in Africa, with over 923,000 square kilometres 4

5 The resource landscape is fundamentally changing and creating new risks and opportunities 40% increase in the number of resourcedriven countries compared to 1995 $17 trillion of total cumulative investment in mining and oil and gas is needed by million people can come out of poverty from the investment of resource extraction, more than China managed in the last 25 years 6 dimensions are crucial to transform extractive resources into long-term prosperity: institutions and governance, infrastructure, fiscal policy and competitiveness, local content development, spending the windfall and economic diversification Source; McKinsey Global Institute Reverse the curse; Maximizing the potential of resource-driven economies Dec 2013 Key challenge in resource-driven countries is effective utilisation of its extractives as a driving tool for sustainable and inclusive growth 5

6 Nigerian Economic & Energy Policy Pyramid.. The Role of NNPC FGN STRATEGIC IMPLEMENTATION PLAN (SIP) The SIP is a short-term intervention plan developed by the FGN in 2016 to focus on three policy goals: tackling corruption, improving security and rebuilding the economy The ERGP was developed to further the SIP strategy to rebuild the economy MBNP MPR NNPC ECONOMIC RECOVERY AND GROWTH POLICY (ERGP) Comprises of 5 priorities including achieving macroeconomic stability, agriculture and food security, energy sufficiency, transportation & industrialization through Small and Medium Scale Enterprises ERGP targets a 7% GDP growth rate by 2020 SEVEN BIG WINS (7BW) Developed to achieve the energy sufficiency objectives of ERGP Comprises of Seven objectives aimed at growing the Nigerian oil & Gas Industry and developing a stable and enabling landscape with improved transparency, efficiency, stable investment climate, and a well protected environment 12 KEY BUSINESS FOCUS AREAS (BUFA) Implemented by NNPC to institutionalize efficiency, profitability and growth required to support the 7BW agenda and in line with the National strategic goal of achieving energy sufficiency and restoring economic growth 6

7 Nigeria National Petroleum Corporation is the largest asset holder in the Nigerian oil and gas industry across the value chain Upstream assets Gas and power assets 11 th global oil reserve 37 billion barrels of 2P reserves 9 th global gas reserve trillion cubic feet of proven gas reserves Produced 2.0 million barrels of oil and 7.68 billion cubic feet of gas per day as of 2017 Owns and manages national domestic gas pipeline infrastructure Over 1,700 km of backbone gas transmission infrastructure Equity stake in 2 power JV IPPs, Nigerian LNG Refineries assets Owns and operates 4 crude oil refineries Combined capacity of the refineries is 445,000 barrels per day Nigeria National Petroleum Corporation (NNPC) is wholly owned by the Federal Government of Nigeria Downstream assets Over 5,000 km pipeline network Over 500 Retail Stations 21 Storage Depots, 9 LPG Depots 25 Pump Stations 4 Jetties 7

8 We are repositioning the Corporation for the challenges of the new oil & gas environment Principles of our organisation Organizational setup F Focus with a clearly defined mandate Group HQ A Accountability with a single point of responsibility * Upstream Downstream Gas & Power Refineries C Competitiveness to ensure efficient resources management and profitability T Transparency with a governing council which has a defined mandate Nigerian Petroleum Development Company Integrated Data Services Limited National Engineering & Technical Company Retail Petroleum Products Marketing Company Nigeria Pipeline & Storage Company Nigeria Gas Processing & Transmission Company Nigeria Gas Marketing Company Gas & Power Investment Company Warri Refining & Petrochemical Company Kaduna Refining & Petrochemical Company Port Harcourt Refining Company I Integrity and honesty in all dealings and reporting National Petroleum Investment Management Services Shipping West Africa Gas Limited Greenfield Refinery Projects *Ventures ring-fences non-core investments and incubates new investments, to commercialise them into profitability (e.g., through partnering) 8

9 We have prioritized 12 Key Business Focus Areas (BUFA) to Support Economic Diversification Staff Welfare New Business Models 9

10 Investment Enablers to attract FDI Strategic Plan Business Environment Governance Framework Removal of Access Barriers Regulatory Framework ERGP Focus labs to fast track implementation and attainment of objectives; energy sufficiency NNPC 12 BUFAs and identified investment opportunities Security challenges are being addressed Ongoing reforms in supporting sectors; infrastructure development Cost Optimisation Initiatives Increased transparency Continued commitment to NEITI objective Monthly Published NNPC Financial and Operations Report Improved access information to Removal of administrative bottlenecks Improvement measures for Customs Procedure, Labour Mobility: Visa Processing Clarity and simplicity in legal and resource institutional framework Regulatory reforms ongoing 10

