Gas Supply and Transportation Issues: Gas to Power Demand November 28, 2011 Dr. David Ige Group Executive Director, Gas & Power Nigerian National Petroleum Corporation

Outline  Gas Sector Aspirations  Gas Supply Options  Infrastructure Update  Gas to Power Status  Conclusion 2

Overview of the Nigerian Gas Industry Gas Resource Base Source: EU Energy Portal; Transparency International, 2011 Report on Oil and Gas Companies Nigeria has a huge economic potential trapped in this vast natural gas resource 600TCF Undiscovered Potential 3

Gas Strategy and Anchor Sectors G AS TO P OWER “… By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.” G AS B ASED I NDUSTRIALISATION H IGH V ALUE E XPORT S TRATEGIC F RAMEWORK FOR N IGERIAN G AS 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 LNG Regional Pipelines 4

Gas Consumption and Demand Forecast Based on the forecast growth in domestic gas demand, we foresee opportunities in transmission and marketing 5

Enabling Sector Policy – Stimulating Supply 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 sector’s agenda Domestic Supply Obligation (DSO) Regulation Scalable Gas Infrastructure Blueprint Commercial Framework Reforms 6

Outline  Gas Sector Aspirations  Gas Supply Options  Infrastructure Update  Gas to Power Status  Conclusion 7

Gas Availability - Sources of Gas in Domestic Market FGN Mandated Domestic Supply Obligations (DSO) Direct Bilateral Arrangement between Suppliers and Buyers Unutilized Gas Flares  Most significant short/medium term planned source of gas  Allocation of available gas from DSO sources managed by GACN 3 Sources of Gas in Nigeria  Gas from suppliers over and above their respective DSO  Managed bilaterally on a willing buyer, willing seller basis i.e. negotiated terms  Limited volume in the short term, particularly from IOCs.  Small flared gas for which no plan exists to utilize but 3 rd party players may propose utilization plans 8

Domestic Supply Obligation – Western Area Supply Projects Dry Gas 2 Existing Wet Gas 3 Ongoing Projects - Wet Gas 4 FID Acceleration - Wet Gas 5 5 Gas from East 9

Domestic Supply Obligation – Eastern Area Supply Projects 10

Analysis of Stranded Gas in the East A significant amount of gas is stranded currently in the East mainly due to infrastructure and the delays in NIPP power plants 11

Strategy Aggregator Company: Gas Aggregation Company Nigeria (GACN)  Gas Aggregation Company Nigeria (GACN) Contact Details:  Office: #1B Malcolm Fraser Street, Asokoro, Abuja  Telephone:  GACN was established to manage the Domestic Supply Obligations – Facilitate gas access and aggregation of gas pricing 12

Outline  Gas Sector Aspirations  Gas Supply Options  Infrastructure Update  Gas to Power Status  Conclusion 13

Koko Port Bonny LNG Escravos Ob/Ob Oben Utorogu Egbin Olorunshogo Omotosho Ihovbor Geregu Afam Delta IV Abuja Kaduna Calabar Map showing critical Infrastructures 14 Sapele

Status of Major Infrastructure Projects 15

Western Network Pipeline System ELPS A  Escravos to Warri expansion from 300mmcf/d to 600mmcf/d  Will allow immediate addition of 80mmcf/d from Escravos  Due end 2011 ELPS A  Escravos to Warri expansion from 300mmcf/d to 600mmcf/d  Will allow immediate addition of 80mmcf/d from Escravos  Due end 2011 Looping ELPS C  Doubling capacity to 2bcf/d from Warri to lagos  Due August 2012  Pipes expected in October Looping ELPS C  Doubling capacity to 2bcf/d from Warri to lagos  Due August 2012  Pipes expected in October Olorunshogo Permanent Line 24”permanent line to Olorunshogo. 24”permanent line to Olorunshogo. Recent contract approval by Mr. P and contractor being mobilized. Due Apr 2012 Recent contract approval by Mr. P and contractor being mobilized. Due Apr 2012 Will address pressure problem at Olorunsogo Will address pressure problem at Olorunsogo Olorunshogo Permanent Line 24”permanent line to Olorunshogo. 24”permanent line to Olorunshogo. Recent contract approval by Mr. P and contractor being mobilized. Due Apr 2012 Recent contract approval by Mr. P and contractor being mobilized. Due Apr 2012 Will address pressure problem at Olorunsogo Will address pressure problem at Olorunsogo 16

