Nigeria Associated Gas U0lizaon Study - Columbia...
Transcript of Nigeria Associated Gas U0lizaon Study - Columbia...
NigeriaAssociatedGasU0liza0onStudy
ThankstoAlbertBressandandThomasMitrofortheirthoroughpeer-review
PerrineToledanoandBelindaArchibong
Fiscalandlegalregula0onforAPGuseandoutlet
APGprojects:NLNG
Pipelines:non-integratedandnotmaintained
UnaHrac0vegasandpowerpricing
Underdevelopeddomes0cmarket
Deficientgovernance
Endorsementofthezerorou0neflaringby2030ini0a0ve
Summaryoffindings
S NigeriahasanextensiveregulatoryandfiscalframeworksurroundingflaringandAssociatedPetroleumGas(APG)use,aswellasnetworksofdomes0candinterna0onalpipelines(suchastheWestAfricanGasPipeline).
S ThishasspurredafewAPGuseprojectsinthecountryincludingthelandmarkNLNGprojectusingAPGforLNGproduc0onforexport.
S However,deficientmaintenanceofnon-integratedgaspipelinesandunaHrac0vegasandpowerpricingactasdisincen0vesforAPGuseandinvestmentinthedomes0ceconomy,par0cularlythepowersector.
S DeficientgovernanceoftheoilsectormarkedbythelackofanindependentregulatorandahistoryofpaymentdefaultsonthepartoftheNNPCandthepoweru0lity,combinedwithsomeunstructuredregula0onlikethe2014direc0vebytheMPRurgingoilcompaniestogiveflaredgasto3rdpartyinvestorsforAPGu0liza0onprojectshassparkedmuchcontroversyamongoilmajorsopera0nginthecountry.
S Nigeria’smostrecentendorsementoftheWorldBank’sZeroRou0neFlaringby2030mightgivetheimpetusforadeepreformofthelegalframeworkandinvestmentclimatenecessarytoenableAPGuse.Infact,Nigeriajustsetitsownflaringoutdateasbeing2020.
Thesta0s0csofAPGflaringinNigeria:Howbadisit?
OverviewstatsonAPGflaring
Onthecompaniesinvolved
Overthelastdecade
Andtheirflaringtrendover0me
37.4
14.611.4
9.47.1
5 4.7 4.1 3.7
0
5
10
15
20
25
30
35
40
Gasflared
(billioncubicmeters(bcm)
Top10GasFlaringCountries2011
S Nigeriaaccountsforjustover2%ofglobaloilproduc0onandabout10%ofgasflaredgloballyin2011.
S Economiccostofflaringhasbeenassessedatabout$72bnfrom1970-2006=about$2.5bn/yearinrevenuelosses.
S Accordingtothe2015sta0s0calreportoftheOrganiza0onofPetroleumExpor0ngCountries(OPEC)Nigeriaproduced86.3bcmofgasandflared10.7bcmin2014.AccordingtoNNPC,gasflaringrepresentedalossofupto$868.8million,aboutN173.76billionin2014.
Source:NOAAsatellitees0mates,2011
Thesta0s0csofAPGflaringinNigeria:Howbadisit?
OverviewstatsonAPGflaring
Onthecompaniesinvolved
Overthelastdecade
Andtheirflaringtrendover0me
S Ofthe2400billionstandardcubicfeet(bscf)ofgasproducedin2011,1800bscforabout75%wasAPG.About28%ofthisAPGwasflaredinadecreasingtrendfrom2006con0nuingtoday.About12%ofAPGwasflaredin2014accordingtoNNPC.
S Asof2008,Nigeriawasexpor0ngabout3billionstandardcubicfeetperday(bscf/d)ofgasinLNGform,whileflaringabout2.5bscf/dandprovidingonly0.5bscf/dtothedomes0cpowersectorwhichaccountedforabout70%ofdomes0cgasconsump0on.
Source:DepartmentofPetroleumResources(DPR)Nigeria,2011
Trend:APGProducedandFlaredsince2006
Thesta0s0csofAPGflaringinNigeria:Whoisinvolved?
S Shellhasbeenthetopflareronacumula0vebasisoveralmostadecade,followedcloselybyExxon,ENIandChevron.
