#1Oando Oando- NGC Partnering for the development of Gas Supply Infrastructure in Nigeria Bolaji Osunsanya Managing Director, Oando Gas & Power March 26th 2008#2. • . Outline Background / Context Gas Infrastructure Blueprint Opportunities of Interest. • Possible Deal Structure • Timeframe • Next Steps . Oando 2#3Context 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 Oando 3#4History 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 Oando 4#52 Players in the Gas Value Chain Local participation remains limited to low-value segments, even lower, when discounted for Government participation. Distribution Markets Oilfield Services Oil and Gas E&P Gas Processing Transmission Oando-Halliburton Oando Schlumberger Petrolog Noble Mallard Chevron Shell BG Shell Chevron NGC Shell Oando Shell NG Falcon Gasland NGC Trans Ocean Lonestar Power (Oando) Industrial Commercial Domestic Transportation Government is the dominant gas resource owner but has limited operatorship - Most 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 utilisation - - The 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 Oando Through partnering and Strategic Acquisitions, Oando is steadily establishing a footprint across the Gas value Chain 5#62 Gas in Nigeria today Issues • New Regulation is advocating Open Access OGIC - The role of and reporting path of NGC is unclear Security of Supply Appropriate Pricing? Opportunities Infrastructure / Network development Derivative Products (LPG, Petrochemicals, GTL...) Privatization? • Domestic Priority Regulation/Policy Infrastructure • Gas/Power Linkage (or lack) NGC is the largest investor today & therefore the most affected by any development NGC must drive the need to chart a holistic response Oando 6#7Gas Master Plan Network Schematic with TSGP Revision 2 Monday, August 06, 2007 WESP Ogbomoshu Legend: Upstream Pipelines Downstream Pipelines Compressor Stations Central Processing Facilities Pipeline length (km) 2100 Clameter inches Design Capachy (mmscla) C 88823 Custer A OKLMG Adu Beyon Bress Cudar Quakerb Hot Alloc will require mening at export point and treptat processing points. Cluster - 1763 100 B Abuin Beran sanie 200 IHS TROP Kadun 7#82 Gas Infrastructure Blueprint 58 11 ),, OGUN LAGOS USUN Ajaokuta KOGI ONDO EDO BENUL ELOPS Cluster 9 2P rem: 3.9 tcf Existing CPFs Proposed CPFs Operating Pipelines Cluster & 2P rem: 2.4 tcf Proposed Eastern Pipelines Proposed Central Pipelines Proposed Western Pipelines Oando Cluster 1 2. rem: 26.4 tcf Cluster 2 2P rem: 19.Btcf ENUGU ANAMERA EBONY! MO Cluster's 2P re 36,9 20 Cluster 4 2P rem 24.7 tc Cluster 7! 2P rem: 10.5 tcf 3 Cluster 5 2P rem: 27.5 tcf 5 Cluster 6 2P rem: 28.1 tcf 4 CROSS RNER 8#92 Gas Infrastructure Blueprint ID Pipeline Project Length (km)/ Capacity Diameter(in) Description 2 OB-OB to Oben 100 / 42 1700 Provides security of Supply to the West 3 Calabar to Ajaokuta 365/ 3000 (48,48,56) 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 ELOPS Escravos to Lagos Offshore 265/(24,22) 200/42 390 Secure supply to Ogun, Osun, Oyo and Kwara 1250 Supply to Lagos via secure offshore route ID CPF Location Capacity COD Year Description A Escravos 2395 2010 B Ob-Ob 1700 2010 Serves North and West. Several phases of expansion, 2bcfd by 2012 Servers North and West. Several Phases of expansion. Calabar 4500 2010 Main supply to Calabar and North D Bonny 1500 2013 Incremental capacity to LNG Plant F Forcados 3250 2020 G Brass 1700 2011 1bcf required by 2012, successive expansion phases Brass LNG Only H Olokola 2000 2012 No incremental capacity – LNG only foreseen Source: IHS Gas Master Plan Oando The infrastructure blueprint highlights a number of gas pipeline and Gas Central Processing Facilities (CPF) required to fulfil the domestic utilisation requirements 9#102 ON Specific Opportunities OGUN 11 LAGO ELOPS OSUN Ajaokuta XOG ONDO Cluster 9 2P rom: 3.9 tcf Cluster & 2P rem: 2.4 tcf Existing CPFS Proposed CPFs Operating Pipelines Proposed Eastern Pipelines Proposed Central Pipelines Proposed Western Pipelines Oando Cluster 1 2P rem: 26.3 ter Cluster 2 EDO 2P rem 19.tcf 2 B Cluster ANAMAYA ENUGU EBONY! 