15 September 2015 Where are the opportunities in oil & gas in West Africa?

The better the question. The better the answer.The better the world works.

15 September 2015

Where are the opportunities in oil & gas in West Africa?

Qualifications:► MBA - Richard Ivey School of Business, University

of Western Ontario

► ACA - Associate member of the Institute of Chartered Accountants of India

► B. Sc (Honours) Mathematical Statistics

Experience

► Jai supports our ASEAN highest-priority accounts. He also supports the area's sector leaders with high-priority pursuits and other regional and global sector initiatives

► Prior to joining EY, Jai was a Equity Analyst focused on oil and gas equity/industry research covering India & Canada. His prior experience includes 8 years in the Middle East with international banks, supporting clients in the Oil & Gas sector. He has also worked with a US multinational corporation in a regional role in Singapore for 5 years

Key projects

► Presentation on global LNG market at International Gas Union Meeting, South Korea

► Strategic review of major National Oil Companies with a view to identify key areas of focus and growth

► Study of evolving dynamics of the lubricant industry in Asia for determining market entry strategies for a National Oil Company

► Medium term business plan for a National Oil Company, identifying key areas of focus, including rationalization of ownership structure with a view to raising capital

► Thought leadership on Oilfield services in Asia presenting new approaches and business models

► Study on the impact of US shale gas on petrochemical manufacturers in Asia

Analyst Oil & Gas EY Knowledge

Ernst & Young Solutions LLPOne Raffles Quay, North Tower, Level 18 048583 , Singapore

Phone: +64 6309 6611Mobile +65 9879 [email protected]

12 years professionalexperience inOil and Gas Industry, with focus on Asia and the Middle East.

Select oil and gas clients in EY► Chevron► Petronas► Pertamina► PTT► ENH Mozambique► Temasek (Pavilion Energy)► Mitsui (Oil & Gas)► JX Nippon

Previous clients ► Shell Markets Middle East► Gulf Oil Middle East ► Elf Aquitaine► McDermott-ETPM

Jaishankar Krishnamurthy, Analyst - Oil & Gas Strategic Market Intelligence, EY Knowledge

EY in Oil & Gas: Strong client base and global network

► Oil and gas is one of EY’s priority industry sectors. ► We have a global oil and gas network through our 15 global

Centres of Excellence, which interacts regularly. ► Through these Centres of Excellence, we make investment

in keeping our resource pool connected with the latest in the industry (such as familiarity with local and internal GAAPs, regulatory frameworks and taxation regimes), and this allows us to maintain a leading edge in oil and gas knowledge giving us the ability to provide highest quality deliverables and service to clients on a global basis.

► We have been involved in most of the industry transactions over the recent years, both on a regional and global basis.

► ExxonMobil ► ConocoPhillips

► Amerada Hess► Apache► Koch► Petro-Canada► Sunoco► Talisman Energy► Tesoro► Transocean Inc.► Valero Energy

Corp.► Weatherford Int.

North America

Region specific players

► Beach Petroleum

► BHPB Petroleum► Santos► Tap Oil► Woodside

Australasia

► Abu Dhabi Gas Co► Abu Dhabi Onshore

Co► Addax & Oryx► Bahrain Petroleum ► Kenol Kopil► Kufpec► Kuwait Petroleum ► Kuwait Oil Co► Kuwait National

Petroleum Co.► Oman Gas Co.► Oman Oil Co.► Petro SA► Qatar Petroleum► Qatar Liquefied Gas

Co.► Saudi Aramco► Saudi Shell Refinery

Africa and Middle East

► BG► Eni► Gazprom► Hellenic

Petroleum► Lukoil► Orlen► Petroplus► RWE Transgas► Sibneft► Statoil► Rosneft► Vitol► Yukos

Europe and CIS

Global players Our oil and gas centres

► Cairn Energy► CNOOC► CNPC► Indian Oil► PetroChina► Petronas► PTT► Sinochem► Sinopec

Asia

► Petroleo Brasileiro

► Petróleos de Venezuela

► YPF

South America

►Chevron ►Shell ►Total► BP

► Carlyle► Blackstone► Babcock & Br► Temasek► Merrill Lynch► Warburg Pincus► Standard

