africa’s place in the global hydrocarbons

8/12/2019 Africas place in the global hydrocarbons

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Africas place in the global hydrocarbons

industry

Rolake AkinkugbeHead of Energy Research, Ecobank Group

Oliver Kinross Africa Oil and Gas Summit, London

January 28 2013


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Presentation Outline

Global fundamentals

Reserves, production & development in Africa

Gas

Whos investing?

Risks, challenges and outlook


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Section 1

Global Fundamentals


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Global oil demand growth (1000 bpd)

Source: FT


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Global crude oil demand and supply

76

78

80

82

84

86

88

90

92

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Global oil demand and supply, 2002 - 2013(f), million barrels per day(mbpd)

Demand Supply

China, the US and Europe accountfor 46% of global demand

Oil supply growth currently 50% of2010 levels

Unconventional sources willaccount for high portion of supplygrowth in 2013


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Demand growth in OECD has contracted

-400

-200

0200

400

600

800

1000

1200

1400

1600

Africa Latin America Asia Middle East Europe FSU North America

2010 2011 2012

Global oil demand growth (1000 bpd)

Only emerging and frontier markets experienced positive oil demand growth in 2011 and2012

But Global demand likely to grow 36% by 2035

Demand growth in the years ahead will be non-OECDChina, other Asia and Middle East

countries


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The global supply picture

12%

10%

22%

9%

30%

17%

% Share of global oil productionAfrica

Asia Pacific

Europe andEurasia

South and CentralAmerica

Middle East

North America

Africa supplies around 10 million bpd ofcrude oil, accounting for roughly 12% ofglobal output in 2012

Oil reserves in Africa grew from 53.4 billionbarrels in 1980 to 132.1 billion in 2011

33

33.5

34

34.5

35

35.5

36

36.5

49

49.5

50

50.5

51

51.5

52

52.5

53

2004 2005 2006 2007 2008 2009 2010 2011 2012

Non-OPEC OPEC

OPECNon-OPEC

OPEC and Non-OPEC supply, million bpd, 04-11


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Global oil and gas CAPEX

Global O&G Capex increasein 2013 by 15.5%

Angola and Ghana deepoffshore oil and gas

exploration in WA & GOG

Mozambique and Tanzanialead East Africa in terms ofthe number of O&Gdiscoveries in 2012

0

50

100

150

200

250

300

350

Asia-Pacific Europe The MiddleEast andAfrica

NorthAmerica

South andCentral

America

2012 2013

Oil & Gas Capital Expenditure by Region, 2012 & 2013, US$ Billion


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Section 2

Reserves, Production & Development in Africa


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Oil reserves and production in Sub-Saharan Africa

Cameroon 70kGhana 110k

Nigeria 2.4m

Cote dIvoire 40k

Angola 1.8m

Congo-B 300k DRC 20k

Gabon 220k

EG 280k

Chad 115k

Niger 20k

South Sudan 150k*

Current Reserves: 152bn barrels

2013 production: 5.9million bpd


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42%

34%

6%

6%4%2%

2%1%

% Share of current oil production bycountry

Nigeria

Angola

Equatorial Guinea

Republic of the Congo

Gabon

Ghana

Chad

Cameroon

Cote d'Ivoire

Democratic Republic ofthe Congo (DRC)

Crude oil production in Sub-Saharan Africa

0

500

1000

1500

20002500

3000

2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f

Crude oil production, historic and forecast.million barrels (bbl), 2005 - 2014

Angola Nigeria

Crude oil productionforecasts (000 bpd) 2013

Cameroon 70

Chad 115

Cote d'Ivoire 40

DRC 20

Equatorial Guinea 280

Gabon 220

Ghana 120

Niger 20

Republic of Congo 300

South Sudan* 150


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New developmentsWest Africa & the Gulf of Guinea

Nigeria- In 2013: ExxonMobils Ehran North Phase 2 Field, ENIs Oberanfield

- Lingering uncertainty over PIB

Angola- BPs PVSM field to reach 150,000bpd in 2013- Total capacity could rise above 1.9million bpd in 2013

