Opportunities for Regional and Domestic use of Associated Gas in Nigeria OPEC/World Bank Workshop on Global Gas Flaring Reduction Vienna Austria - July 1, 2005 PETROLEUM NATIONAL NIGERIAN 1 CORPORATION
Nigeria Oil and Gas Reserves Oil Reserves Total - 35 billion bbls Gas Reserves Total - 187Tcf Niger Delta 85% Deep water 15% Niger Delta 86% Deep water 14% @ Dec. 2004 2
Gas Reserves TOTAL RESERVES 187 TCF Dec. 2004 Proposed 22% Associated Gas Reserves By Company Mobil 21% Agip 9% Chevron 7% ELF 3% Other 4% Undeveloped Gas 58% Existing Projects 18% Future Projects Shell 56% Non - Associated Gas Reserves By Company Mobil 7% Agip 10% Chevron 6% ELF 6% Other 7% Shell 64% 3
Natural Gas Reserves T C F 210 180 150 120 90 60 30 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Associated Gas 4 Non-Associated Gas
Average Crude Oil Production 2004 Avg. Prod. 2.5 million bopd Avg. Production 5.7mmscfd Mobil 22% Chevron 14% Elf 8% Agip/Phil lips 7% Other 8% Injection /lift 16% Sold 15% Used in Operations 4% NGL 2% Flare 43% SHELL 40% LNG 20% 5
Nigerian Oil Industry - National Goals 2003-2007 National Objectives 36 Billion Bbls Reserves and 4 million b/d production Maximizing sector value and fair share for Nigeria Improving Nigerian capacity and content Year 2010 Aspiration 40 billion bbls reserves and 4.5 million b/d production Zero flaring by 2008 Current Reserve 33.5 Billion as @ Dec. 2004 Current production 2.5mbd Production Capability 3 mbd 6
National Natural Gas Goals Eliminating gas flaring and addressing the attendant environmental issues facilitating development of the domestic power sector Develop domestic market Increasing private sector participation Capturing economic value of gas thereby generating as much revenue from gas (as oil) within the decade 7
Gas Flaring Reduction Gas Produced: Utilised and Flared 3,500 80% 3,000 70% 2,500 BScf 2,000 1,500 1,000 % Flared ` 60% 50% 40% 30% 20% % Gas Flared 500 10% - 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 GAS FLARED INJECT./LIFT FUEL NGL GAS SOLD LNG % FLARED Gas flare ratio reduced by 25% point in 5 years from 1999 8
Legislative Provision Targeted At Gas Flare Reduction GAS FLARING REDUCTION Petroleum Act of 1962 Pet. (Drilling and Production) Regulation, Decree No. 51 0f 1969 Petroleum Amendment Decree of 1973 Associated Gas Re-injection Decree 99 of 1979 Ass. Gas Re-injection Amend. Decree 7 of 1985 Associated Gas Framework Agreement (1991/1992) 9
Projects Targeted At 2008 Gas Flare Out And Future Utilization LNG Gas Injection Project Gas As Feedstock To Fertilizer Plants GTL Gas As Feed To Power Plants LPG Export Through Trans National Pipelines 10
Gas Supply Domestic and Export 3000 500 MMscf/d 2750 2500 2250 2000 1750 1500 1250 AG is base supply and NAG tops-up demand, supplies swing and back-up. Power and Aluminum Industries need continuous gas supply which can only be guaranteed by NAG supply. Additional Domgas growth relies on the FG s D/S Gas Act, Power Reform and Privatisation. Actual Plan 450 400 350 300 250 200 Kboe/d 1000 750 500 150 100 250 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 Industries Power WAGP T1-2 T3 T4 T5 T6 Kboe/d AG 11