Eastern Network Pipeline System Completion of the NOPL pipeline in 2012 will unlock stranded gas from MPN (100mmcf/d); NAOC Ebocha (50mmcf/d) and TEPNG (60mmcf/d), bringing them to Obigbo Node hub from where Alaoji and other Eastern Power plants can be supplied 17

Eastern Network Pipeline System 18

Ongoing Pipeline Projects –ELPS Phase 1 19 Horizontal Directional Drilling Operation across Warri – Benin Express way Lowering of welded line pipes at NGC Right of Way through Jesse, Delta State Welding activities for Ethiope River Crossing

Ongoing Pipeline Projects –Alaoji, Olorunshogo 20 Pipe stacked on Site Offloading pipe on site ROW Clearing

Roadmap to Securing Alternative Funding for Pipelines Assess Pipeline Tariff Review Tariff Affordability Review revenue securitisation Source for Investors Secure Financial Closure Assessment of pipeline tariff required to make 3 rd party financing viable – this study now completed by NNPC Engagement of stakeholders (e.g. NERC) on affordability of tariff and implication for medium-term MYTO Checking of possible tariff revenue securitisation to make 3 rd party financing bankable Road show to attract investors / financiers, selection of willing financiers/investors Investors secure financial closure Description Sept 2011 Dec 2012 Jun 2012 Jan 2012 Dec

Outline  Gas Sector Aspirations  Gas Supply Options  Infrastructure Update  Gas to Power Status  Conclusion 22

Our efforts in Power are focused on meeting a projected 3.5 bcf/d of gas demand by over 30 existing and proposed power plants. Gas to Power PHCN 818 mmscfd PHCN 1 NIPP 1,297 mmscfd NIPP 2 JV IPP 322 mmscfd JV IPP 322 mmscfd 3 3 rd Party IPP 531 mmscfd 3 rd Party IPP 531 mmscfd 4 Egbin + AES Egbin + AES Delta IV Delta IV Sapele Sapele Olorunshogo Olorunshogo Omotosho Omotosho Geregu Geregu Afam I-V Afam I-V Olorunshogo Olorunshogo Sapele Sapele Geregu Geregu Omotosho Omotosho Ihovbor Ihovbor Egbema Egbema Gbaran Gbaran Omoku Omoku Alaoji Alaoji Calabar Calabar Chevron Agura Chevron Agura NAOC, Okpai NAOC, Okpai Total, Obite Total, Obite Shell, Afam VI Shell, Afam VI ExxonMobil, QIT ExxonMobil, QIT Grow Gas Supply to Power Numerous 3 rd party IPP in consultation with the Bulk Trader 23

Gas to Power Supply Outlook 24

New Gas Sources of Gas to Bridge Gap New sources of gas, hitherto not considered for domestic market e.g. bringing offshore PSC gas to shore, are being evaluated. This could add mmscf/d by 2016/17 Koko 1 2 Erha Bosi - Development of offshore processing plant with offshore pipeline to transport about 400mmscfd of gas currently being re-injected to the western CPF in Koko. CAMAC Oyo Field Development – Following options are being looked to monetized the currently re-injected mmscfd gas in Oyo field : a.Offshore pipeline from Oyo to the western CPF in Koko b.Offshore pipeline to ELPS via Chevron Okan gas processing plant c.Offshore pipeline to OGGS

Outline  Gas Sector Aspirations  Gas Supply Options  Infrastructure Update  Gas to Power Status  Conclusion 26

Conclusion  We have an enabling policy framework is in place to support critical mass of gas supply development for the power sector  Very good progress being made in development of a robust gas grid that will enable rapid growth of supply from diverse sources increasing the liquidity of supply  Medium term outlook is promising and power sector investors can be assured of supply 27

APPENDIX 28

29  Was created to manage Domestic Gas Supply obligations volumes  First point of contact for Gas Buyers to access gas for domestic market use  Primary aim  Coordinate and manage wholesale gas supply from Gas Producers to eligible Gas Purchasers within Nigeria  Ensuring a balanced growth of all critical sectors of the economy: Power, Gas Based Industries and Local Distribution Companies  Conduct due diligence assessment on eligible Gas Buyers  Allocate available gas from the DSO to credible buyers successful on assessment  Facilitate the expeditious execution of the GSAA and GTA between the buyer, seller and transporter respectively  Operational since Jan 2010 Role of GACN in Domestic Gas Market

30 Due Diligence General Process

31 Map showing critical Infrastructures 31