COMMERCIALISATION OF NATURAL GAS IN SUB SAHARAN AFRICA

Transcription

1 COMMERCIALISATION OF NATURAL GAS IN SUB SAHARAN AFRICA May 2013 University of Surrey 14/05/2013

2 Agenda Why gas is important in Sub Saharan Africa (SSA)? Why gas is different? What issues need to be addressed? Markets Case Studies Back Up University of Surrey SLIDE 1

3 Why natural gas is important in SSA? Country Changer Mozambique GoM revenue from nat gas $6-8 bn cf GDP of $12 bn Tanzania Today Relatively small scale development Imports saving $4bn Kept the lights on Future Exports from nat gas c 20% of GDP BG announced project slow down Lack of infrastructure and GoT capacity Next, Kenya, Namibia? +??? Company Maker Cove, Ophir, Anadarko Next? University of Surrey SLIDE 2

4 Why gas is different to oil? 1. Price 120 Oil and Natural Gas Prices Compared Assumed Conversion 1 bbl = 6 mcf $/boe FOB Oil $100/bbl FOB LNG (oil equivalent) $17/mcf FOB LNG Contract ($12/mcf) Domestic gas market ($8/mcf) University of Surrey SLIDE 3

5 Why gas is different to oil? 2. Time University of Surrey SLIDE 4

6 Why gas is different to oil? 3. Complexity Oil can be produced early Jubilee Ghana South Sudan [Kurdistan] Gas requires pipelines from production to consumption Existing pipeline networks with capacity New pipelines Who will build / operate? Who will regulate? Mnazi Bay still waiting vs. Jubilee producing University of Surrey SLIDE 5

7 Why gas is different to oil? 3. Complexity (continued) VS. University of Surrey SLIDE 6

8 Why gas is different to oil? 3. Complexity (continued) Cost of developing a gas discovery is generally higher Pipelines Purpose built offshore processing rather than lease arrangements Gas reservoirs are easier to manage than oil reservoirs Operational costs for gas fields tend to be lower than for oil fields University of Surrey SLIDE 7

9 Why gas is different to oil? 4. Value Oil vs. Gas Production Value Production Discounted at 20% Oil PV: Production (boe) Gas PV: Present Value Year Gas volume (boe) Oil volume (boe) Cumulative Gas PV Cumulative Oil PV University of Surrey SLIDE 8

10 What issues need to be addressed before investors will commit? Gas Money LNG Production LNG Shipping LNG Customers Production Processing Large Customers Pipeline Transportation Pipeline Distribution Medium Customers PSC taxation vs. CIT what segmentation? PSC high tax, CIT lower tax LNG included within PSC net or run as a utility? Transfer pricing issues Government participation, regulation and pricing (e.g. domestic) Uncertainty will harm investment Small Customers University of Surrey SLIDE 9

11 What are the natural markets for gas in Sub Saharan Africa? University of Surrey SLIDE 10

12 Case Studies. 1 Tanzania Songo Songo field 1 Tcf sales gas Discovered 1974, first gas 2004 Close link between gas and power sector Challenge with payments from state power company Robust private sector sales Mnazi Bay c 1 Tcf sales gas Discovered first gas 2006 New pipeline opens up monetisation opportunity Deep offshore discoveries [10] Tcf Export LNG to Asia as natural anchor load Size of investment compared to size of country s economy and development University of Surrey SLIDE 11

13 Case Study 2. Cameroon Logbaba Modest size gas field (40 Bcf) located under Douala Pipeline gas distribution to industry Liquid fuel displacement Sanaga Sud Gas to power 200 MW IPP supply to state utility Etinde c 350 Bcf of sales gas Gas to fertiliser commercialisation scheme University of Surrey SLIDE 12

14 Case Study 3. Mozambique Pande Temane Onshore gas field discovered in 1960s c 3 Tcf Pipeline export scheme to South Africa Expansion within 10 years of commercial operation Rovuma Area Very large quantities of natural gas have been discovered offshore Rovuma Current estimates suggest [100] Tcf recoverable Discoveries made 2010/11, target first gas [ ] Natural commercialisation route LNG to Asia How to develop resources in the manner to benefit GoM and incentivise investors to allocate capital to Mozambique Govt role? Fiscal structure Pricing of gas Roles and responsibilities University of Surrey SLIDE 13

15 BACK UP University of Surrey SLIDE 14

16 Risk and Reward University of Surrey SLIDE 15

17 Global Gas Pricing April 2013 University of Surrey SLIDE 16

18 NE Asia LNG University of Surrey SLIDE 17