Commercial Opportunities in Nigerian Oil and Gas Sector. Engnr. Funsho Kupolukun Group Managing Director Nigeria National Petroleum Corporation. Gulf of Guinea Breakfast Session OTC 2007, Houston May 2, 2007. CONTENT. Global Oil and the Gulf of Guinea
Engnr. Funsho Kupolukun
Group Managing Director
Nigeria National Petroleum Corporation
Gulf of Guinea Breakfast Session
OTC 2007, Houston
May 2, 2007
In both oil and gas, there has been a band shift in prices occasioned by supply tightness and growing demand. Secure supplies is therefore a major agenda issue for the global oil and gas industry as well as governments alike
Whilst OPEC remains the primary point of call for global capacity additions, the Gulf of Guinea countries, particularly Nigeria and Angola, are evolving as geo-strategically important suppliers to the global market, particularly to the USA
Deepwater Comparative Reserves
The Gulf of Guinea’s growing importance is supported by a high level of prospectivity. Almost 40% (14 bn bbls) of global deepwater discoveries have come from this region. About half of this is from Nigeria. Recent discoveries have brought the region to the forefront of deepwater technologies
THE GULF OF GUINEA Projected West African Crude Oil Output
World Average 3%
From this robust base, a significant contribution is expected from this region to global capacity. An estimated 7mmb/d or 9% of worlds total daily production is expected to come from this region in 2007. Relative to the world average of 3%, production capacity growth in Africa (specifically Gulf of Guinea) is forecast to be highest at about 7% annually
THE NIGERIAN OIL AND GAS INDUSTRY Nigeria In the Gulf of Guinea
Nigeria is a key component of the Gulf of Guinea. It represents 70% of total Gulf of Guinea reserves and is the anchor country for the region in terms of supply
Recent Presidential Mandate
Core Sector Aspirations
… Attain a GDP growth rate of 10%
Nigeria’s aspirations for its oil and gas industry are anchored on 2 key elements – capacity growth and economic integration of the industry with the macro-economy. The nation aspires to grow GDP at a 10% rate. The strategic thrust is therefore that of alignment between global and domestic objectives.
To deliver the aspirations, between 1999-2007, the industry has refocused strategically on 7 key areas vital to coping with the rapidly evolving global and local industry landscape. These 7 areas have anchored industry operational focus and the achievements to date
Reserves have continued to grow steadily in Nigeria. Over 7bn bbls have been discovered in the deepwater acreages bringing the total national crude oil reserves to about 35bn bbls from about 22bn bbls pre 1999. Significant scope for reserves growth still exists
Similarly, production capacity has grown steadily to an installed capacity of about 3mmb/d in 2007. More recently in 2005/2006, an additional 790mmboed was added to the nations supply capacity. In essence despite major disruptions to production, the industry has been able to sustain production at within quota limits in view of the robust and diverse supply base
THE NIGERIAN OIL AND GAS INDUSTRYPerformance Update - Gas Sector
Steady drop in % gas flared
Gas flares have reduced significantly to about 32% by end 2006. Significant growth in domestic and export gas utilisation will end flares by 2008.
22 Mtpa LNG, 3.5 Mtpa NGLs
L N G
24 dedicated LNG tankersTHE NIGERIAN OIL AND GAS INDUSTRYPerformance Update - Gas Sector
Total Investment - $11.4 bn
NLNG was commissioned in 1999 with 2 Trains at startup. It has since expanded rapidly to 5 trains by 2005 and the 6th is planned for commissioning in 2008. To date, the NLNG project has delivered over $3.6bn in revenues to Nigeria, part of which has been reinvested for further growth.
To deliver the GDP aspiration as well as contribute to global economy growth, Nigeria needs to grow capacity significantly. The sector has assembled and is progressing a robust portfolio of projects planned to grow capacity to about 4mmb/d by 2010. The portfolio comprises a mix of deepwater and conventional terrain projects
Over 2.0mmb/d additional capacity is planned from the shallow offshore concessions between 2006 - 2011.
Over 1.0mmb/d of additional capacity is anticipated from about 7 major deepwater projects.
THE GROWTH AGENDAGas Sector Growth
In gas, there is a major transformation in forecast utilisation for both the domestic and export sector. Domestic demand will grow to about 1000mmscf/d by 2006 and forecast to grow to over 10,000mmscf/d by 2010. LNG capacity has equally grown from zero to 22MTPA in 2006 and forecast to grow to 50MTPA by 2011 – second fastest growth in the world. Nigeria’s forecast gas growth is one of world’s most aggressive
THE GROWTH AGENDAGas Sector Growth – Diverse Portfolio Opportunities
Underpinning the gas demand growth is a robust portfolio of projects. The portfolio comprises Methanol, GTL, Power and Fertilizer projects
Other Regional Gas Pipeline Projects
NB:- 2006 investment includes IPP
The crude oil capacity growth has translated into major investment inflow in the industry. For instance between 2000 and 2006, FGN funding levels more than doubled from about $2.5bn to over $6bn.
THE GROWTH AGENDAIndustry Investment Levels
Over $60bn is anticipated to be spent through to 2008 alone and significantly more in future years. Relative to competing OPEC countries, Nigeria is experiencing one of the highest investment inflows in the industry creating opportunities
Proposed Gas Pipeline Network
To support the growth in gas utilisation, a major growth in gas pipeline infrastructure is planned. An infrastructure blueprint is currently being developed which will triple the gas transmission capacity in the next few years
About 3-4 gas processing plants with capability to strip NGLs is required by 2009/2010. These could be merchant plants
In addition, there will be numerous opportunities in the support services for gas to cope with the massive growth in gas delivery systems
With over $85bn spend in the next 5 years and Policy requirements to domicile
Engineering Design and over 50% of fabrication works in country, international EPC companies, Investors & engineering companies are welcome to set up in Nigeria
KEY INDICATORS FOR INVESTMENT OPPORTUNITIES
FPSOs & Platforms
MC Dermott Lay barge
Marine construction equipment & support bases
Inspection services & project Mgt support
Pipe-lay & Crane Barges
Pipe Spooling facilities
Support clusters & skilled Maintenance crew
The Nigerian Content Policy is strongly linked to the cabotage act which requires Nigerian Flagging of vessels operating in Nigerian waters. Coupled with the spike in work load, opportunities abound for new entrants to buy into this emerging segment.
The Nigerian Oil and Gas industry is open to investors who are keen to partner with Nigerian companies in the provision of Tankers and coastal vessels to service the operations. This will offer additional opportunity in the areas of Ship Management expertise and training of seafarers
ENABLING INITIATIVES Targeted Incentives for Investors
Effort is ongoing to secure a targeted set of incentives for would-be investors who need to install major capacity in Nigeria. The incentives include some guaranteed work to justify investment
ENABLING INITIATIVES Free Trade Zones
4 Free Trade Zones
Free trade zones will provide significant incentives for oil and gas investors by lowering investment barriers and enhancing project profitability
ENABLING INITIATIVES Niger Delta Interventions
Despite investment by successive governments and corporations, the level of success of many of the past initiatives have been largely low and unsustained
A New Dawn
The Nigerian Oil and Gas industry is set for a second phase of growth.
Rapid Capacity Growth
The opportunities are immense at over $60bn and the landscape is being prepared for willing investors to participate. Please join us.