11 Drive for Transparency & Accountability Nigeria Extractive Industries Transparency Initiative (NEITI), Est 2004, Act Strategic Objectives in extractive sector include to: Deepen openness in the extractive sector through timely audits and other impactful studies Shape extractive sector and overall governance reforms Strength demand for accountability in the use of extractive revenues NNPC Monthly Performance Report Published Financial and Operations Report So we need everyone on board: governments, businesses, development partners, international organisations, civil society groups, media, and citizens. For us in Nigeria, we will remain on board the EITI and the ownership transparency train because they align with our national priorities and will help to advance the electoral mandate of our administration, which is to fight corruption, combat insecurity and grow the economy. Prof. Yemi Osinbajo Vice-President of Nigeria, Oct 2017 Open Government Partnership (OGP) sign-up in Nigeria National Action Plan for extractive resources transparency: NEITI Beneficial Ownership Register CAC law review on disclosure of beneficial owners and register for public companies Money Laundering Act 2007 review on definition of beneficial owner of a company Petroleum Industry Bill (PIB) Passage by National Assembly (Senate) in May 2018 of all component parts Main Objective: Separation of regulatory, policy and commercial roles of public sector agencies in the oil and gas industry to position respective agencies for improved performance 11

12 There is a unique and significant opportunity for interested investors to Gain unique access to a substantial energy resource base across the full value chain Participate in a rapidly reforming country with a commitment towards governance Invest in the current visionary technocratic management team Buy into a portfolio of high-value projects Gain insights into the Africa energy sector 12

13 NNPC is pursuing a growth plan which will require USD 40bn over the next 5 years Selected projects $13-17bn Development of upstream gas fields with a total of ~37.4 TCF Short-term loan for NPDC operations Cash call financing in upstream JVs $14-17bn Trans-Nigeria gas pipeline project Gas Revolution Industrial Park at Ogidigben FTZ Three power plants for additional 3.2GW capacity $ bn Rehabilitation of the 3 refineries Development of collocated refineries at PHRC and WRPC Greenfield Refinery at Sabke on our border with Niger Republic $0.7-1bn $3-3.6bn Revamp of LPG and building of new CNG plants across the country Pipeline and storage tank construction Biofuels Equipment Leasing (rigs, FPSOs) Development of multispecialist hospital and cancer diagnosis and treatment centres 13

14 Upstream.. Roadmap towards Diversification Strategic Objectives Reserves Production Infrastructure Midterm strategic objective to grow reserves from 37 to 40 billion barrels by 2020 This will comprise of exploration of deeper horizons and new acreages and development of P1 & P2 reserves. Strategic objective to grow production to 3 million barrels of oil per day by 2020; This comprises of both brownfield and greenfield developments both in the PSCs and JV arrangements. Critical infrastructure such as the Gas Infrastructure Blueprint need to be delivered i.e; ELPS II, Trans Nigerian Pipeline System-QIT-Obigbo- OB3, AKK, CPFs A robust reserve is critical to sustain the revenue base of the country while we progress towards diversification Increase in production will translate to revenue growth required to fund economic diversification A robust gas delivery system is able to stimulate gas supply for power and industry to catalyze the diversification of the economy.