Ghana- Jubilee reached 110,000bpd in 2013- Could reach 120,000bpd

Cote dIvoire- Discovery by Vanco n block CI-40 in December 2012

The rest of core West Africa- Small production increase in Chad, Niger,- No discoveries in 2012- On-going exploration : Liberia, Sierra Leone etc


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Source: Cobalt Energy, Incorporated, 2012

Could pre-salt plays be a big game changer

There is potential for pre-salt discoveries West Africas deepoffshore region

On-going exploration in Angola, Congo and Gabon


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New developments: East and Southern Africa

East & Southern Africa

- Crude oil discoveries in Kenya by Tullow at the Ngaima-1 and Twiga-1wells in the Northern Kenya in mid-2012.

- Licensing round likely in 2013 in Kenya

- In 2012, Uganda passed oil law

- South Sudan could resume production, starting at 150,000bpd

- Namibia is southern Africas hotspot

- Watch Petrobras Nimrod prospect


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Section 3

Gas


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Natural GasMore golden opportunity than golden age

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2

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8

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12

14

16

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20

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

Global LNG Prices Spot Prices, US Henry Hub/Japan,2011 - 2012 US$/MMBTU LNG Japan

US Henry Hub

Natural gas has bounced backfrom its 2009 decline

Will grow by 60% in the nextdecade

Production in Africa could reach440bcm by 2035 (IEA)

Gas exports from EquatorialGuinea and Nigeria; Angola to

start in 2013


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Golden opportunity

Availability of low cost associatedgas

East Africa could also have anLNG cost advantage

Opportunities for industry

fertilizers, petrochemicals etc.

Developer Country Capacity (metric tonnes) Cost (US$ million)

Notore Chemicals Nigeria 1500000 1000Dangote Group Nigeria 3500000 2800

Indorama Group Nigeria 1000000 1800

Ferostaal Cameroon 1000000 n/a

Rashtriya Chemicals Ghana 1000000 1000

Wentworth Resources Tanzania 800,000 1500

Olam & Tata group Gabon 3500000 3000


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A major gas frontier at a time of declining nuclear use in the east

Ecobank Research 2012 |

Over 100 trillion cubic feet (tcf) has been discovered to date in East Africa, and there isconsiderable upside remaining.

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

70

80

Area 1Mozambique

Area 4Mozambique

Blocks 1, 3 & 4Tanzania

Block 2 Tanzania Mozambiquepotential

Tanzania potential

Discovered Resources

Potential Resources

No of 5 million metrictonne per annum(mmpta) trainssupportedTrillion cubic feet (tcf)

Gas Volumes Discovered in Mozambique and Tanzania & Potential Resources

Source: WoodMackenzie, 2012


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Section 3

The competitive landscape: Independents, local players,and BRIC investors


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The competitive landscape

Independents- Major discoveries in 2012 by E&P

independents- ENI has been an exception

% Deep Offshore West Africa, Major oil and gas discoveries JanSept 2012

Indigenous Companies- Still few and far between with

the exception of Nigeria

- Most are unlisted privates- Shoreline Energy- Southwest Energy (Ethiopia)

Date Discovery Country Operator

24-Sep-12 Caporolo-1 Angola Maersk

20-Sep-12 Sankofa East-1X Ghana ENI SpA

21-Aug-12 R-5 (Fortuna East-1) Equatorial Guinea Ophir Energy

25-Jul-12 R-4 (Tonel-1) Equatorial Guinea Ophir Energy

18-Jul-12 Wawa-1 Ghana Tullow Oil

7-Jun-12 Paon-1X Cote d'Ivoire Tullow Oil

19-Apr-12 Kosrou-1 Cote d'Ivoire Anadarko

09-Feb-12 Cameia-1 Angola Cobalt International

04-Jan-12 Azul-1 Angola Maersk


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Ecobank Research 2013| 22

Presence in West Africa and the Gulf of Guinea (2011)

