Oando- NGC Partnering for the development of

Gas Supply Infrastructure in NigeriaBolaji Osunsanya

Managing Director, Oando Gas & Power

March 26th 2008

1

Outline

• Background / Context

• Gas Infrastructure Blueprint

• Opportunities of Interest

• Possible Deal Structure

• Timeframe

• Next Steps

2

Context

With the approval of the Gas Pricing regime and the publication

of the infrastructure blue print, this is an auspicious time for a

prudent investor to make its foray into the development of gas

delivery infrastructure in Nigeria.

NGC, the pioneer in the development of gas infrastructure in

Nigeria must take it’s rightful place at the vanguard of this

movement

Oando, with its history of cooperation with NGC, a proven

ability to manage huge projects and mobilize funding is the

ideal partner for NGC in this pursuit

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History

To date, Oando, through Gaslink has had an 8 year relationship

with the Nigerian Gas Company, the success of which is

demonstrated by the following achievements:

– Over 224km of gas pipelines in different parts of the country

arranged by Oando subsidiaries

– $156m (NGN18.7bn) of investment mobilized by Oando to

construct pipeline infrastructure

– The connection of over 90 industrial customers to the gas

network including a possible UNICEM

– Income in excess of NGN14.1bn from the operation of the

Greater Lagos Distribution Network

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Players in the Gas Value Chain

Government is the dominant gas resource owner but has limited operatorshipMost of the production is done by MOCs which although are 50-60% owned by NNPC are commercially

driven

Also controls transmission & distribution – operated on behalf of the government by Nigerian Gas

Company (NGC)

The Government has now stated its commitment to domestic gas utilisationThe new clarity on domestic gas pricing has made it possible to evaluate further opportunities

Most of the gas field development today is geared towards the export market

(LNG)

Gas processing and more encompassing infrastructure is a clear gap

Gas

ProcessingDistribution MarketsTransmissionOil and Gas

E&POilfield Services

Local participation remains limited to low-value segments, even lower, when discounted for Government participation.

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Oando-Halliburton

Schlumberger

Petrolog

Noble

Mallard

Trans Ocean

Lonestar

Shell

Chevron

Oando

Chevron

Shell

BG

NGC

Shell

Oando

Shell NG

Falcon

Gasland

NGC

Power (Oando)

Industrial

Commercial

Domestic

Transportation

Through partnering and Strategic Acquisitions, Oando is steadily establishing a footprint across the Gas value Chain

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Gas in Nigeria today

2

Issues Opportunities

• New Regulation is advocating Open Access

• OGIC – The role of and reporting path of NGC is unclear

• Security of Supply

• Appropriate Pricing ?

• Domestic Priority

• Regulation / Policy

• Infrastructure

• Gas/Power Linkage (or lack)

• Infrastructure / Network development

• Derivative Products (LPG, Petrochemicals, GTL…)

• Privatization?

NGC is the largest investor today & therefore the most affected by any development

NGC must drive the need to chart a holistic response

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7

Gas Infrastructure Blueprint

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Gas Infrastructure Blueprint

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ID Pipeline Project Length (km)/Diameter(in)

Capacity Description

2 OB-OB to Oben 100 / 42 1700 Provides security of Supply to the West

3 Calabar to Ajaokuta 365 / (48,48,56)

3000 Provides Security of Supply to North. Serves as pre-investment for TSGP( Abia, Anambra en route)

4E East Loop Onshore East 188 /56 3500 Main Supply to Calabar CPF and the North

4W East Loop Onshore West 56 3000 Supply to Bonny from the East Onshore

5E East Loop Offshore East 32 1150 Supply to Calabar from offshore

5W East Loop Offshore West 209 /42 1700 Supply to Bonny from East offshore

11 Shagamu to Jebba 265 / (24,22) 390 Secure supply to Ogun, Osun, Oyo and Kwara

ELOPS Escravos to Lagos

Offshore

200 / 42 1250 Supply to Lagos via secure offshore route

ID CPF Location Capacity COD Year Description

A Escravos 2395 2010 Serves North and West. Several phases of expansion, 2bcfd by 2012

B Ob-Ob 1700 2010 Servers North and West. Several Phases of expansion.

C Calabar 4500 2010 Main supply to Calabar and North

D Bonny 1500 2013 Incremental capacity to LNG Plant

F Forcados 3250 2020 1bcf required by 2012, successive expansion phases

G Brass 1700 2011 Brass LNG Only

H Olokola 2000 2012 No incremental capacity – LNG only foreseen

The infrastructure blueprint highlights a number of gas pipeline and Gas Central Processing Facilities (CPF) required to fulfil the domestic

utilisation requirements

Source: IHS Gas Master Plan

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Specific Opportunities

2

32

C

10

B

Specific Opportunities

2

Pipeline Project Length(km)

Diameter(in.)

