WORKSHOP COMMERCIAL FRAMEWORK FOR ENERGY INVESTMENT Abuja, 1 st & 2 nd May 2008 THE WEST AFRICAN GAS PIPELINE AUTHORITY-WAGPA A REGIONAL REGULATORY BODY APPROACHS – PROBLEMS & SOLUTIONS PRESENTED BY: Engr. MAGBONDE Leonce Director of Operations / WAGPA

CONTENT 1.OVERVIEW OF THE WAGP PROJECT  WAGP PROJECT PURPOSE  PIPELINE OWNERS & PARTICIPATING COUNTRIES  INSTITUTIONAL & LEGAL FRAMEWORK 2.THE WAGP AUTHORITY  MISSIONS  DESCRIPTION OF THE ENVIRONMENT  WHAT WAGPA REGULATES 3. PROBLEMS & SOLUTIONS

1. OVERVIEW OF THE WAGP PROJECT

West African Gas pipeline Project West African Gas pipeline Project WAGP Takoradi Tema Escravos Cotonou GHANA TOGOTOGO NIGERIA Lomé Lagos Niger Burkina Faso Mali BENINBENIN

1. OVERVIEW OF THE WAGP PROJECT  WAGP PROJECT PURPOSE  Transport Nigerian Natural Gas through high pressure pipeline  Supply Natural Gas to commercially viable markets in Benin, Togo and Ghana.

1. OVERVIEW OF THE WAGP PROJECT(Cont’d) Pipeline Owner: West Africa Gas Pipeline Company (WAPCo): WAPCo Shareholders  Chevron (36.7%) Managing Partner  Nigerian National Petroleum Corp. – NNPC (25%)  Shell (18%)  The Volta River Authority of Ghana -VRA (16.3%)  Benin Gaz SA - BenGaz (2%)  Société Togolaise de Gaz SA – SoToGaz (2%)

1. OVERVIEW OF THE WAGP PROJECT (Cont’d) Participating Countries Two French speaking Two English speaking Different legal systems Four currencies (Naira-cidi-Fcfa-US$) Three of four countries without pipeline experience English speaking Common Law Ghana Nigeria Togo Benin French speaking Civil law

1. OVERVIEW OF THE WAGP PROJECT (Cont’d) Institutional & Legal Framework Harmonized fiscal, regulatory, legal and investment regime 3 mechanisms to achieve regime harmonization WAGP Treaty International Project Agreement Enabling Legislations passed in all countries

1. OVERVIEW OF THE WAGP PROJECT (Cont’d)  Regulatory Documents Access Code WAGP Technical Regulations Pipeline Licenses Pipeline Development Plan Rule of Procedure Environmental Impact Assessment & Environment Management Plan

2. THE WAGP AUTHORITY A REGIONAL REGULATORY BODY

2.THE WAGP AUTHORITY 2.1 MISSIONS : FIXED BY WAGP TREATY  REPRESENTATION OF THE STATES  FACILITATION  REGULATION

2. THE WAGP AUTHORITY (Cont’d) 2.2 DESCRIPTION OF THE ENVIRONMENT (key players)  Gas Producers: Chevron, Shell, NNPC  Gas Marketers or shippers: N- Gas (established by gas producers)  Gas Transporters:  NGC for ELPS  WAPCo for WAGP  Customers in 3 buyer countries (Benin,Togo,Ghana)  Foundation customers  Standard customers  Industrial customers  Local Distribution Companies (LDC’S)  WAGP Authority : Established by the States parties

2.THE WAGP AUTHORITY (Cont’d) 2.3 What WAGPA Regulates?  Transportation Tariff in WAGP (tariff methodology aproved by WAGPA)  Gas quality – Dry gas (Acces Code aproved by WAGPA)  Acces to the Pipeline (Acces Code)  Technical specifications of the pipeline (WAGP Regulations)  Dispute & Arbitration (Rules of Procedure &Treaty)  WAGP Tribunal & Fiscal Review Board)  DG / BOG / COM

3. PROBLEMS & SOLUTIONS 3.1 Problems  Gas availability  Gas specifications  Volume of free flow gas  Limitation of the pipeline Capacity  Security of the pipeline  Deadline Completion Date  Funding of the WAGP Authority

3. PROBLEMS & SOLUTIONS (Cont’d) 3.2 SOLUTIONS  Improve Economic Envir. For Investors in gas production  Shell to provide facilities for wet gas processing  NGC to increase pressure in ELPS (40 to 60 bars)  WAPCo to implemente expansion program (order at least 1 additional compressor)  Adopt offshore Damage Prevention Program  Agreement on a new completion deadline with provisions for compliance  Review of WAGPA charge for full compression  Set WAGPA charge for free flow gas

EXPERIENCE OF REGIONAL REGULATION END THANK YOU FOR YOUR ATTENTION