WORKSHOP COMMERCIAL FRAMEWORK FOR ENERGY INVESTMENT Abuja, 1 st & 2 nd May 2008

WORKSHOP COMMERCIAL FRAMEWORK FOR ENERGY INVESTMENT Abuja, 1st & 2nd May 2008 THE WEST AFRICAN GAS PIPELINE AUTHORITY-WAGPA A REGIONAL REGULATORY BODY APPROACHS – PROBLEMS & SOLUTIONS PRESENTED BY: Engr. MAGBONDE Leonce Director of Operations / WAGPA

CONTENT • OVERVIEW OF THE WAGP PROJECT • WAGPPROJECT PURPOSE • PIPELINE OWNERS & PARTICIPATING COUNTRIES • INSTITUTIONAL & LEGAL FRAMEWORK • THE WAGP AUTHORITY • MISSIONS • DESCRIPTION OF THE ENVIRONMENT • WHAT WAGPA REGULATES 3.PROBLEMS & SOLUTIONS

1. OVERVIEW OF THE WAGP PROJECT

Niger Mali Burkina Faso B E N I N T O G O NIGERIA GHANA Lagos Cotonou Lomé Tema Escravos Takoradi West African Gas pipeline Project WAGP

1. OVERVIEW OF THE WAGP PROJECT • WAGP PROJECT PURPOSE • Transport Nigerian Natural Gas through high pressure pipeline • Supply Natural Gas to commercially viable markets in Benin, Togo and Ghana.

1. OVERVIEW OF THE WAGP PROJECT(Cont’d) • Pipeline Owner: West Africa Gas Pipeline Company (WAPCo): • WAPCo Shareholders • Chevron (36.7%) Managing Partner • Nigerian National Petroleum Corp. – NNPC (25%) • Shell (18%) • The Volta River Authority of Ghana -VRA (16.3%) • Benin Gaz SA - BenGaz (2%) • Société Togolaise de Gaz SA – SoToGaz (2%)

French speaking • Civil law Benin Togo Ghana Nigeria • English speaking • Common Law 1. OVERVIEW OF THE WAGP PROJECT (Cont’d) • Participating Countries • Two French speaking • Two English speaking • Different legal systems • Four currencies • (Naira-cidi-Fcfa-US$) • Three of four countries without pipeline experience

1. OVERVIEW OF THE WAGP PROJECT (Cont’d) Institutional & Legal Framework Harmonized fiscal, regulatory, legal and investment regime 3 mechanisms to achieve regime harmonization • WAGP Treaty • International Project Agreement • Enabling Legislations passed in all countries

1. OVERVIEW OF THE WAGP PROJECT (Cont’d) • Regulatory Documents • Access Code • WAGP Technical Regulations • Pipeline Licenses • Pipeline Development Plan • Rule of Procedure • Environmental Impact Assessment & Environment Management Plan

2. THE WAGP AUTHORITY A REGIONAL REGULATORY BODY

2.THE WAGP AUTHORITY 2.1 MISSIONS : FIXED BY WAGP TREATY • REPRESENTATION OF THE STATES • FACILITATION • REGULATION

2. THE WAGP AUTHORITY (Cont’d) 2.2DESCRIPTION OF THE ENVIRONMENT (key players) • Gas Producers: Chevron, Shell, NNPC • Gas Marketers or shippers: N- Gas (established by gas producers) • Gas Transporters: • NGC for ELPS • WAPCo for WAGP • Customers in 3 buyer countries (Benin,Togo,Ghana) • Foundation customers • Standard customers • Industrial customers • Local Distribution Companies (LDC’S) • WAGP Authority : Established by the States parties

2.THE WAGP AUTHORITY (Cont’d) 2.3 What WAGPA Regulates? • Transportation Tariff in WAGP (tariff methodology aproved by WAGPA) • Gas quality – Dry gas (Acces Code aproved by WAGPA) • Acces to the Pipeline (Acces Code) • Technical specifications of the pipeline (WAGP Regulations) • Dispute & Arbitration (Rules of Procedure &Treaty) • WAGP Tribunal & Fiscal Review Board) • DG / BOG / COM

3. PROBLEMS & SOLUTIONS3.1 Problems • Gas availability • Gas specifications • Volume of free flow gas • Limitation of the pipeline Capacity • Security of the pipeline • Deadline Completion Date • Funding of the WAGP Authority

3. PROBLEMS & SOLUTIONS (Cont’d)3.2 SOLUTIONS • Improve Economic Envir. For Investors in gas production • Shell to provide facilities for wet gas processing • NGC to increase pressure in ELPS (40 to 60 bars) • WAPCo to implemente expansion program (order at least 1 additional compressor) • Adopt offshore Damage Prevention Program • Agreement on a new completion deadline with provisions for compliance • Review of WAGPA charge for full compression • Set WAGPA charge for free flow gas

EXPERIENCE OF REGIONAL REGULATIONEND THANK YOU FOR YOUR ATTENTION

WORKSHOP COMMERCIAL FRAMEWORK FOR ENERGY INVESTMENT Abuja, 1 st & 2 nd May 2008