Capacity(mmscf/d)

CODYear

OB-OB to Oben 100 42 1700 2012

Calabar to Ajaokuta

Phase 1 (Okopedi Ito) 55 56 3000 2009

Phase 2 (Umuahia) 65 48 2200 2010

Phase 3 (Ajaokuta) 245 48 2200 2011

Total 365

CPF Capacity COD Year

Calabar CPF

Phase 1 500 2008

Phase 2 900 2011

Phase 3 500 2012

Phase 4 600 2013

Phase 5 1,500 2015

Phase 6 500 2018

Total 4,500

NGC must proactively collaborate with a sound investment partner

Source: IHS Gas Master Plan

CPF Capacity COD Year

OB/OB CPF

Phase 1 700 2011

Phase 2 1,000 2012

Total 1,700

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Immediate Opportunities

2

Development of OB/OB CPF• Purpose of this CPF is to assure security of supply to the West

Construction of OB/OB to Oben Gas transmission Line• Primary purpose of this pipeline is to assure security of supply to Lagos

• Oando (Gaslink) is the primary private sector off-taker from the ELPS and

is best placed to benefit from this project

• In addition, we are downstream beneficiaries along the West Coast of

Africa

Development of Calabar CPF• Oando already has gas assets and infrastructure in the Calabar Area

– OML 236 – currently under development, but already with 690bcf of proven

reserves

– 124km of 18” gas transmission line from Ukanafun to Mfamosing

• Along with additional assets being developed, Oando is able harness its

assets and provide input to the CPF

Construction of Calabar to Ajaokuta Pipeline• A major step in fulfilling Oando’s commitment to developing the national

gas grid

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Peculiarities of CPF/Pipelines

2

Capital Intensive

Technical

Capabilities

Assured Supply /

Throughput

Shared Utility

Size (length),

Scalability

- Partners with deep pockets

- Capital Markets & International financial markets

TSG backbone

- Technical Partners with proven experience

- Access to cutting edge technology

- Assured O&M capabilities

- Reasonable transportation/throughput tariff

- Swaps

- Assured Supply

- Leverage domestic gas & flare down policies to enforce patronage

- Reconfirm cluster commitments

- Execute in phases

- Find foundation customers en-route

- World Class Construction

- Align with on-going TSG Discussions

ISSUES MITIGANTS

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Partnership Model

2

Capital

Technical Capabilities

Assured Supply /

Throughput

Shared Utility

Size (length), Scalability

- NGC / Oando & Highly capitalized institutions

- Leverage JSE & NSE

- Oando is currently mobilizing to raise the required financing througho Seed Equity

o Guarantees

o Development Finance Institutions

TSG backbone

- LOI with 2 business/technical partners

- Access to learning points on recently concluded regional CPF

and pipelines

- Access to Canadian Operators

- Leverage OML 236 for phase 1

- Leverage 630bcf ‘OML 236’

- Discussions ongoing with others within cluster 5

- WAGP experience – quick execution; phased approach

- Credible foundation customers (some of whom we have had

discussions)

- Leverage work already done by NGC and the Ministry

- Leverage political support

ISSUES ACTIVITIES

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Deal Structure

2

OB/OB

Pipeline

Calabar CPF

Calabar – North

Pipeline

OB/OB CPF

Project Make up Model

BOT

OGP NGC

OB/OB Limited

OGP NGC

Calabar CPF NEWCO

Multi-Party

JV

Multi-Party

JV

OC

x% y%

z%x% y%

OGP NGC

N-South NEWCO

Multi-party

Investors

z%x% y%

OGP OC

OB/OB CPF NEWCO

NGCz%x% y%

Multi-Party

JV

Mobil?

Addax?

Moni Pulo?

Total?

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Time Frame

2

OB/OB

Pipeline

Calabar CPF

Calabar – North

Pipeline

OB/OB CPFDevelopment (9 months) Construction (24 months)

Development (12 months) Construction (36 months)

Development (9 months) Construction (24 months – phase 1)

Development (6 months) Construction (12 months)

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Next Steps

2

• Formal response in 30 days

• MOU with NGC

• Collaboration MOUs with other partners

• Presentation to Minister/President

• Joint Task Force : Program Management– 2 per Investor?

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We have positioned ourselves to capture maximum value along the entire

energy chain and harvest synergies between subsidiaries

MarketingRefinery

Division

Production

& Dev. Co.

Energy

Services

Power

Supply &

Trading

Synergies

RefiningOil and Gas

E&PPrimary

DistributionConsumerStorage

Secondary

DistributionChannelsTrading

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Gaslink /

East Horizon

Oando an Integrated Energy Company

Oando Plc

Marketing

No. 1

marketer of

Petroleum

Products

Power

A Significant

option play

for Oando

Energy

Services

Offering

Product

service lines

through

strategic

alliances

(e.g. Baroid,

Halliburton)

Exploration and

Production

Assets

Acquisition

and

Monetization

Refining

New Build

Supply and

Trading

Dominant

local player

Expansion

into other

West African

Markets

Gas (Pipeline

Transmission of

Natural Gas)

20-year BOT

Franchise

Agreement

with NGC

New Industrial

customer

connects

Further

pipeline

expansion into

un-served

markets

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Thank you

http://www.oandoplc.com

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