Investment Opportunities in Nigerias Downstream Oil

and Gas Value Chain

By

Diezani Alison-Madueke (Mrs.) CON

Honourable Minister of Petroleum Resources
July, 2012

Investment Opportunities in Nigerias Downstream

Oil & Gas Value Chain
Nigeria in Perspective

Politics

Presidential System (Democratic

since 1999)
Bi-cameral Parliament
Federation: Three tiers of
government (Federal, state and
local government)
36 states and Federal Capital
Territory
Land Mass Area - 923,768 sq km

Natural Resources (Capacity)

Oil 37 Bln bbls

Gas 187 TCF
Coal & Lignite 2.7 billion tonnes
Tar Sands 31 bln boe
Hydro Power 14750 MW
Solar 7.0 Kwh/m2/day
Wind 2-4m/s at 10m height
Biomass 320 mln hectars
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Economy

GDP (PPP) - US$418 Bln (The 2nd

largest in Africa)

GDP growth rate 7.2%

Ranked 31st largest in the world

Ranked 27th largest in the world

Population 160 million (the

largest market in Africa

Electricity consumption per

capita 120.51 kwh

Investment Opportunities in Nigerias Downstream Oil &

Gas Value Chain
Scope of Investments in Nigeria
Investment
Opportunities
Midstream &
Downstream Refining
& Petrochemicals&
Fertilizer Plants

Exploration &
Production

Gas & Power

Oil block acquisition

Refinery optimization

Drilling Rig Leasing

and drilling related
services

Greenfield refineries
engineering, construction
New Petrochemical Plants

Engineering services

New Fertilizer Plants

Heavy Equipment
leasing

Seismic Acquisition
and processing

Pipeline production and

laying

Services

Remote pipeline monitoring

and control devices

LNG design, fabrication

etc.

Gas Metering and

Monitoring devices

Power Plant engineering,

construction and operation
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Gas Processing

Haulage and logistics

services
Equipment leasing
Pressure vessel
fabrication yards
Turbo-machinery
procurement, servicing
Spare parts fabrication
Financial Services
Manufacturing of LPG
cylinders/Accessories

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Midstream & Downstream Refining & Petrochemicals
Downstream Industrial Park / Gas Hub Concept

Refineries

Each facility to be an independently owned Venture

Roll out of 3-Industrial Parks viz.:
South West
East Niger Delta
Northern Area (Along Trans Nigeria Gas Pipeline Route & Excl. Refinery)
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Downstream Oil
& Gas Value Chain
Nigerias Gas Resources Confers Significant Opportunities
for Investment

Investment Opportunities in Nigerias

Downstream Oil
& Gas Value Chain
Nigerias Gas Resources Confers Significant
Opportunities for Investment (2)

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Gas & Power
Strategic Framework for Nigerias Gas Industry
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
STRATEGIC
through Power
FRAMEWORK FOR

NIGERIAN GAS
GAS TO POWER

Significantly increase gas

supply to the Power Sector

Focused delivery plan to

support existing and ongoing
power plants by PHCN and
NIPP

GAS BASED INDUSTRIALISATION HIGH VALUE EXPORT

By 2014, we would
have positioned
Nigeria firmly as the
undisputed regional
hub for gas-based
industries such as
fertilizer,
petrochemicals and
Presidents
Gas
methanol.

Deliver on
Revolution Agenda to:
Position Nigeria as the
regional hub for gas-based
industries such as fertilizer,
petrochemical and methanol

Deliver Gas for at least 12GW

by 2015

Transform gas sector to value

adding sector
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Regiona
l
Pipeline
s
Consolidate Nigerias position and
market share in high value export
markets
Targeted LNG export
opportunities

LNG

Regional gas pipelines that help

consolidate nations footprint
and influence

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Midstream (Gas) & Downstream (Power)
Policy Initiatives
To support the agenda, a set of enabling policies were approved by
His Excellency, Dr. Goodluck Jonathan. These are being rolled out
and have created a major boost and jumpstart for the sectors
agenda

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Gas & Power
Investments in Nigerian Gas Infrastructure System
Future of Nigerian Gas Infrastructure When Completed

Over 5,000km of gas

pipelines to be laid

At least 3 gas processing

facilities (about 1bcf/d
capacity each) to be
designed and built

Aggressive Timeline
Anticipated for delivery

Numerous gas utilization

projects to be developed
concurrently LNG,
fertilizer, Power etc.

