Boost Nigeria’s Economy via Gas Monetization and Oil Refining

Dr. Soni O. OyekanPresidentPrafis Energy Solutions

4th Intl. Petroleum Downstream ConferencePort Harcourt 2015University of Port HarcourtAugust 19/20, 2015

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Address Outline

State of the Economy of Nigeria Sector Strategies PrioritizationProfitable Oil RefiningGas Monetization Summary

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Huge Plusses of Nigerian Economy

• Africa’s largest economy – can rank 9th by 2050 37.3 billion barrels proved oil reserves, 13th

190 Tcf of gas, potential 600 Tcf, 7th

31 billions boe oil sands; 3 billions tons of coal

• 2.4 MMBPD of oil and liquids

• Banking, communications & entertainment growing

• Agric, services, industrial are GDP contributors

• 6th in the world in farm output

• 247 million population by 2030!

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Major Challenges of the Economy• Weak infrastructure, industrial base, defense

• Oil & foreign revenues

• 22 % drop in foreign reserves

• $64B debt in 2015

• Oil losses of 400 MBPD

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• Endemic corruption & impunity

• Massive environmental pollution

• Investors flight

Major Challenges of the Economy

• Federal character, population are burdens

• National threats, oil piracy

• Huge expensive governance

• PIB, insecurity

• Oil and gas investments

• Ineffective taxation system

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CountryTax Rev(% GDP)

Nigeria 6.1

Tanzania 12.0

France 44.6

UK 39.0

USASweden

27.0 45.6

Thanks Super Eagles

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• Can do attitude

• Significant contributions in Diaspora

• Lagos State & Eko Atlantic City

• National mindset change

Policy Costs Impacts – US Case

• US Private sector

• 17 MMBPD refining capacity

• Nigerian regulations and uncertainties

• Landscape insecurity and losses

• Global investments

• Inaction impacts GDP, jobs, revenues, etc.

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Maintain Effective Defense• Strong deterrent forces - partner with military allies

• Oil piracy and insecurity

• Stable operating environment

• Business friendly policies

• Reduce cost of oil & gas business

• Strong and independent judiciary

• Bolster investors confidence

• Jobs creation & brighter future

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Achieve 100 GW Electricity Power • Vision 2020 40 GW

• 1.3 GW of 5.5 GW in April 2015

• Gas supply, pricing & vandalism

• GenCos and DisCos

• Infrastructure reliability/security

• Solar, hydro, coal, wind, nuclear

• Petroleum, biomass

• Generation and distribution

• Economic development

• Jobs creation & higher standards of living

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Oil Business Sector Strategies• Oil E&P and marketing business

• Oil trading patronage

• Oil blocks patronage

• Review, amend & assess PIB

• Increase transparency

• Oil thefts & vandalism

• Grow oil and gas revenues

• Efficient taxation system

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100

150

200

250

300

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Oil Reserves of Selected Countries, Billions Barrels

Ven Saudi Canada Iran Iraq UAE Nigeria USA

Attract Major Joint Partners • Fiscal & security incentives

• Joint partners equity in oil refineries

• Increase production of dry gas

• Associated gas flaring less than 25 Bcf per year

• Polluters clean up and fined per PIB

• Qtrly performance reviews

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4

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Category 1

Total Petroleum & Liquids, MMBPD

USA SA Rus China

Canada UAE Iraq Nigeria

A Simplified Refinery Flow Diagram

NHTCatalytic Reformer

Gas Recovery

SulfurPlant

FCCU

H/C

CokerUnit

GasolineBlending

DHTDistillate

Fuels

TamUnit

VacUnit

Coke

Asphalt

Diesel Fuels

Gasoline

Sulfur

LPG, C3=Hydrogen

CrudeOil

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Strategies for Refined Products

• 85 to 95% UF global

• No TAR since 1992

• 305 MBPD demand vs 140 MBPD produced

• Toll refining to meet demand

• 500 MBPD Dangote refinery

• Rationalize current refining assets

• Joint venture refineries with oil production partners in Nigeria

Dec 2011 Refinery DataOniwon's Response

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22% UF in 2013

Strategies for Refined Products

• Global refineries are efficient• Higher clean fuels• Asphalt, chemical feeds• Toll manufacturing during refinery outages, TARs, etc

• Global joint venture refining• Refined products export business

• Profitability, revenues• Economic development• Job creation and training

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20

40

60

80

100

120

Crude PMS DPK AGO

Toll Mfg. Can Yield More Fuel

Nigeria Global

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Block Drawing of a Typical Refinery

Effective Oil Refinery Management

• Multiple crude units

• Good design, construction and start up

• Reliable feedstock, chemicals and services

• Successful routine & TAR maintenances

• Optimal frequency for process units TARs

• Trained staff and excellent refinery monitoring

• Establish safety culture

• Strong central refining engineering support group

• Review key performance and economic indices (KPIs)

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Nigeria 3rd in Gas Flaring

• Gas reserves of 190 Tcf, potential 600 Tcf• Net 5 Bcfg/d, • Nigeria flares ~500 Bcf/yr, 10% of global• Same as Russia and Iran • Saudi Arabia flared 131 Bcf in 2011• Environmental and health hazards• Revenue loss is $3.0 to $5.0B/y.!

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Short Term Gas Strategies

• Gas for 50% power generation • Hydro, solar, coal, methanol, biofuels, nuclear• Export gas for foreign revenues• Grow petrochemical sector• Flare less than 50 Bcf/y.

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Gas is Future Driver• Incentives for major investors

• Optimize gas export and petrochemical gas

• Low Capex for methanol and derivatives

• C2 and C3 feedstock for ethylene and propylene

• Natural gas liquids for PMS

• Plastics, paints, polymers,

• Pharmaceuticals, consumer products

• Economic development

• Jobs creation

• Increase in foreign reserves

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Methanol Production Process• Natural gas, H/Cs, CO2, biomass

• Methane via SMR to syngas and methanol

Feed Pretreatment

Steam Reforming and Heat Recovery

Cooling and Compression

Methanol Distillation

Methanol Synthesis

Methanol Product

Methanol and Biofuels Industries

• High growth demand for methanol

• Methanol in PMS, 3 % in Europe

• Alcohol flex fuels vehicles (AFFVs)

• MTBE, DME, Marine fuels, MTO

• Methanol generators

• Palm and ground nuts as renewable feeds

• Biodiesel for diesel generators

• Biodiesel for diesel cars and trucks

• Expanded industrial base Jobs creation

• Reduce imports and increase foreign reservesv

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GTL for Clean Fuels

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GTL, Fischer Tropsch synthesis 33 MBPD EGTL Diesel, Kerosene, LPG, Naphtha

Qatar 33 MBPD Oryx GTL Plant

Summary• High priority electrical power, strong defense, debt

reduction and revenue growth

• Bolster investor confidence

• Revamp Nigeria’s oil E&P sector and protect the environment

• Meet energy demands and export refined products

• Balance gas export and power generation

• Grow petrochemical business on gas

• Establish energy, chemical and consumer products business sectors on gas

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Acknowledgements

Prof. Godwin Igwe, Chair 4th Conference on Gas Utilization

Prof. Mabolaji E. Aluko, Sunday Musings Notes, June 7, 2015

Dr. Ngozi Okonjo-Iweala, Clarifying Nigeria’s Debt Position

US EIA Reports on Nigeria

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Thank you for your time