Gas – Dominant Energy of the Future

Mr. Babs Omotowa

16th January 2015

Managing Director/CEO, Nigeria LNG Limited

Vice President of Bonny Gas Transport Limited.

SYMPOSIUM IN HONOUR OF CHIEF F.R.A. MARINHO AT 80

Nigeria’s Energy Evolution – A glimpse of the future

“Maverick Pioneer”

We celebrate you today

• First MD, Nigerian National Oil Corporation (NNOC)

• First GMD of the NNPC

• Former Board Chairman of the NLNG and BGT.

The World

• World population 9bln in 2050

• Majority in developing countries

• Energy demand will increase

• World demands cleaner energy

Gas fastest growing

BP Energy Outlook 2035 www.dieoff.org

More gas…

6,866 TCF

7,299 TCF

100,000 TCF

Methane Hydrates

• Japan – 1st successful extraction in 2013• Plan commercialization within 10 years

Gas Value

.

Power Transport Cooking and heating

• Cheaper, Cleaner, Abundant, Industrialization, Revenue,

Industries – GTL, Petrochemical, LNG

petrochemical , refining, LNG, GTL Oil Exploration

Qatar example

LNG - 26% mkt share 3 large GTL - Palm, Oryx, Pearl

Mega Industrial cities

Production77mta

Revenue$91b/yr

Employment of 1.3m (local/expats) in Qatar

Qatar – 3rd largest gas reserves, 2nd largest exporter

Transformed from small emirate to global powerhouse

Production400K bbl/d

Revenue$16b/yr

Infrastructure/Service(local content)

Nigeria - Gas

Export - LNG

.

Power generation Domestic LPG Petrochemical (Eleme) Gas Master plan

Initial growth in reserves but now stagnant and still remains largely untapped

1. Gas to power2. Gas based

industrialization3. High value Export

NLNG – 22mta, $80b, 4% GDP 3bcf of gas 700m scf of gas • 350kMT/a – polyethylene, polypropylene

• FDI- $1.2b, $3.7b by 2017• Revenue - $280m

Adequate for all sectors

…Still flaring

• 50% reduction from 1996 • > 1bscf flared daily

Observations

Independent Producers entry

IOCs divestment - 19 OML (11% )

• IOC commitment to Nigeria?

Independent producers capability

• World standards field practices?• Investment to stem natural

decline and growth?

• More investments

• More projects e.g. Bonga, Erha, NLNG

NOC & IOC Cooperation/Trust(?)

1971 till 1999

• Less investment • Divestment (Risk,

uncertainties, etc.)

1999 till date

• JV - budget/funding , projects/contract approval duration, etc• PSC – Reconciliation, Gas ownership, etc.• PIB – divergence even before involvement of legislature.• Insecurity/Bunkering – Collaboration and integrated approach?• NCD – Real capacity development? i.e. Mesaieed city in Qatar

Could more have been achieved working together?

…not any easier

IOC & Independent producers• CAPEX prioritization• Favorable ROI country • Business climate

Investments in gas projects in the short term?

$110 <$50

>50% drop

Oil price

Japan

Europe

US

$18 <$10

$10 <$7

$4 <$2.50

Gas price

Government• Reduced revenue• Inflation/Devaluation• Austerity measures• Social impact

Thoughts

Extend focus on ‘Gas to Power’ to allied industries (Petrochemicals / Methanol etc) in integrated manner

.

The sector needs to work more together in one voice/accord – NOC, IOCs & Independents

Gas is the future and Government role is key on policy, business climate, investment model etc.

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