overview of the nigerian oil and gas industry
DESCRIPTION
Overview of the Nigerian Oil and Gas IndustryTRANSCRIPT
NNPC
Overview of the Nigerian Oil and Gas Industry: Upstream, Midstream &
Downstream Activities
August 22, 2012
ByGroup Coordinator
Corporate Planning & Strategy (CP&S)
2
Overview Oil & Gas Value Chain Oil & Gas Industry & Economy
Upstream Sector Commercial Arrangements E & P Trends in the Nigerian Upstream
Midstream Sector Refining Trends Natural Gas/LNG
Downstream Sector Retail Marketing
Structure of the IndustryCurrentReforms Post PIB Structure
Concluding Remarks
Overview of the Nigerian Oil & Gas IndustryPresentation Outline
3
Overview of the Nigerian Oil & Gas IndustryThe Oil & Gas Value Chain-Upstream, Midstream, Downstream
Downstream
Midstream
Upstream
Activities related to winning of crude oil and gas, drilling and
operation of oil and gas producing wells, construction and operation
of oil and gas gathering, separation and treatment facilities and
transportation of personnel and equipment to and from upstream
petroleum locations
Construction and operation of crude oil and gas transport
pipelines, oil refineries and gas processing facilities, oil and gas storage facilities and coastal or
ocean going tankers, rail cars and trucks for transporting and
marketing petroleum products on wholesale basis
Construction and operation of pipelines for distributing and
marketing petroleum products and gas to small customers, storage tank farm for petroleum products and city
gate reception terminals for gas Distribution and the sale, marketing and retailing of petroleum and gas
products
Beyond primary use of hydrocarbons, there are significant secondary derivatives that are essential for a modern
economy
Overview of the Nigerian Oil & Gas IndustryOil & Gas Industry and the Nigerian Economy
Proven Oil Reserves estimated at 37.2bn barrels as at Jan 2012
Main Stay of the
Nigerian Economy
Major source of Foreign Direct Investment
Proven Gas Reserves estimated at 185tcf as at Jan 2012
About 80% of Government Revenue
About 90% of Foreign Exchange Earnings
Focus of Exploration has shifted to Frontier Offshore acreages
Major Export of Nigerian Economy
Overview of the Nigerian Oil & Gas Industry Linkages of the Oil & Gas Industry to Economy
E & P ActivitiesOil & Gas SupplyFinancial ServicesCommunication
Petroleum ProductsPetrochemicalsChemicalsFertilizer
ConstructionCommunication,Tourism,Financial Services,Agriculture
Power -IPPsManufacturingFuel to RigsCommunication
Retail OutletsTransportHaulageManufacturing
DistributionTradingPipelines, Storage Depots
The economic development of any Nation is influenced by the Real Sectors
of the Economy
6
Upstream Sector
License Acquisition
Pre-Drilling Exploration
Exploratory &Development Drilling
Production
Abandonment & Restoration
Overview of the Nigerian Oil & Gas IndustryUpstream Sector
The upstream oil sector refers to the searching for and the recovery and production of crude oil and natural gas. The various stages are as indicated in the flow chart above
Stages of Exploration & Production (E&P)
Realization of Country’s Economic Potential
Development of National Expertise
Broad Control of Overall Activity
Balanced Risk / RewardRelationship
Stable Politicaland Fiscal Environment
Management of Operations on Sound Commercial Basis
Government Investor Company
Maximum Economic Development of Hydrocarbon Resources
Fiscal Terms
Fiscal terms act as the contractual balance between the financial Objectives of Government and the
investor Company
Overview of the Nigerian Oil & Gas IndustryUpstream SectorBalancing Host Government and Investor Company Objectives
Gov
ernm
ent R
even
ue ($
mill
ion)
Government Take (% Project Profit)
Terms too lenient Terms too tough
Need to increase government take
Optimal terms
Need to provide greater incentive
Gov
ernm
ent R
even
ue
($ m
illio
n)
Government Take (% Project Economic Rent)
Terms too lenient Terms too tough
Need to increase government take
Optimal terms
Need to provide greater incentive
Overview of the Nigerian Oil & Gas IndustryUpstream SectorCommercial Arrangements
