Gas Supply and Transportation Issues:
Gas to Power Demand
Dr. David Ige
Group Executive Director, Gas & Power
Nigerian National Petroleum Corporation
November 28, 2011
Outline
 Gas Sector Aspirations
 Gas Supply Options
 Infrastructure Update
 Gas to Power Status
 Conclusion
2
Overview of the Nigerian Gas Industry
Gas Resource Base
Nigeria has a huge economic potential trapped in this vast natural gas resource
Proven Natural Gas Reserves, 2010
1,800
1,680
1,600
1,400
Trillion cubic feet
1,200
1,046
1,000
899
800
600
400
265
200
263
245
199
187
176
159
-
600TCF Undiscovered Potential
Source: EU Energy Portal; Transparency International, 2011
Report on Oil and Gas Companies
3
Gas Strategy and Anchor Sectors
STRATEGIC FRAMEWORK FOR
NIGERIAN GAS
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.”
• Significantly increase gas supply
to the Power Sector
• Focused delivery plan to support
existing and ongoing power
plants by PHCN and NIPP
• Deliver Gas for at least 12GW by
2015
Deliver on President’s Gas
Revolution Agenda to:
• Position Nigeria as the regional hub
for gas-based industries such as
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
• Targeted LNG export opportunities
• Regional gas pipelines that help
consolidate nation’s footprint and
influence
4
Gas Consumption and Demand Forecast
Based on the forecast growth in domestic gas demand, we foresee opportunities in
transmission and marketing
Nigeria’s Historical and Projected Gas Demand
4,500
4,000
3,500
2,500
2,000
1,500
1,000
500
0
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
mmscf
3,000
Year
Power
LDC
GBI
WAGP
5
Enabling Sector Policy – Stimulating Supply
To support the agenda, a set of enabling policies were approved by His Excellency, Dr.
Goodluck Jonathan. These are being rolled out and have created a major boost and
jumpstart for the sector’s agenda
Scalable Gas
Infrastructure
Blueprint
6
Outline
 Gas Sector Aspirations
 Gas Supply Options
 Infrastructure Update
 Gas to Power Status
 Conclusion
7
Gas Availability
- Sources of Gas in Domestic Market
3 Sources of Gas in Nigeria
FGN Mandated Domestic
Supply Obligations (DSO)
 Most significant short/medium term
planned source of gas
 Allocation of available gas from
DSO sources managed by GACN
Direct Bilateral Arrangement
between Suppliers and
Buyers
Unutilized Gas Flares
 Gas from suppliers over and above their
 Small flared gas for which no plan exists
respective DSO
 Managed bilaterally on a willing buyer,
to utilize but 3rd party players may
propose utilization plans
willing seller basis i.e. negotiated terms
 Limited volume in the short term,
particularly from IOCs.
8
Domestic Supply Obligation – Western Area Supply
Projects
5
4
3
2
1
1
Dry Gas
2
Existing Wet Gas
3
Ongoing Projects - Wet Gas
4
FID Acceleration - Wet Gas
5
Gas from East
9
Domestic Supply Obligation – Eastern Area Supply
Projects
10
Analysis of Stranded Gas in the East
A significant amount of gas is stranded currently in the East mainly due to infrastructure and
the delays in NIPP power plants
11
Strategy Aggregator Company:
Gas Aggregation Company Nigeria (GACN)
GACN was established to manage the Domestic Supply Obligations – Facilitate gas access and
aggregation of gas pricing
 Gas Aggregation Company
Nigeria (GACN) Contact
Details:
 Office: #1B Malcolm Fraser
Street, Asokoro, Abuja
 Telephone: 098759045
 Email: info@gacn-nigeria.com
12
Outline
 Gas Sector Aspirations
 Gas Supply Options
 Infrastructure Update
 Gas to Power Status
 Conclusion
13
Map showing critical Infrastructures
Kaduna
Abuja
Geregu
Olorunshogo
Omotosho
Ihovbor
Oben
Egbin
Koko Port
Sapele
Ob/Ob
Afam
Delta IV
Escravos
Utorogu
Calabar
Bonny LNG
14
Status of Major Infrastructure Projects
15
Western Network Pipeline System
Olorunshogo Permanent Line
• 24”permanent line to Olorunshogo.