Chartered

PE House

EY has an established global network of more than 10,300 experienced professionals supported by 15 oil and gas centers of excellence situated in key locations for the industry

► INPEX► Itochu Corp► JAPEX

► Mitsui & Co.► MOECO► Sumitomo Corp

► JX Holdings► Marubeni Corp► Mitsubishi Corp

Japan

EY in Africa

EY Africa has a presence in 36 African countries and provides support to the remaining African countries. Our Oil & Gas professionals across Africa work closely with all of EY’s 15 Global Oil & Gas centres. Our O&G centres in Africa are based in Cape Town, Johannesburg and Lagos.

Local insights► EY has acted as advisors on oil and

gas transactions throughout Africa► Our Africa based Oil & Gas

professionals provide intelligence and advice on relevant local transaction issues and delivery capability

► Our global network provides our clients an unrivalled access to the international universe of industry leaders and transaction opportunities

EY offers its clients an integrated service, leveraging strong relationships with oil and gas companies, local input and transaction advisory expertise

West Africa: Significant reserves and growing production: excellent opportunities for upstream

2004 2009 2014 2015F 2020F -

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Gas Liquids

Break-up of production (mm-boe)

O&G Countries: Angola, Benin, Burkina Faso, Cameroon, Chad, Congo, Cote d’Ivoire, Equatorial Guinea, Gabon, Ghana, Guinea, Mauritania, Namibia, Niger, Nigeria, Senegal, Sierra Leone, Togo

Source: Wood Mackenzie


Nigeria: the largest oil producer in Africa and among the world's top five exporters of LNG► With a production capacity of over 3.2 million b/d of oil, Nigeria is theoretically the largest producer in Africa, although

operation issues and sabotage mean that it has slipped behind Angola in terms of actual output. ► Most new production is coming from offshore deep-water reserves, due to attractive terms in previous licensing

rounds► The country is estimated to have in excess of 183 tcf in gas reserves and the federal government has now set in place

a gas master plan that will end gas flaring and monetise its resources. ► LNG remains the primary means of doing this, although more attention is being paid to local gas use as well as

regional pipeline exports.

2013 2014 2015 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f30

31

32

33

34

35

36

37

38

760

780

800

820

840

860

880

900

920

Proven oil reserves, bn bbl Crude, NGPL & other liquids prod, mn bbl/year

Bn b

bl

mn

bbl/y

ear

Nigeria: Oil reserves and crude oil production 2013 - 2024

Source: BMI Research Publication

Overview of developments in oil and gas industry in Africa

Angola: pre-salt prospects seen as analogues to notable Brazilian discoveries

► Angola is southern Africa's most dynamic oil producer and reached capacity of 2 million b/d in 2009-10 but has since been forced to restrict some production because of OPEC targets, although the government often does not heed the cartel's regulations.

► It was the first African country to licence deepwater areas for oil exploration and its successes have drawn in a high-level investor mix, featuring most of the super-majors and some NOCs.

► Angolan oil production has quadrupled over the past two decades while oil reserves have increased to around 13 billion barrels – with a fast-paced new development schedule of around 1 million b/d of oil laid out to 2015, albeit against a backdrop of expected declines in older fields.

Angola: Oil reserves and crude oil production 2013 - 2024

2013 2014 2015 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f0

2

4

6

8

10

12

0

100

200

300

400

500

600

700

800

900

Proven oil reserves, bn bbl Crude, NGPL & other liquids prod, mn bbl/year

Bn b

bl

mn

bbl/y

ear


Ghana: steep growth in production by 2020

► While the O&G industry is at a very nascent stage, oil production has seen a significant rise since 2010► The industry is largely dominated by private players due to the large amount of investment required for exploring oil

fields► Key oil fields: Jubilee, Saltpond, Twenboa, Enyenra, Ntomme and Sankofa oil field► Ghana’s location is perfectly supported by its maritime infrastructure, which is considered advanced compared to that

of other low-income African countries

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20240

100

200

300

400

500

600

700

800

900

0

10

20

30

40

50

60

70

80

90

100

Proven oil reserves, mn bbl Crude, NGPL & other liquids prod, mn bbl/year

Oil

rese

rves

(mm

bbl

)