G G G I I I Highlights T12 FID 11/95 T3 FID 2/98 T12 started 10/99 T45 FID 03/02 T3 started 12/02 T6 FID 07/04 T45 RFSU 2005 T6 RFSU 2008 14 ships owned for T12345 10 ships chartered for T456 ~$1.5 bn 3 rd Party financed USD 569million dividend Over 500 cargoes delivered 10million man hours without LTI achieved in T4/5 construction twice in 2004 Nigeria LNG Limited Total Investment - $11.4 bn ($bn) T1&2 T3 T4&5 T6 Plant 3.3 1.4 2.1 Ships 0.3 0.4 1.4 0.8 NLNG 22 Mtpa LNG, 3.5 Mtpa NGLs BGT L N G 24 dedicated LNG tankers T6 (4 Mtpa): Shell & Total 12 10.4% 10.4% 25.6% 15% Total T123 (9Mtpa) : Gas Natural, Transgas, ENEL, GdF, Botas T45 (8 Mtpa): Transgas, Iberdrola, ENI, Endesa, Shell, BG, Total 1.7 LNG Customers Europe/USA 49% N A A ER I N N N I C C TIONAL NA NA NA ORP TIONAL TIONAL ORP ORP OR OR A A P A P E E TROLEUM TROLEUM TROLEUM TION TION TION Gas Supply 3.5 Bcf/d Gas Supply % MMscf/d SPDC 56% 1,945 EPNL 20% 686 NAOC 24% 857
Major Integrated Gas Export Projects OK LNG 4x5mtpa NNPC/CVX/BG NNPC/SHELL Escravos GtL (35kbpd) NNPC/CVX Onshore Brass LNG NNPC/Agip/CVX/CoP 2x5 mtpa NLNG (NNPC/Shell/Agip/Total) 22 mtpa (T1-6) & 8 mtpa (T7&8) XOM @ Bonny 1x5 mtpa OGGS Shallow water Including; - WAGP (West African Gas P/L project) NNPC/CVX/Shell - OSO Phase-1 & -2 (NNPC/Mobil) - Escravos Gas Projects 1, -2 & -3 (NNPC/CVX) 13 Total 33.7
OPPORTUNITIES FOR MONETIZING GAS West African Gas Pipeline Project To transport Nigerian produced natural gas to commercially viable markets in Benin, Ghana & Togo * FID for the project was taken 16 th December 2004 * Strategic importance to participating countries as a way of fostering subregional cooperation and economic development in the spirit of ECOWAS * In consonance with the philosophy of NEPAD New West African Gas Pipeline GHANA Takoradi Objective: Transport Nigerian produced natural gas to commercially viable markets in Benin, Ghana & Togo Tema Lomé T O G O B E N I N Lagos Cotonou NIGERIA Escravos Existing Escravos-to- Lagos Pipeline System 14
Domestic Gas Utilization Historical Trend 700 Utilisation (Power + Local Industry) 600 mmsdf/d 500 400 300 Total Gas Utilised 200 100 Power Consumption 0 1992 1994 1996 1998 2000 2002 2004 15
Future Of The Gas Industry Opportunities exist for further investments in the sector as not all the discovered gas has been allocated Gas flare out target of 2008 is achievable with the implementation of the downstream gas act New PSC does not permit gas flaring Investment opportunities still exist as a sizeable level of reserves are unallocated 16
New Opportunities For Monetizing Gas Domestic Domestic demand currently 400 MMSCFD with potential for growth in: Power 85 Kwh/capita < 425 Kwh/capita (for developing economies) Cement Fertilizer 6 Kg/hectare about 40% of current demand of 800,000 t/yr imported Iron and Steel Most of domestic demand currently imported 17
New Opportunities For Monetizing Gas Africa and Regional West African Gas Pipeline Project Trans-Saharan Gas Pipeline Project Export LPG GTL LNG: Bonny NLNG West Niger Delta LNG Brass GBS LNG Statoil Floating LNG Shell Floating LNG 18
Concluding Remarks Nigeria has abundant gas resources Current fiscal terms are very generous to encourage investment in the sector Nigeria s location vis a vis the market provides opportunity for the monetization of her abundant gas resources Domestic consumption of gas will increase, particularly in the electricity generation sector, and more when the Trans-Saharan Gas Pipeline is put in place Government and operators are making efforts to drastically reduce incidences of community disturbances and vandalisation of facilities Gas is the energy of the future and Nigeria will play a leading role in its supply 19
Thank You 20