• Recent contract approval by Mr. P and
contractor being mobilized. Due Apr
2012
• Will address pressure problem at
Olorunsogo
Looping ELPS C
 Doubling capacity to 2bcf/d from
Warri to lagos
 Due August 2012
 Pipes expected in October
ELPS A
 Escravos to Warri expansion
from 300mmcf/d to 600mmcf/d
 Will allow immediate addition
of 80mmcf/d from Escravos
 Due end 2011
16
Eastern Network Pipeline System
Completion of the NOPL pipeline in 2012 will unlock stranded gas from MPN (100mmcf/d); NAOC
Ebocha (50mmcf/d) and TEPNG (60mmcf/d), bringing them to Obigbo Node hub from where Alaoji and
other Eastern Power plants can be supplied
17
Eastern Network Pipeline System
18
Ongoing Pipeline Projects –ELPS Phase 1
Horizontal Directional Drilling Operation across Warri –
Benin Express way
Lowering of welded line pipes at NGC Right of Way
through Jesse, Delta State
Welding activities for Ethiope River Crossing
19
Ongoing Pipeline Projects –Alaoji, Olorunshogo
Pipe stacked on Site
ROW Clearing
Offloading pipe on site
20
Roadmap to Securing Alternative Funding for
Pipelines
Sept 2011
Assess Pipeline Tariff
Dec 2011
Review Tariff
Affordability
Jan 2012
Review revenue
securitisation
Jun 2012
Source for
Investors
Dec 2012
Secure Financial
Closure
Description
Assessment of
pipeline tariff required
to make 3rd party
financing viable – this
study now completed
by NNPC
Engagement of
stakeholders (e.g.
NERC) on affordability
of tariff and implication
for medium-term MYTO
Checking of possible
tariff revenue
securitisation to
make 3rd party
financing bankable
Road show to attract
investors / financiers,
selection of willing
financiers/investors
Investors secure financial
closure
21
Outline
 Gas Sector Aspirations
 Gas Supply Options
 Infrastructure Update
 Gas to Power Status
 Conclusion
22
Gas to Power
Our efforts in Power are focused on meeting a projected 3.5 bcf/d of gas demand by over 30
existing and proposed power plants.
1
PHCN
818 mmscfd
•
•
•
•
•
Egbin + AES
Delta IV
Sapele
Olorunshogo
Omotosho
• Geregu
• Afam I-V
Power Sector Gas Demand
PHCN
NIPP
JV IPP
3rd Party IPP
3500
3
NIPP
1,297 mmscfd
•
•
•
•
•
Olorunshogo
Sapele
Geregu
Omotosho
Ihovbor
•
•
•
•
•
JV IPP
322 mmscfd
•
•
•
•
•
Chevron Agura
NAOC, Okpai
Total, Obite
Shell, Afam VI
ExxonMobil, QIT
Egbema
Gbaran
Omoku
Alaoji
Calabar
3000
2500
mmscfd
2
2000
1500
1000
500
4
3rd Party IPP
531 mmscfd
Numerous 3rd party IPP in
consultation with the Bulk Trader
0
Q4 2011
2012
2013
2014
2015
23
Gas to Power Supply Outlook
24
New Gas Sources of Gas to Bridge Gap
New sources of gas, hitherto not considered for domestic market e.g. bringing offshore PSC
gas to shore, are being evaluated. This could add 400-500 mmscf/d by 2016/17
1
Erha Bosi - Development of offshore processing
plant with offshore pipeline to transport about
400mmscfd of gas currently being re-injected to
the western CPF in Koko.
Koko
2
1
CAMAC Oyo Field Development – Following
options are being looked to monetized the
currently re-injected 100-200mmscfd gas in Oyo
field :
a.
Offshore pipeline from Oyo to the
western CPF in Koko
b.
Offshore pipeline to ELPS via Chevron
Okan gas processing plant
c.
Offshore pipeline to OGGS
2
25
Outline
 Gas Sector Aspirations
 Gas Supply Options
 Infrastructure Update
 Gas to Power Status
 Conclusion
26
Conclusion
 We have an enabling policy framework is in place to support
critical mass of gas supply development for the power sector
 Very good progress being made in development of a robust gas
grid that will enable rapid growth of supply from diverse sources
increasing the liquidity of supply
 Medium term outlook is promising and power sector investors can
be assured of supply
27
APPENDIX
28
Role of GACN in Domestic Gas Market
 Was created to manage Domestic Gas Supply obligations volumes
 First point of contact for Gas Buyers to access gas for domestic market use
 Primary aim
 Coordinate and manage wholesale gas supply from Gas Producers to eligible Gas
Purchasers within Nigeria
 Ensuring a balanced growth of all critical sectors of the economy: Power, Gas Based
Industries and Local Distribution Companies
 Conduct due diligence assessment on eligible Gas Buyers
 Allocate available gas from the DSO to credible buyers successful on assessment
 Facilitate the expeditious execution of the GSAA and GTA between the buyer, seller
and transporter respectively
 Operational since Jan 2010
29
Due Diligence General Process
30
Map showing critical Infrastructures
31
31