Crud

e pr

oduc

tion

(mm

bbl

/yea

r)

Ghana: Oil reserves and crude oil production 2013 - 2024


Cote d’Ivoire: Government has aggressive plans to triple output by 2020► Oil and gas production in Ivory Coast began in the 1980s. Despite political instability over the last decade and the civil

war having led to a slow-down in investments, 14 new production sharing agreements were signed by the Government and 19 blocks out of the 33 available were granted to 11 petroleum companies since the end of 2011

► Oil exports represent c.30% of the State’s export revenues and the Government hopes to produce more than 200,000 barrels per day by 2020. While oil exploration and production is picking up, the production of natural gas has also remained important to the country’s economy

► The majority of Ivory Coast’s electricity is generated through natural gas-powered stations and the country exports electricity to Ghana, Burkina Faso, Benin, Togo and Mali, with plans to further expand its exports to other countries in West Africa

Cote d’Ivoire: Oil and gas production


2013 2014 2015f 2016f 2017f 2018f 2019f 2020f0

10

20

30

40

50

60

70

80

Oil Gas

kb

oe

Opportunities in other countries

• Has proven reserves of 1.9 billion barrels of oil and 28.3 billion cubic meters of gas• Produced an average of 244,000 bpd and 100 million cubic meters of gas per in

2014• Will be least exposed due to more proven basins, high prospectively and the range

of players active in its waters• Investment of USD9.2 billion across 118 fields have been planned for the

upstream sector

Gabon

• Has proven reserves of 990 million barrels of oil and 250 billion cubic meter of gas• Produced an average of 259,000 bpd and 7 billion cubic meter of gas per in 2014• Intends to leverage the Marathon-led discoveries and developments into rapid

economic growth

Equatorial Guinea

• Has proven reserves of 183 million barrels of oil and 135 billion cubic meters of gas• Produced an average of 75,000 bpd and 400 million cubic meters of gas per in

2014• Investment of USD6.1 billion across 50 fields in planned for the upstream sector

Cameroon

Challenges

Uncertain regulatory framework• Governments around Africa are

reviewing or developing their energy policies.

• Many countries are investigating changes in the terms, taxation regulations and state participation.

Corruption• Governments around Africa are

reviewing or developing their energy policies.

• Many countries are investigating changes in the terms, taxation regulations and state participation.

Inadequate infrastructure• Inadequate infrastructure remains an

obstacle towards Africa achieving its full economic and energy growth potential.

Setup costs• With a significant downturn in oil prices, E&P

companies are looking to streamline operations

• Setup costs in Africa are elevated due to complex bureaucratic structures, regulations and lack of infrastructure.

Lack of skilled resources• A universal challenge across the industry

is a lack of skilled labor

• This is compounded in Africa due to the requirement for E&P companies to comply with national participation and local content obligations

Crime• Shell reports that criminal gangs are

targeting, damaging and bunkering an estimated 150K bbl/d in Nigeria alone.

EY Oil & Gas Statement of Capabilities

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9 May 2008

EY | Assurance | Tax | Transactions | Advisory

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How EY’s Global Oil & Gas Center can help your businessThe oil and gas sector is constantly changing. Increasingly uncertain energy policies, geopolitical complexities, cost management and climate change all present significant challenges. EY’s Global Oil & Gas Center supports a global network of more than 10,000 oil and gas professionals with extensive experience in providing assurance, tax, transaction and advisory services across the upstream, midstream, downstream and oil field sub-sectors. The center works to anticipate market trends, execute the mobility of our global resources and articulate points of view on relevant key sector issues. With our deep sector focus, we can help your organization drive down costs and compete more effectively.

© 2015 Ernst & Young Solutions LLP.

All Rights Reserved.EYG no. DW0430CSG/GSC2014/1419737ED 0115

In line with EY’s commitment to minimize its impact on the environment,this document has been printed on paper with a high recycled content.This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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15 September 2015 Where are the opportunities in oil & gas in West Africa?

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