Transcript NGC - Nigerian Association for Energy Economics

The State of Energy Resources and Supply in Nigeria
- Challenges, Constraints and Opportunities
Dr. David Ige
Group Executive Director, Gas & Power NNPC
April 24, 2012
Nigerian Association of Energy Economics
Outline
 Overview of the Nigerian Oil & Gas Industry
 Supply Perspective & Challenges
 Investment Opportunities
 Conclusion
2
Overview of the Nigerian Oil & Gas Industry
- Huge Resource Base
Abundant oil and gas reserves base.
Crude Oil Reserves
Natural Gas Reserves
Our Aspiration for Oil
 Grow crude oil reserves from 35bn bbls to 40bn
bbls
• Refocus efforts on exploration both in
existing and frontier basins
 Grow production capacity from about 2mmb/d to
3mmb/d
• Arrest decline in mature assets through
increased work-over and secondary
development activity
• Accelerate new field development plans
 Ensure better linkage of the sector’s activity with
the wider economy, leveraging the National
Content law
4
Our Aspiration for Natural Gas
STRATEGIC THEMES OF GAS
MASTER PLAN
GAS TO POWER
GAS BASED INDUSTRIALISATION
“… By 2014, we would have
positioned Nigeria firmly as the
undisputed regional hub for
gas-based industries such as
fertilizer, petrochemicals and
methanol.”
• Deliver Gas for at least threefold
increase in generation capacity
by 2015
Deliver on President’s Gas
Revolution Agenda to:
• Create regional hub for gas-based
industries – fertilizer, petrochemical
and methanol
• Transform gas sector to value adding
sector
HIGH VALUE EXPORT
LNG
Regional
Pipelines
Consolidate Nigeria’s position and
market share in high value export
markets
• Regional gas pipelines – consolidate
national footprint and influence
5
Projection of Domestic Energy Demand
Socio-economic data on Nigeria point to an era of sustained energy demand growth,
either for vehicular use, industrialization or for electricity generation
6
Outline
 Overview of the Nigerian Oil & Gas Industry
 Supply Perspective & Challenges
 Investment Opportunities
 Conclusion
7
Crude Oil and Condensate Production Profile
3,200
3,000
2,800
Production - MBOPD
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
JV
PSC
High production decline rates in PSC operations
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Unprecedented Growth Requirement in Gas Sector
Delivering the aspiration translates to an aggressive growth which is unprecedented. In reality, a brand new
industry is being created from scratch at a pace which challenges the pace of gas supply development, delivery
of physical infrastructure and stability of the market
Short Term Gas Supply to Power - West Area
Based on current projections, the shortfall in supply in the Western Area for 2012 is estimated at about
400mmcf/d by end year
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Medium Term Power Sector Gas Demand/Supply
Profile
Similarly in the medium term, will align demand with supply. The deficit in 2016 could be bridged
with possible acceleration of the Odidi development slated currently for about 2018
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Challenges of Supply
1. Commercial : Evolution to free market
 Deregulation
 Market led gas pricing
2. Infrastructure
3. Capital
4. Human Capacity
5. Industry Structure – Oil vs Oil & Gas Industry
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Enabling Policy Thrust
The aspiration is supported by a set of enabling policy interventions which are already being
implemented
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Critical Pipeline Infrastructure
Western Gas Infrastructure
1n 2011, we focused on reinforcing and expanding the Western supply infrastructure
1
OBEN – GEREGU
 36” x 136km;
 Project completed in 2011
 Gas supply to Geregu
power plant and access
for gas to the North
WESTERN CPF / OBEN –
KOKO PIPELINE
2
GAS SUPPLY TO OLORUNSHOGO
 24” x 31km;
 Line Pipes procured and all
lengths welded
 Project to be completed by
May 2012
6
2
 Tech configuration
completed by Kellogs
 Ready to commence
Pre-FEED
4
1
3 ELPS A
 24”/36” x 104km;
 Project progressing
steadily with issues
being addressed
6
3
OBIAFU-OBRIKUM-OBEN (OB3)
5
 48” x 127km;
 Contract about to be awarded;
completion in 2013/2014
4
ELPS 2
 36” x 324km;
 Doubling pipeline capacity to 2
bscfd to support the growing
demand in the West
 Construction about to commence
15
Capital Expenditures
JV + PSC
JV only
20,000
20,000
18,000
18,000
16,000
16,000
14,000
12,000
10,000
8,000

14,000
12,000
10,000
8,000
6,000
6,000
4,000
4,000
2,000
2,000
0
0
JV

Significant number of
new oil and gas
projects provide
opportunity to
rationalize for greater
efficiency
22,000
CAPEX - $Million
CAPEX - $Million
22,000
PSC
Exploration
BASE BUSINESS
Dev Drilling & Work over Ongoing Oil Projects
New Oil Projects
Ongoing Gas Projects
New Gas Projects
IPP Projects
High finding, development, and production costs continue to be a challenge in the
conventional and deepwater environments.
Capital costs will average $13.9 billion and $6.1 billion per annum in the JV and PSC
operations respectively, in the 2011 to 2015 period.
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Stimulating Demand – Gas Based Industrialization
- Koko FTZ Gas Industrial Complex
Our gas based industrialisation agenda is kicking off with the Koko FTZ project in Delta State.
This will be Africa’s largest gas industrial city when completed
PETROCHEMICAL PLANT
FERTILIZER PLANT
• 1.3MT/400KT PA PE/PP Plant
• Xenel of Saudi Arabia
• Largest Plant in Africa
• 2*1.3MTPA Fertilizer Plant
• Nagarjuna of India
Anchor
Investments
Critical
Foundation
Projects
FTZ INFRASTRUCTURE
PORT INFRASTRUCTURE
CENTRAL PROCESSING FACILITY
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Outline
 Overview of the Nigerian Oil & Gas Industry
 Supply Perspective & Challenges
 Investment Opportunities
 Conclusion
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Investment Opportunities
1
FINANCIAL SERVICES
7
PIPE MILLING AND
FABRICATION YARDS
$16 Billion
Investment
Opportunity
6
KOKO FTZ INFRASTRUCTURE, PORT
INFRASTRUCTURE & REAL ESTATE
DEVELOPMENT
GAS TRANSMISSION
PIPELINES
2
UPSTREAM GAS
DEVELOPMENT
3
5
4
LNG & LPG PLANTS
GAS PROCESSING FACILITY /
GAS BASED MANUFACTURING
INDUSTRIES
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Outline
 Overview of the Nigerian Oil & Gas Industry
 Supply Perspective & Challenges
 Investment Opportunities
 Conclusion
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Conclusion
1. Demand growth is and will continue to be unprecedented
2. Supply will always be the challenge tempering broad demand
growth
3. Next 5-8 years are critical in addressing key structural issues
impacting supply
4. Good progress so far, but momentum needs to be sustained
5. Significant scope for explosive growth thereafter
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