May, 2019 www.oandoplc.com
Independent Players In Africa: Portfolio and Strategies
Africa E&P Summit and Exhibition
Presented by:
Ainojie ‘Alex’ IruneChief Operating Officer, OER, Nigeria
The Event
22 - 23 May 2019Date
The Africa E&P Summit and Exhibition
Event
Venue IET London: Savoy Place
Panel Discussion
2
Panelists
Ainojie ‘Alex’ IruneChief Operating Officer, Oando Energy Resources
Arkangelo OjokDirector General, Planning, Training and Research, Ministry of Petroleum (Sudan)
Dr Ibiwari Lorvde JackExecutive Director, Monitoring & Inspection - JDA
Celedónio Plácido VieiraDirector of Marketing & Business Dev. of Petroguin-EP National Oil Company
Menno de RuigActing VP Exploration for Africa and Middle East Shell
Austin AvuruChief Executive Officer Seplat
Jerreh BarrowCommissioner for Petroleum,Ministry of Petroleum and Energy (Gambia)
Patrick Allman-WardCEODana Gas
AND MORE
3
Production Oil: 20.1MMbpd Production Gas: 92.1Bcf% to world (Oil): 21.7
NORTH AMERICA &
MEXICO
AFRICA
Production Oil: 7.8MMbpd Production Gas: 58.8Bcf% to world (oil): 8.5
ASIA & PACIFIC
MIDDLE EAST
Production Oil: 17.8MMbpd Production Gas: 102.3Bcf% to world (oil): 19.2
EUROPE & EUROSIA
SOUTH & CENTRAL AMERICA
Production Oil: 7.1MMbpd Production Gas: 17.3Bcf% to World (Oil): 7.8
Production Oil: 8.0MMbpd Production Gas: 21.8Bcf% to world (oil): 8.7
Production Oil: 31.5MMbpd Production Gas: 63.8Bcf% to world (oil): 34.1
Source: BP Statistical Review 2018
OIL RESERVES
Bnboe
1,697
OIL PRODUCTION GAS RESERVES GAS PRODUCTION
MMbpd Tcm Bcf
92.6 193.5 356.1
Global Industry Overview
Average OilConsumption
>10YEARS AVERAGE FOR 3 CONSECUTIVE YEAR
Average Energy Consumption
LATEST SINCE 2013
Market Share of NOCs & Oil
Majors
2.2%
73%
1.8%
4
1.52MMBbls Oil Production
12.2BBls Proven Oil Reserve
153.1Tcf Gas Reserve
2.0MMBbls Oil Production
37.5BBls Proven Oil Reserve
183.7Tcf Gas Reserve
1.7MMBbls Oil Production
9.5BBls Proven Oil Reserve
14.9Tcf Gas Reserve
Nigeria
Algeria
Angola
*Source: BP Statistical Review 2018
Africa Context: Market Share
19.1%
Algeria
20.7%
Angola
Nigeria
24.6%
4%
World EnergyDemand
Market share ofNOCs & Oil Majors
90%
Oil MarketShare Growth in Energy Growth in Energy
Consumption ProductionGrowth in OilProduction
Growth in GasProduction
2.9% 5.7% 5.0% 9.0%
P R I C E C R A S H R E C OV E R Y F OR E C A S T
$
West TexasIntermediate (WTI) spot price
70.2
75.25
363.86
49.52 53.26
98.6893.80
87.84
63.00
43.47
38.23 33.94
2015 2016 2017 2018 2019 2020
5
Global population grows from 7.4 billion today to9.2 billion people in 2040
Africa’s population to hit~2bn by 2040 - the fastest rate across major regions
Africa will have the largest working-age population across regions by 2040
Strong global demand for cleaner energy source. Power accounts for ~50% of demand growth
INCREASING DEMAND
Business Model
Optimize Portfolio
Internal Efficiency
MANAGING & BENEFITING FROM SHIFT
Positioning for Increased Participation
62.80
95% NYMEX futures price
confidence upper bound
95% NYMEX futures price
confidence lower bound
NYMEX futures price
Source: Energy Information Agency
The Opportunities
6
Oil consumption as a % of global: 4.1%, although it grew regionally by 2.5%
Oil production as a % of global:8.6%, down 0.4% from 2015
By 2050, Africa’s oil & gas is set to increase by 74% and global consumption by 45%.Africa’s share of global consumption willincrease from 4.3% to 5.1%
Shale oil potential Libya 5th globally 26 Billion barrels
Gas Reserves503.3 Tcf7.6% of world’s proven reserves
Oil Reserves129.0 Billion barrels7.5% of the world’s proven reserves
Potential industry investment in Nigeria, Egypt, Libya, Angola & Mozambique estimated at US$40 billion per annum over the next 5 years
Natural gas pipeline exports were 45.6Bcm. 5.1% of the world’s exports in 2015
Source: PwC
Refinery capacity as % of global: 3.5%
Actual throughput 2016: 2.5% or 2.05 million bbl/day
Gas Flaring 32Bcf of gas flared 21% of global
Energy demand growing at 3.5% p.a.
Energy consumption per capita remains theworld’s lowest, as it increases modestly, by1.2% p.a.