15 Gas 7 Critical Gas Development Projects (7CGDP) S/N Identified Projects/Synergy Assa North-Ohaji South Gas Field Development Joint Development of OML 24 (NNPC/NewCross) and OML 18 (NNPC/Eroton) on top of 100MMscf/d already delivered by Alakiri Gas Plant. Development of 4 SPDC JV/NAOC JV Unitized Gas Fields (Samabri-Biseni, Akri-Oguta, Ubie-Oshi, and Afuo- Ogbainbiri) Cluster Development of NPDC's OML 26, 30 & 42 SPDC JV Gas Supply to Brass Fertilizer Company Cluster development of OML 13 to support the expansion of Seven Energy Uquo Gas Plant Cluster Development of Okpokunou/Tuomo West (OML 35/62) (Straddling + Non Straddling) in Phases (5 Tscf) Expected Volume (MMscf/d) Proposed 1st Gas Date Gas Supply & Infrastructure Development Required Full field development of Assa North and Ohaji South Gas fields EPCI of a 2 x 300mmscfd gas processing plant. Construction of 16km dry gas pipeline from Assa North to OB3. Joint field development of OML 24 and 18 Construction of a 12km gas pipeline to transport Ekulama gas to Awoba Expansion of the existing 12 x 30km Awoba to Cawthorne Channel Pipeline Development of the Trans Nigeria Gas Pipeline segment from Cawthorne Channel-Alakiri-Obigbo Node Full field development of the four unit area gas fileds. Construction of gas gathering pipelines from the unitized fields to a central hub (Assa North CPF) for processing Gas to be evacuated to the domestic market through OB3 pipeline Joint development of OMLs 26,30 & 42. Construction of gas pipelines from both OMLs 26 & 30 to Utorogu Gas Plant for processing and evacuation to the domestic market through ELPS Construction of a gas pipeline from Odidi (OML 42) to WEND CPF for processing A full field development of OML 33 with 2P reserves of 2.2TCF and unlock other satellite fields that are less than 60km from Brass Construction of eight (8) gas gathering pipelines from the identified supply sources to Brass Fertilizer Construction of Pre Treatment Facilities. Cluster gas development of OML 13 with 2P reserves of about 5TCF Expansion of the existing Seven Energy Uquo Gas Plant Development of the Trans-Nigeria Gas Pipeline to transport the processed gas further to the domestic market from Ukanafun Joint development of Okpokunou and Tuomo West unit area with a combined 2P gas reserves of 5TCF Construction of gas pipelines from Okpokonou and Tuomo West to Utorogu Gas Plant 7 Critical Gas Development Projects (7CGDP) aims to deliver 2,500 mmscf/d to 3,000 mmscf/d of gas by

16 Annual Equivalence Gas Role of Gas in Growing and Diversifying the Economy OR 1 LNG Cargo/Year 150,000 Tonnes 1.4 Cargos/Year of Crude Oil Equivalent 24 mmscf/d 24 millions standard cubic feet of gas per day OR 100MW At least 100 MW of Electricity OR OR 12,000 Jobs $2bn GDP $2bn annual GDP Contribution in a Developed Economy like the US OR OR $400mn GDP $400mn annual GDP Contribution in a Developing Economy like Nigeria 56,000 Jobs About 12,000 annual jobs created by injecting the energy in 24 mmscf/d in a developed Economy like the US About 56,000 annual jobs created by injecting the energy in 24 mmscf/d in a Developing Economy like Nigeria 1 6 It is our estimate that 2,400mmscf/d of additional gas to be supplied from the 7CGDP to our local economy can create up to 5.6 million jobs and boost our GDP by about $40bn i.e. about 10% of the current GDP 16

17 Refineries KRPC Plants: Fuels, Lubes, LAB plant, Tin & Drum Capacity: 110kbopd Staff: 1,181 (incl. Zonal Office) Investment and Upgrade Opportunities: Rehab of Water Treatment Plant Rehab of Power Generation System Revamp of Refinery Control System CDU-2 Cladding to increase refining capacity Warri to KRPC 613.5km Transports Escravos blend and Heavy crude (imported) Six pump stations Escravos Terminal to WRPC 60km Transports Escravos blend and Heavy crude (imported) for KRPC Satellite Lagos Ibadan Mosimi Atlas Cove Ilorin Ore Bonny Terminal to PHRC 55km Transports Bonny Light crude Minna Auchi Benin Warri Escravos Gusau Zaria Kaduna Suleja Enugu Aba Kano Calabar Port Harcourt Bonny Jos Makurdi WRPC Gombe Maiduguri Yola PHRC Refinery Depots NNPC pipeline network Pipeline 2A 2B 2C 2CX 2D 2DX 2E 2EX Fluid Product Product Crude Product Product Product Product Product Plants: Fuels, Polypropylene, Carbon Black Capacity: 125kbopd Staff: 776 (incl. Zonal Office) Investment and Upgrade Opportunities : Rehab of Waste Water Treatment Plant Upgrade Warri Jetty facilities; dredge channel improve draft Rehab of Power Plant & Utilities Distribution Depots Receiving terminals Refineries Warri Benin Ore-Mosimi Atlas Cove Mosimi Ibadan-Ilorin IBP Escravos; Warri-Kaduna Benin Auchi Suleja Kaduna; Suleja-Minna Kaduna Zaria Kano; Zaria-Guasu; Kaduna Jos-Gombe-Maiduguri Jos-Gombe PH Aba; PH Enugu-Makurdi PH Aba; PH Enugu Makurdi Yola; Enugu-Auchi Plants: Fuels Capacity: 210kbopd Staff: 923 (incl. Zonal Office) Investment and Upgrade Opportunities: Utilities Procurement and Installation of Boilers System and De-min Plant Reliability Human Capacity Development Crude / Product Storage & Evacuation 17

