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