Balancing Govt. “Take”
Royalty/PPT
System
IOCs in JV with NNPC
Indigenous companies as concessionaire
Production Sharing Contracts
NNPC as Concessionaire,
IOC as Contractor
Indigenous companies as concessionaire and IOC as
contractor
Risk Service
Contracts
NNPC/NPDC as Concessionaire in RSC with AENR &
SINOPEC
Nigerian Fiscal Arrangement
International Oil Companies (IOCs) relinquish wells that are not commercially viableWells are assigned to indigenous Oil CompaniesContractor is taxed under Companies PPT Act (PPT) regime at 66.75% and 85% thereafter
Marginal Field Concession
Contractor undertakes exploration, development & Production on behalf of HolderContractor has no title to OilContractor is taxed under Companies Income Tax Act (CITA) on service fees at 30%
Service Contract
NNPC is the Holder of oil LicensesIOCs or Indigenous Companies are engaged by NNPC as ContractorsContractor bears the risks and recover cost thru cost oilTaxation is under the PPT Act Regime and is at 50%
Production Sharing
Contracts (PSC)
Between International Oil Companies (IOCs) and NNPCTax Rate of 65.75% for the 1st 5yrs and 85%, thereafterTax Payable modified by the terms of MOUsJVs currently being phased out
Joint Ventures
Overview of the Nigerian Oil & Gas IndustryUpstream SectorCommercial Arrangements (2)
Overview of the Nigerian Oil & Gas IndustryUpstream SectorFactors that Influence the Cost of E&P
Upstream Capital
Cost
Labour Cost
Technology &
Environment
Crude Oil
Price
Rig Costs
Construction Cost
Steel Market
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
80,000
130,000
180,000
230,000
280,000
330,000
380,000
430,000
480,000
0
20
40
60
80
100
120
140
Capital ExpenditureCrude Oil Price Movement
Capi
tal E
xpen
d. (U
S$M
ill.)
$/bbl
Crude Oil Prices Clearly Influencing E&P Spending
The sustained high crude oil price is expected to continue to drive up oil and gas investment in 2012
More E&P activities are likely to be seen as high oil price makes oil projects economics more robust
High oil prices will allow oilfield service and drilling companies to invest in E&P activities and these activities will contribute to more pipeline and infrastructure activities
More activities are also expected in Unconventional Oil & Gas like Shale and Oil Sands
Composite barrel and its components ($/b)
E & P Trends in the Nigerian Upstream
0
5
10
15
20
25
Oil GasNo.
of
Rigs
per
day
02468
101214161820
Land Offshore
No.
of R
igs
per
Day
2005 2006 2007 2008 2009 201002468
101214161820
9
19
14
6 64
No.
of W
ells
Exploratory Drilling on the decline despite high oil
Prices
2005 2006 2007 2008 2009 20100
20406080
100120140160
106
150138
57 5774
No.
of W
ells Developmental activities picking
up in order to sustain produc-tion.
Rig Count by Energy Type
Exploratory Well ActivitiesDevelopmental Well Activities
Rig Count by Sector
Source: NNPC, Baker Hughes
Overview of the Nigerian Oil & Gas Industry E&P Trends in the Nigerian UpstreamHistorical Information on Nigerian E&P Activities
E&P activity has been very low in Nigeria and this is signified by the decline in exploratory wells in recent years
Development wells slightly increased in 2010 in order to maintain production levels
Focus on most E&P activities in Nigeria have been on finding oil with minimal activity
in the gas sector
Offshore drilling has been on the increase lately
Overview of the Nigerian Oil & Gas Industry E&P Trends in the Nigerian UpstreamRecent Discoveries in Nigeria
200120022003200420052006200720082009201020110
100
200
300
400
500
600
700
800
900
1000
Liquids Gas
mm
boe
Recoverable Reserve by Discovery Date
Source: Woodmac
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
2
4
6
8
10
12
14
Under Development Technical Reserves Probable Development OnstreamCeased Production Abandoned
No.
of F
ield
s
Field Discovery by Development Status
2 Fields were discovered in 2011; Etisong North and Tologbene with a cumulative technical recoverable oil & gas reserve of 108 mmboe (mainly Gas)
2011 new discovery is about 44 mmboe lower than 2010
Likewise, in 2012 only 2 reserves were discovered so far; 1 technical and the
other probable.