Investment Opportunities in Nigerias

Downstream Oil
& Gas Value Chain
Opportunities for Gas Investments In Nigeria

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Midstream & Downstream Refining & Petrochemicals
Downstream Assets - Historical Perspective

Current NNPC Supply & Distribution

Infrastructure

Refining Capacity

1989
1979
1978
1963/1972

445,000B
PSD

Simple . Complex . State of

the Art

Refining Capacity Per Capita, %

10
5

New
Refineries

6.17
1.37

0.96

Algeria

Egypt

Libya

0.3

1.11

Nigeria

S/Africa

0.81
%
Bayelsa Refinery

Kogi Refinery Lagos Refinery

TOTAL PROPOSED NEW

CAPACITY

750,000B
PSD

5,120 kilometers Of Pipeline Network

21 Petroleum Products Depots
9 LPG Depots
Atlas Cove Terminal
PPMC Escravos Terminal
Bonny Export Terminal
MT Oloibiri/MT Tuma

NNPC Current National Holding Capacity

850,725
m3

CRUDE

1,202,01
m3

PMS

578,238
m3

DPK

748,398
m3

AGO

Linkage To Existing
Backbone Mandatory

Downstream Infrastructural Growth Plateaued In The Early Nineties. FGN Is Re Strategizing To

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Face Current Consumption Challenges & Preparing For Additional Product Volumes From

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Midstream & Downstream Refining & Petrochemicals
Refineries, Pipelines and Depot Infrastructure

Close to $3 Billion required in upgrading pipeline Infrastructure

The PIB to prescribe the Commercial tariffing models for pipelines
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Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Midstream & Downstream Refining & Petrochemicals
Refinery Rehabilitation

Strategic objective of the TAM is to drive up average utilization of refineries to 90%,

thus creating domestic self sufficiency in HHK and AGO, whilst significantly reducing
imports of PMS
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Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Greenfield Refineries Project

Greenfield Refineries

Build three (3) Refineries in Lagos,

Bayelsa and Kogi States with a
combined capacity of 750KBPD &
Fertilizer plant along the Trans Sahara
Gas Pipe line corridor, subject to
Technical and Commercial viability.

Status of Implementation

Secured 1500 Ha of land in Lekki Free

Zone from Lagos State Government for
the Refinery and Industrial Park.
Secured 324Ha of land in Oloibiri from
Bayelsa State Government for Refinery.
Location Studies for Kogi State ongoing.
Negotiations for Project Funding from
Chinese ongoing.

Near Term Impact

Long Term Impact

Expected Investment estimated at

US$23 billion.
Save about US$10.0 billion spent
annually on importation of White
Petroleum Products.
Engage about 15,000 construction
workers at peak and 2,000 fulltime plant
operators for the three Refineries.

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Achieve self sufficiency in supply of

Petroleum Products by 2018, and
eliminate importation of Petroleum
Products completely.
Save over US$2.5 billion annually in
subsidies on Petroleum Products.
Become a major exporter of PMS in the
energy market
Trigger the switch from firewood,
charcoal and kerosene to LPG

Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Economic Benefits of Downstream
Non-Fuels Industrial Developments

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Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Service Sector
Service Sector Opportunities
Engineering Design
Over $500 Mln/year will be spent on Engineering Design projects in the next 5 yrs
Fabrication & Construction
Over $8 billion/year earmarked for fabrication scope in the upstream for the next 5
years
Need for new fabrication yards / dry docking facilities and expansion of existing yards
Materials, Manufacturing & Equipment Leasing
About $25bn to be spent on procurement of materials over the next 5 years
Some equipments and materials to be assembled/manufactured in Nigeria are Valves,
fittings, heaters, static equipment, pumps and other rotating equipment
Banking & Insurance
Financing of low risk Oil/Gas projects through direct funding and venture capital
Partnering of Local insurance firms in the Insurance and Reinsurance of small Oil and
Gas projects
Shipping & Logistics
Partnership with Nigerian shipping companies unlocks over $ 600 million annual spend
on international transport of crude
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Investment Opportunities in Nigerias Downstream Oil

& Gas Value Chain
Conclusion
Nigeria as the largest market in Africa offers unique opportunities for
investment in refining, storage, transportation, distribution and marketing of
petroleum products.
The downstream oil and gas value chain is the focus of government intention
in creating the necessary business environment through price liberalisation
and strong independent regulation.
The PIB offers fiscal rules of general application and open access regulations
for the domestic oil and gas activities.
Nigeria plans to upgrade existing refineries, build new refineries, build new gas
infrastructure (pipelines and central processing facilities), power plants,
petrochemicals, fertiliser etc. in order to enhance linkages between the oil and
gas sector and the wider Nigerian economy.
Nigeria is open for business.

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