Independents in the driving seat of frontier exploration

COTE DIVOIREAfren

AnadarkoVanco Energy

GHANAAnadarko, Hess Corp

Tullow, Afren, KosmosVanco

LIBERIAAnadarko,Tullow,

MitsubishiAfrica Petroleum

SIERRA LEONEAnadarko

Tullow

GUINEAHyperdynamicsDana Petroleum

CAMEROUNNoble Energy,

Kosmos,

Victoria Oil and GasBowleven,

GABONMaurel et Prom

Sasol, Tullow, Vaalco

SENEGAL &

GUINEA-BISSAUOphirTullow

Premier OilFAR Ltd

EQUATORIALGUINEA

Noble Energy,Tullow,Ophir,

Vanco Energy

0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010

Europe Africa South Asia

Tullow Oil and Gas Reserves by Region, MMBOE (2004 - 2010)


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Somalia

Ethiopia

Mozambique

Tanzania

Uganda Kenya

Africa Oil

Corp,Petrotrans,Tullow, CNOOC

Africa Oil Corp,Ophir,

Asante Oil,PrimeResources

Tullow, Afren, Africa

Oil Corp, Anadarko,

Total,Lion

Petroleum, Simba

Resources,Vanoil,BG,

Apache

Tullow, CNOOC,

Total, Dominion

Petroleum, Tower

Resources,

Heritage

Ophir, BG Group,

Statoil, Exxon Mobil,

Petrobras, Dominion,PanAfrican, Antrim,

Statoil,Maurel and

Prom,Beach etc

Anadarko, Cove

Energy, ENI, GalpAfren, ExxonMobil

(Madagascar, Seychelles)

Upstream competitive landscape in East Africa

A i k t f Af i


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Asian markets for Africas gasIn the last 2 years, Asian countries have struck deals worth overUS$20 billion for gas projects in SSA

Z

China lends Tanzania

1.5bn for gas

processing facilities

and gas fired power

plant in 2011

In 2011 China

lends Ghana $3bnfor oil and gas,

$800mn will be for

gas projects

Chinas PetroTrans

acquired 4 Ethiopian

gas fields in 2011 for

$130mn

South Korea

signed trade

agreement with

Angola for LNG

purchase

KOGAS has a

major stake in the

40 tcf Rovuma

offshore 4 gas fieldin Mozambique

South Korea plans to

export 1mn tonnes

of LNG in the next 20years as part of a

$84bn - 5.64 mn

tonnes 20-year LNG

supply contract with

Total and Shell

Thailand

discussion LNG

partnership with

NNPC for gas

infrastructure,

NLNG Train 7, off-taker of OKLNG

SINOPEC investment

in Cameroons

PETCEN gas fields

Singapores Olam to

spend $1.3bn on gas

processing facilities

in Gabon

0

1

2

3

4

5

6

7

8

2012 2013 2014 2015 2016 2017 2018 2019 2020

Japan China South Korea India

Forecast Natural Gas Consumption of key Asian

Countries, Trillion Cubic Feet, 2012-2020

Ecobank Research 2013|

Section 4


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Section 4

Risks, challenges and outlook


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Changes in global oil trade patterns

US imports of African hydrocarbons have dropped by nearly 1million bpd

0

1000

2000

3000

4000

5000

6000

2007 2008 2009 2010 2011

Asia US Europe Other regions

6

6.5

7

7.5

8

8.5

9

9.5

Production Imports

US crude oil production and net imports to 2013, million bpdShare of Africa s oil exports, 000 bpd

General shift in exports of African oil and gas towards the east African crude oil is declining in importance to the US Replacement of high premium Africa crude oil grades with cheaper alternatives


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Other pertinent challenges

Regulation

Infrastructure

Transparency

Creating local value

Security

Local content policies and implementation

The social licence

Partnerships

Investing and saving for the future


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Resource-rich models: Which way for Africa?

Global economic dynamics have altered the fundamental premise of the

resource-curse debate

Present vs. Future Consumption

The Botswana-Malaysia examples

Government accountability to an informed public


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Section 3


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Section 3

Thank you & QuestionsTwitter: @EcobankResearch

africa’s place in the global hydrocarbons

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