19611966
19711976
19811986
19911996
20012006
20112016
20212026
20312036
20412046
20510.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0Deepwater Onshore Offshore
Source: Wood Mackenzie, NNPC
Overview of the Nigerian Oil & Gas Industry E&P Trends in the Nigerian UpstreamNigerian Oil & Gas Production
Majority of Nigeria’s future Oil production is expected from offshore especially the deep waterGas production is anticipated to grow and unless gas infrastructure is developed export volumes
will continue to riseGovernment currently working towards ensuring more domestic consumption by building
infrastructuresIn light of govt. efforts, gas flare will eventually be phased out with time
Gas ProductionOil Production
Oil Production by Sector Gas Production by Utilization
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0%
5%
10%
15%
20%
25%
30%
35%Gas Produced
% of Total Flared
Gas P
roducti
on
(mm
cfd
)
Gas F
lare
(Perc
ent)
0
2,000
4,000
6,000
8,000
10,000
12,000
0%
10%
20%
30%
40%
50%
60%
70%Export Operations Domestic FlaredExport as % of Total
mm
cfd
Gas F
lare
& %
Exp
ort
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
Chev
ron
Exxo
nMob
il
Sino
pec
Tota
l
NPD
C
Cono
coPh
illip
s
NN
PC Eni
Stat
oil
Shel
l
Petr
obra
s
Sout
h A
tlan
tic
CNO
OC
Ltd
Oan
do
0.0
2.0
4.0
6.0
8.0
10.0
12.02010 2011
US$/
bbl
Overview of the Nigerian Oil & Gas Industry E&P Trends in the Nigerian UpstreamProduction Cost in Nigeria
Opex per bblCapex per bbl
Ave. Nigerian JV Cost
Source: Wood Mackenzie, NNPC
Considerable improvement observed in the Nigerian Upstream Expenditure in 2011
NNPC Capex seems to have declined from $12.7/bbl in 2010 to $11.1/bbl in 2011
Chevron has highest Capex above $26/bbl and OPEX of about $9.3/bbl
Average JV Technical Cost has increased from about $23/bbl in 2010 to about $24/bbl in 2011 though there was a $2/bbl decline in Opex while Capex grew by $3/bbl
Chev
ron
Exxo
nMob
il
Sino
pec
Tota
l
NPD
C
Cono
coPh
illip
s
NN
PC Eni
Stat
oil
Shel
l
Petr
obra
s
Sout
h A
tlan
tic
CNO
OC
Ltd
0.0
5.0
10.0
15.0
20.0
25.0
30.02010 2011
US$/
bbl
2008 2009 2010 20110
5
10
15
20
25
10 11 1114
13 1312
10
Opex Capex
US$/b
bl
Overview of the Nigerian Oil & Gas Industry E&P Trends in the Nigerian UpstreamNNPC – NPDC Historical Production and Costs
2008 2009 2010 2011 -
5
10
15
20
25
10.87
6.22 7.58 6.92
10.83
10.38 9.78
6.51
Production Cost
T1 ($/bbl) without CHQ Overheads T2 ($/bbl)$/b
bl
2004 2005 2006 2007 2008 2009 2010 2011 -
20,000
40,000
60,000
80,000
100,000
120,000
Historical Production
bopd
Production is on the increase, above 102,000bbl/d on the average in 2011 due to assets additions from the divested blocks (Seplat)
NPDC average production cost on the decline $13.43/bbl in 2011 lower than average JV cost of $24/bbl
Midstream/Downstream Oil
Overview of the Nigerian Oil & Gas Industry Midstream & Downstream OilActivities in the Midstream/Downstream Oil & Gas Sector
Dow
nst
ream •2 Refineries in
PH, 1 each in Kaduna & Warri
•Installed domestic refinery capacity is 445,000b/d
Dow
nst
ream •NLNG with
commercial capacity of 22mtpa
•Brass LNG-FID to be taken before end 2012
• Train-7 & Olokola under evaluation
•Gas Processing Facilities to supply pipeline spec gas.