18 Refineries Revamping our Refineries to Stimulate Economic Growth Current Key Challenges Crude Supply Operations TAM Infrastructure Inadequate crude oil supply to Refineries due to incessant pipeline vandalism Product evacuation and blending challenge due to limited storage system. Current Solution Initiatives Strategic Partnership for Pipeline Revamp Behind the schedule Turn Around Maintenance (TAM) programs largely due to funding constraints Strategic Partnership for financing Refinery Revamp & Upgrade Depletion of Functional Capacity owing to degraded equipment and obsolete instrumentation. NNPC has commenced engaging key strategic partners for the Revamp and upgrade of the Refinery System and the associated crude supply/product evaluation pipeline systems; It is expected that the revamp of the Refineries to at least 90% capacity utilization by 2020 will go a long way in supporting other sectors of the Nigerian economy in stimulating the desired diversified economy.

19 Downstream... Roadmap towards Diversification Strategic Objectives Stable Supply Net Exporter of Products Kero/Wood to LPG Switch Over 60 million liters of petroleum white products is required to run the Nigerian economy daily NNPC s objective is to ensure that adequate and stable supply of at least 30days is provided at all times. Non-oil sector of the economy relies on energy for its activities. A stable supply of energy will thus ensure stability and growth of the non-oil sector Strategic objective is for Nigeria to be a net exporter of petroleum products by This will translate Nigeria from a crude oil exporting Nation to both a crude oil and products exporting Country after achieving domestic sufficiency Efforts are accelerated to ensure Nigeria has sufficient refining capacity to refine products in excess of its domestic demand Efforts are also ongoing to diversify the energy consumption mix especially for domestic cooking from the currently large percentage of Kerosene and dirty firewood to cleaner LPG which is in abundance in Nigeria The Wood/Kero to LPG project can go a long way in supporting the diversification agenda by the creation of new opportunities in the industry

20 The LPG Value Chain in Nigeria Supply Shipping Storage Transport Filling Plant Retail Current Situation 671,500 MTPA Vessel size 10,000MT Capacity 58,000MT 400 Nos. of 20MT trucks 274 plants 350,000 MTPA Does trips/year. (High cost at $100/T) Can handle up to 25 trips a year (250,000 Tons) Coastal - 20,000 MT 450,000 MTPA :2 through puts a month Inland - 38,000MT 70,000MTPA: 2 through puts a year Can handle 480,000MTPA at 6 trips a month Averagely handles 900MTPA With 1.5 M CYLINDERS Ideally should have about 2.5M cylinders in circulation Desired State 1.65 Million MTPA Vessel size MT 150,000MT 1,000 Nos. of 20MT trucks needed 500 plants needed 1.5Million MTPA for 15M cylinders. 3,109,000 MTPA Available trips per annum for 30,000MT ships. Costing about $30/T Additional /bigger ships and New Jetty(ies) Required 60,000MT coastal and 70,000MT inland storage, to handle 1,495,000MT. About 90,000MT additional storage required Additional 600 trucks of 20MT needed to handle volume at 6 trips a month Additional 230 plants required 20 Additional 13.5M cylinders required 20

21 NNPC Biofuels Programme in Diversifying Nigerian Economy Details of Project Development Activities: Sugarcane-Fuel Ethanol Development Objective in Benue State Development of Integrated Sugarcane Plantation and Fuel-Ethanol/ Sugar/ Power Plant Complex in Benue State through a Special Purpose Vehicle (SPV) with a total Project Land Size of 20,000 Ha Cassava-Fuel Ethanol Development Objective in Ondo State Development of Integrated Cassava Plantation and Fuel-Ethanol/ Industrial Starch/ Power Plant Complex in Ondo State through a Special Purpose Vehicle (SPV) with a Project Land Size of 15,000 Ha. Oil Palm-based Biodiesel Development Objective in Cross River State Development of Integrated Oil-Palm Plantation and Diesel-Ethanol/ Industrial Oil-Palm/ Power Plant Complex in Cross River State through a Special Purpose Vehicle (SPV) with a Project Land Size of 15,000 Ha. Sugarcane-Fuel Ethanol Development Objective in Kebbi State Development of Integrated Sugarcane Plantation and Fuel-Ethanol/ Sugar/ Power Plant Complex in Kebbi State through a Special Purpose Vehicle (SPV) with a total Project Land Size of 20,000 Ha. 21

22 We look forward to deepening our cooperation in Nigeria oil and gas industry in the next 5 years We aspire to Show case Nigeria and new NNPC Introduce investment opportunities of $40b in the next 5 years Discuss with interested investors face to face 22