AFRICA’S IMMENSE OPPORTUNITIES
Africa: Increasing Participation Through Partnerships
Billion
$38
$37
UpstreamM&A
Deals
Total Transaction Value
Total Reserve Value
>
Billion
Exit Entry
Source: IHS Herold, list not exhaustive* Excluding Nigeria 7
African Upstream M&A (2009 - 2014)
82
8
Exit
Other Assets
Oando Assets
NIGERIA
Nigeria: Increasing Participation Through Partnerships
M&A is a major value driver for indigenous E&P Companies in Nigeria
Source: IHS Herold; list not exhausitve
$1.5Bn
TransactionValueOMLs 60-63, OML 145, OML 131
OML 4
OML 38OML 41
OML 42
In Transactions Value
>1.1BnBoe
In Reserves
OML 26
OML 40
OML 30
OML 34
OML 130
Upcoming IOC Divestments
Company Assets Interests
Shell, Total & ENI OMLs 18, 24, 25 & 29 45%
Chevron OMLs 52, 53, 55, 83 & 85 40%
Exxon Mobil OML 138 45%
Possible Marginal Field Rounds Expected in2019
> $5.8Bn
Unlocking The Potentials
9
Strong Leadership & Good Governance 5
6
7
8
1
2
3
4Improve Business Environment to attract Investment
Economic Diversification & Regional Integration
Drive Financial Inclusion & Access to Capital
Effective Policies
Prioritize Infrastructure Access to Technology
Youth Empowerment & Job Creation
Solving Africa’s Oil And Gas Challenges
10
GOVERNMENTOIL & GAS COMPANIES
Investment in Infrastructure
Access to Sustainable Financing
Increased Domestic Resources Mobilization
Promote domestic oil & gas market
development projects to increase local demand
Investor friendly tax, trade and privatization
policies to attract investment
Predictable regulatory, commercial and legal framework across the continent to boost investor confidence
Government intervention in combating the security issues in the continent which threaten assets and reduce oil & gas supply
Innovation & Technology to drive efficiency
Creative Financing Solutions such as obtaining funds from international markets or forming partnerships based on technical expertise to share costs
Investment in infrastructure to increase production
Conglomerate approach to infrastructure development such that several companies create a framework to construct infrastructure for joint use
Engagement of the Government to increase the domestic market
Nigerian Content
Paved the way for the creation of Nigerian Content Management Board (NCDMB), and how the
business of Oil & Gas was done in Nigeria
NCMDB's Contributions So Far
April 22, 2010
The Nigerian Oil & Gas Industry Content Development
(NOGICD) Act was signed into law
Focused on achieving 70% in-country value retention within the next 10 years, and retain $14billion out of the$20billion yearly industry spend
NCDMB and the Bank of Industry (BOI) have relaxed conditions for accessing US$200m Nigerian Content Intervention Fund (NCI Fund) by qualified oil and gas service companies
Signed agre ment to reduce contracting cycle time and made it possible to review contracts within 100 days. Zabazaba Deepwater project reviewed in 14
months instead of the usual 24 to 36 months
Added 30,000 direct jobs, and has a strategic action plan to create 30 ,0 0 direct and indirect employments over the next 10-years
Local businesses retained about $5billion out of an estimated $20billion spent annually in the sector
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A framework agreement that governs the conception, planning, funding and delivery of JV opportunities that can be done by Oando, and thus enhances the value to the JV.
Benefits include:• Implementation of lower ranking opportunities in the JV
portfolio• Inherent Local Content Benefits• Incremental Production• Provides a form of Risk Reduction for the JV• Knowledge Transfer from International Partner to
Indigenous Partner• Speed and Flexibility – fast-tracked contracting
Tactical Service Agreement
Overcoming Challenges: An Oando Case Study
12
Re-opening of shut-in Wells in Ebocha/Mbede
Improvement in LAR facility integrity and safety due to better crude stabilization
Improved LARexport pipelinehaulage capacity
Increase sale gas production
Improved Well performance in producing LAR
wells
IMPROVE RATES FROM LAR CHOKED-DOWN WELLS AND
WELLS PRESSURE INTERFERENCES
1 2 3 4 5
13
EXPECTED OUTCOME
Overcoming Challenges: An Oando Case Study
Independent Power Plant: Okpai
Both of them finalized to produce highefficiency, environmental friendly electricpower
Oando and its JV partner built 450 MW power plant valued at$320m, after entering a securitization agreement with the federal government in 2001.
The Okpai Combined Cycle PowerPlanthasa:
2 Gas Turbine GenerationSets (ALSTOM – GT13E2) of 165 MW each
A Condensate Type Steam Turbine of150MW; plus Balance of Plant (BOP) andPlantfacilities
Open Cycle, fueled by natural gas and air,with an efficiencyof 34.28%,
Water/Steam Cycle, fueled by the GasTurbines exhaust gases, raising theefficiencyup to 55.03%
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Egina: A Colossal Project in Ultra Deep-water
Setting A Benchmark…
EGINA - How prepared are Regulators & Indigenous players
Industry Capability
Project Management
All the project management teams, for both Total and the main EPC Contractors were based in Lagos - a first for a Nigerian FPSO project
Right Partnership
The Detailed Engineering of the Egina FPSO was executed in-country by Samsung with a consortium of Nigerian engineering companies (NETCO, DeltaAfrik, IESL, Crestech), employing about 250 Nigerianengineers
Right Infrastructure
A new fabrication and Integration yard was built and it was Africa's first FPSO integration quay.
Several existing yards and manufacturing sites in other parts of Nigeria were upgraded for the fabrication of various components of the Egina project in Port-Harcourt, Onne and Lagos
~60,000 tons of equipment were fabricated in Nigeria, representing 35% of fabrication for the entire project
15
Dangote Refineries
An integrated refinery and petrochemical complex in the Lekki Free Zone near Lagos
The refinery will produce Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene
Aimed to double Nigeria’s refining capacity and help in meeting the increasing demand for fuels, while providing cost savings by reducing crude importation
The Dangote oil refinery is being constructed through $3bn equity and $6bn loan capital
The project is expected to generate 9,500 direct and 25,000 indirect jobs with offered funding of N251.3bn ($0.997m) from the US Trade and development Agency
Land Size
2,635ha
Project Cost
$9.0billion
Production
650,000 barrelsper day
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