Dow
nst
ream
• Transportation of Oil & Gas to the Refineries and Gas terminals/ Outlets
•Distribution of refined products to storage and sales outlets
•Pipelines belong to NNPC-PPMC
•Marketing-Procurement & Sales of Refined petroleum products
•Distribution and marketing of gas to commercial customers
Refinery Natural GasTransportati
on & Conveyance
Distribution &
Marketing
Dow
nst
ream
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream OilPipeline Network
5,120 kilometers Of Pipeline Network 21 Petroleum Products Depots 9 LPG Depots Atlas Cove Terminal PPMC Escravos Terminal Bonny Export TerminalMT Oloibiri/MT Tuma
OPHR (60,000BPSD)
WRPC (125,000BPSD)
KRPC (110,000BPSD)
NPHR (150,000BPSD)
1965/1972
1978
1989
1979
Simple ……. Complex …. State of the Art
445,000BPSD
Algeria Egypt Libya Nigeria S/Africa0
4
8
1.37
0.960000000000001
6.17
0.3 1.11
Refining Capacity Per Capita, %
CRUDE
850,725m3
Downstream Infrastructural Growth Plateaued In The Early Nineties. NNPC Is Re-strategizing To Face Current Consumption Challenges & Preparing For Additional Product Volumes From Envisaged New Refineries
New
R
efin
erie
s
Bayelsa Refinery Kogi Refinery Lagos Refinery
TOTAL PROPOSED NEW CAPACITY
750,000BPSD
0.81%
NNPC Current National Holding Capacity
PMS
1,202,001m3
DPK
578,238m3
AGO
748,398m3
Linkage To Existing Backbone Mandatory
21
Refining Capacity Current NNPC Supply & Distribution Infrastructure
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream OilSummary of Midstream/Downstream Assets & Infrastrucrure
NNPC refineries performances increased during the quarter due to reduced incidents of pipeline vandalism & power failure
Provisional figures shows 2Q12 capacity Utilization improved when compared to 1Q12
Average PMS stock increased from 968,805.63Ltrs and 35.72days in 1Q12 to 1,348,431.50Ltrs and 38.53days sufficiency by end 2Q
Source: ERDM Analysis (figures are provisional) 22
Refinery Performance
PMS Stock/Day Sufficiency (000’Ltrs)
KRPC PHRC WRPC1Q10 11.9 6.1 29.22Q10 25.5 0.0 44.83Q10 30.9 12.2 55.64Q10 12.8 18.0 43.01Q11 11 12 332Q11 28 14.34 38.33
3Q11 31.8 21.7 51.84Q11 17.71 12.76 43.18
1Q12 27.8 12.2 14.22Q12 28.72 26 42.9
KRPC PHRC WRPC0
10
20
30
40
50
60
11 12
3328
14.34
38.33
31.8
21.7
51.8
17.7112.76
43.18
27.8
12.2 14.2
28.72 26
42.9
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Capa
city
Util
isati
on (%
)
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
20082009201020112012
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
-
10
20
30
40
50
60
Quantity ('000 litres) Days' Sufficiency
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream OilRefineries Performance
Capacity Utilisation (%)
▪ Implement a new business model for
Refineries
▪ Raise Refinery Performance, Financial Value and Security:
o Improved Capacity Utilisation (60% in
2012, 70% by 2013 and 90% by 2015)
o Improved PMS Yield
o Enhanced Supply/Evacuation
Management
o Improved Operational maintenance and reliability
o Increased Capital Investments
Performance of the Refineries is being vigorously monitored and defined intervention priorities are being addressed, prior to comprehensive rehabilitation
NNPC in dialogue with original Contractors to restore the Nation’s Refineries to their original design capacities
Establishment of 3 Greenfield Refineries to improve on local refining capacity
FCC Unit of Warri Refinery
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
10
20
30
40
50
60
70
Refinery Performance based on Av. Cap Util (%)
KRPC PHRC WRPC
Source: NNPC
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream OilStrategies to turn around Refineries
All NNPC trading activities to be combined into a Shipping & Trading Unit
Retail Business and Bulk Sales to be a single
Organization
Increased Retail Market Share through Affiliates and High volume Stationso No. of Acquired & Affiliate Stations increased
to 505 in 2010 from 157 in 2009
o 12 Floating Stations constructed, 11 Deployed, and 6 operational
o Sustained Policy of Zero tolerance for fuel
scarcity
o Improved domestic market share volumes• Retail to capture 10-15% by end 2013 and
20% by 2015, currently at 12%.