3 2P rea 36,5-105 Cluster 5 2P rem: 27.5 tcf Cluster 4 2Prem 24.7 to L Cluster 7 2P rem: 10.5 tcf Cilister & 2P rem: 28.1 tcf BENUL CROSS RIVER 10#112 Specific Opportunities Pipeline Project Length Diameter Capacity COD (km) (in.) (mmscf/d) Year 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 CPF Capacity COD Year Calabar CPF OB/OB CPF Phase 1 500 2008 Phase 1 700 2011 Phase 2 900 2011 Phase 2 1,000 2012 Phase 3 500 2012 Total 1,700 Phase 4 600 2013 Phase 5 1,500 2015 Phase 6 500 2018 Total 4,500 Oando Source: IHS Gas Master Plan NGC must proactively collaborate with a sound investment partner 11#122 Immediate Opportunities 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 Oando 12#132 Peculiarities of CPF/Pipelines ISSUES Capital Intensive Technical Capabilities Assured Supply/ Throughput Size (length), Scalability Shared Utility TSG backbone Oando - MITIGANTS Partners with deep pockets Capital Markets & International financial markets Technical Partners with proven experience Access to cutting edge technology - Assured O&M capabilities Leverage domestic gas & flare down policies to enforce patronage Reconfirm cluster commitments Execute in phases Find foundation customers en-route Reasonable transportation/throughput tariff Swaps Assured Supply World Class Construction Align with on-going TSG Discussions 13#142 ISSUES Capital Partnership Model Technical Capabilities Assured Supply/ Throughput Size (length), Scalability Shared Utility TSG backbone Oando - - - ACTIVITIES NGC / Oando & Highly capitalized institutions Leverage JSE & NSE Oando is currently mobilizing to raise the required financing through Seed Equity Guarantees o Development Finance Institutions LOI with 2 business/technical partners Access to learning points on recently concluded regional CPF and pipelines Access to Canadian Operators 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 OML 236 for phase 1 Leverage work already done by NGC and the Ministry Leverage political support 14#152 Project Deal Structure Make up OB/OB Pipeline Calabar CPF Calabar North Pipeline OB/OB CPF valiuo OGP x% OGP x% OB/OB Limited Model NGC y% BOT NGC OC z% y% Mobil? Addax? Moni Pulo? Multi-Party JV Calabar CPF NEWCO OGP x% OGP x% Multi-party Investors NGC z% y% Multi-Party JV N-South NEWCO NGC OC Total? z% y% Multi-Party JV OB/OB CPF NEWCO 15#162 OB/OB Pipeline Time Frame Development (6 months) Construction (12 months) Development (9 months) Construction (24 months - phase 1) Calabar CPF Development (12 months) Construction (36 months) Calabar North Pipeline Development (9 months) Construction (24 months) OB/OB CPF valiuo 16#172 Next Steps . • . 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? Oando 17#18We have positioned ourselves to capture maximum value along the entire energy chain and harvest synergies between subsidiaries Oil and Gas E&P Production & Dev. Co. Energy Services J I Refining Trading Primary Distribution Storage Secondary Distribution Channels Consumer Refinery Division | I Supply & Trading I I I Oando Synergies I I Marketing I Gaslink / East Horizon I I Power 18#196 Oando an Integrated Energy Company Oando Plc Marketing • No. 1 marketer of Petroleum Products 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 Energy Services • Offering Product service lines through strategic alliances (e.g. Baroid, Halliburton) Exploration and Production • Assets Acquisition and Monetization connects Oando Further pipeline expansion into un-served markets Refining New Build Power A Significant option play for Oando 19#206 Thank you http://www.oandoplc.com Oando 20 20