Build ‘large retailer’ capabilities at point of sale
Pilot new products e.g. Lubricants, Aviation fuel and Car wash etc.
Duke Oil
Napoil
Nidas
Nikorma
Nigermed
Hyson/Calson
NNPC International Trading Business
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream OilNNPC’s Retail & International Trading Business
Midstream/Downstream-GAS
GasCommercializatio
n
Storage
PipedLTC
LNG
Transport
PowerGen
Client/Hub
Demand for energy will likely increase 1.2 % per year until 2035 –EIA
Hydrocarbons will continue to supply at least half of the world’s energy needs over that period
Gas has Diverse Portfolio ranging from Storage, piping, transportation, LNG, Power
Gas commercialization is becoming complex so also are the capabilities required
Dearth of skilled technical talent poses threat to Oil & Gas Industry
Typical Midstream in Advanced Set-up
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream Gas Gas Commercialization
1,680
1,046
899
265 263 245 199 185 176 159
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Russian Federation
Iran Qatar Turkmenistan Saudi Arabia United States UAE Nigeria Venezuela Algeria
Trillion c
ubic
feet
Proven Natural Gas Reserves, 2010
Pre-1999 1999 Post
2005
Nigerian Domestic Gas Sector is undergoing development Nigeria currently exports about 3bcf/d and utilises about 780 mmscf/d) Implementation of Gas Master Plan will mitigate some of the Gas Infrastructure
challenges
Gas Utilisation Challenge Era(Fiscal Incentives)
NLNG ERA Demand Explosion ERA(Gas Master Plan)
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream GasGas Resource Base
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream GasHistorical Gas Usage in Nigeria
29
Nigeria has over 180 tcf of commercial and technical reserves accounting for 84% of total gas reserves in West Africa
LNG has been an attractive marketing option for Nigerian gas allowing producers to monetize large volumes of gas at
international prices Nigeria LNG has also benefited from tax breaks to encourage investment Domestic gas supply has been limited by the lack of a domestic gas infrastructure and poor commercial
framework FGN is currently implementing measures to correct this via two major policies reforms:o Gas and Power Sectors reforms (the Roadmap for Power Sector Reform and the Gas Master Plan)
FGN is implementing plans to increase prices for gas sales to the power sector o Gas-to-power prices were set at about US$1.5/mmbtu at the end of 2012 o Expected to rise to US$2/mmbtu by the end of 2013
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream Gas Nigeria’s dominance in West Africa Gas
Focus Areas of the Gas Master-Plan
Short/Medium Term Gas Availability
(Domestic Obligations)
Sustainable Commercial Framework Scalable Gas Infrastructure
Stimulate Gas Based Industrialization – Grow
Demand
(Gas Revolution)
30
Specific focus on Gas to Power
Entrenched the DSO concept to stimulate supply
Reviewed gas prices and contractual framework to sustain investment in supply growth
Developed an infrastructure blueprint – pipelines and CPFs
Launched “Gas Revolution” to stimulate demand and crystallize economic development
In pursuit of Government objectives in developing the gas sector, a focus on the 4 key areas culminated in the Gas Revolution Initiative
1 2 3 4
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream Gas Nigerian Gas Master Plan-Focus Areas
31
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream Gas Nigerian Gas Revolution Framework
GAS TO POWER“… By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.”
GAS BASED INDUSTRIALISATION HIGH VALUE EXPORT
STRATEGIC FRAMEWORK FOR NIGERIAN GAS
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
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
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
LNGRegional Pipelines
The Gas Reform is anchored on a robust strategic framework that is focused on maximum economic impact through gas. Aims to drive
linkages with agriculture, manufacturing and dispersed small enterprise through Power
32Source: NNPC, Woodmac
Gas Master Plan Infrastructure Implementation
Implementation of Gas Master Plan with Pipeline Infrastructure & Central Processing Facilities
Domestic Gas Pipeline Expansion;
Liquefied Natural Gas Projects (Train 7, OK LNG and Brass LNG - FID to be taken before end 2012)
Gas to Liquids & Natural Gas Liquids Projects
West African Gas Pipeline
Trans Saharan Gas Pipeline Project providing alternative route to Europe thru’ Algeria
West African Gas Pipeline
Trans Sahara Gas Pipeline Brass LNG Location
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream Gas Gas Infrastructure Development Framework
Development of Independent Power Plants
Project
Engaged in Midstream/Downstream Gas
Operations
Unlock Nation’s proven & undiscovered Gas
Reserves
Domestic Gas Infrastructure
o Develop distribution networks thru’ Gas Hubs
Response to Government Direct Investment
& Incentives
Rapidly growing domestic market
o Power sector
o Gas based Industries
Rapidly growing LNG Export Position
o NLNG T7 planned, Olokola Plant under evaluation
o Brass LNG-FID will be taken before end 2012
Consolidating a regional position
o WAGP Project
o Continued progress on the Trans-Saharan Gas Project
Operator Plant Plant Capacity (MW)
Status
NNPC/IPP
Abuja 1,350Pre-Front End
Engineering
Design Activities
ongoing.
Power Plant
completion date
is Q2, 2014
Kaduna 900Pre-Front End
Engineering
Design Activities
ongoing.
Power Plant
completion date
is Q2, 2014
Overview of the Nigerian Oil & Gas Industry Midstream/ Downstream Gas NNPC’s Strategy across the Gas Value Chain
34
Structure of the Industry
PPPRA – (Price Regulator. Administrator of
PSF)
Overview of the Nigerian Oil & Gas IndustryStructure of The IndustryStructure of the Nigerian Oil & Gas Industry prior to Reforms
35
This structure comprises various institutions and operating entities often with blurred boundaries and non commercial
focus
36
Niger Delta: 85%
Offshore: 15%
Niger Delta: 86%
Offshore: 14%
Growth in oil reserves and managed expansion in production capacity
Reposition Gas for rapid domestic, regional and export penetration
Revitalize downstream capacity to support domestic energy needs
Reform key institutions to anchor sustained growth in the industry
Nigeria’s Focus Area for the Oil and Gas Industry
• Maximize Oil & Gas Sector value to
economy
• Enhance multiplier effect of Oil & Gas
• Embark on aggressive exploration to increase
Reserves from 37.8bn to 40bn bbls by 2020
Production capacity to 4.5 mbd by 2020
•Transit from an Oil Industry to an integrated Oil & Gas Industry
• Develop Domestic Gas Market
• Increase Gas Reserves from 187tcf to
215tcf by 2020
• Policy shift towards reducing Gas Flaring
• Capture economic value & generate as
much
revenue from Gas as Oil
• Create new industries-Gas would create
multiplier
effect (Gas to Power, Manufacturing &
Fertilizer Ind.)• Domestic self-sufficiency
• Efficient supply and distribution
system
• Implementation of PIB
• Improve Nigerian Capacity & Local
Content
• Address Environmental issues &
Entrench
Global HSE
• Standards & Principles in the Sector
Overview of the Nigerian Oil & Gas IndustryNigeria’ Aspirations for Oil & Gas Industry
Overview of the Nigerian Oil & Gas Industry Structure of The IndustryPetroleum Industry Bill Intervention
Policy
Regulation &
Monitoring
Ministry of
Petroleum
Resources Commerc
ial Operatio
ns
37
Objectives Of Reform
Clear delineation of roles and functions within the sector
Enhance value addition
Strict business orientation of NNPC as a National NOC
Strong, viable and independent downstream sector
Optimal utilization of natural gas for domestic and export markets
Diversification of the economy
Greater environmental
protection
Increased Nigerian content
Participatory schemes involving host communities
The Nigerian Petroleum Industry remains the largest and most vibrant in Sub-Saharan Africa and still has a lot of potentials, especially in areas of the deep water and untapped gas resources
The Oil Sector accounts for about 90% of export earnings and about 80% of government revenues
In addition to oil, Nigeria holds the largest natural gas reserves in Africa which is envisaged to be the next vehicle for the nation’s domestic economic growth
The expansion of Liquefied Natural Gas (LNG) infrastructure and policies to eliminate gas flaring are poised to accelerate growth in the sector in terms of both export and domestic use in electricity generation and gas based industries
Product importation will still be required to meet demand even at the
optimal operational capacity of current Nigeria’s Refineries
The PIB will trigger increased Investments, infrastructural developments
across the entire value chain and increase government revenue when
eventually passed
Overview of the Nigerian Oil & Gas Industry Concluding Remarks
39