28%
21%19%
8%
20%
2000-2008%shareofgasflaredbyCompanyinNigeria
Shell(SPDC)
ExxonMobil
Chevron
Total
ENI(NAOC)
Source:Oni,2011,Madueme,2010
Overthelastdecade
OverviewstatsonAPGflaring
Onthecompaniesinvolved
Andtheirflaringtrendover0me
Thesta0s0csofAPGflaringinNigeria:Whoisinvolved?
S Shellhasseenthemostdrama0cdecreaseingasflaredoverthepastdecadespurredpresumablybyacombina0onofaHrac0vefiscalincen0vesandpublicopprobriumconcerningtheirac0onsintheNigerDeltaregionofthecountry.
S Howeverin2014,accordingtoNNPCShell’sincreasedlevelsofoilproduc0onresultedinanaugmenta0onofthevolumesofflaredgasby12%overtheyear,andof9%inflaringintensity.Shellishoweverclaimingthatin2015theyreducedflaringby28%ascomparedto2014andflaringintensityby15%.
Andtheirflaringtrendover0me
OverviewstatsonAPGflaring
Onthecompaniesinvolved
Overthelastdecade
Source:GE,2011
0
1
2
3
4
5
6
7
8
9
2000-2002 2003-2005 2006 2007 2008 2009
Gasflared
(bcm
)
Year
GasflaredbyCompanyinNigeriafromyears2000-2009
Shell(SPDC)
ExxonMobil
Chevron
Total
Eni(NAOC)
Others
S OfthemajorIOCs,Chevronhasflaredthegreatestshareofitstotalgasproducedforthelastdecade,withflaredgasmakingupasmuchas64%oftotalgasproducedasof2008;incomparisonShellhasflared12%oftotalgasproducedasof2008.
S AccordingtoNNPC,in2014Chevron(CNL)wass0llthebiggestoffenderamongcompanieswith53.6bscfofgasburnt.Shellfollowedwith51.92bscf,Exxonwith42.86bscfandNigeriaAgipOilCompany(NAOC)with35.79billionSCF.
S Thesmalleroffendersare:AddaxPetroleumDevelopmentCompanywhichburnt35.6bscf,TotalExplora0onandProduc0on,22.78bscf,TotalUpstreamNigeria18.73bscf,Esso4.517bscf,ChevronTexaco4.43bscfandAmniPetroleum3.87bscf.
Thesta0s0csofAPGflaringinNigeria:Whoisinvolved?
Andtheirflaringtrendover0me
OverviewstatsonAPGflaring
Onthecompaniesinvolved
Overthelastdecade Source:Madueme,2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000-2002 2003-2005 2006 2007 2008
Shareofflared
gasasa
%oftotalgasprodu
ced
Year
Flaredgasasa%oftotalgasproducedbycompanyfromyears2000-2008
Shell(SPDC)
ExxonMobil
Chevron
Total
Eni(NAOC)
Others
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
Regula0on:Agenciesand
analysis
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis
GovernmentinsKtuKonsinvolvedinregulaKonofoilproducKon/flaring
DescripKon
FederalMinistryofPetroleumResources(MPR)
HeadedbytheMinister.Inchargeofformula0ngoilandgaspoliciesandregula0ngExplora0on&Produc0on(E&P)ac0vi0esbygran0ngflaringallowancesandmonitoringE&Pac0vi0es.ControlstheNNPCandDPR
DepartmentofPetroleumResources(DPR)
OriginallythefirstlegalagencycreatedtoregulatethepetroleumsectorinNigeria;iscurrentlytheenforcementarmoftheMPR
NigerianNaKonalPetroleumCorporaKon(NNPC)
Governmentoilcorpora0on,exertsNigeria’sinterestsinthepetroleumindustry.TheNigerianGasCompany(NGC)isoneofabout11subsidiariesoftheNNPCandisresponsibleforthedevelopmentofanefficientgasindustry.NNPChasgenerally60%stateequityshareintheprojectsthatithastroublehonoring
FederalMinistryofEnvironment(FMENV)
Federalministryresponsibleforprotec0onandimprovementofwater,air,land,forestandwildlifeinNigeria(note:exceptoilandgas)
TheNaKonalEnvironmentalStandardsandRegulaKonsEnforcementAgency(NESREA)
SubsidiaryofFMENV,createdtoenforceenvironmentallaws,policiesandregula0onsinNigeria.ActsastheregulatoryarmofFMNEV
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
Regula0on:Agenciesand
analysis
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis S 70%ofFGNrevenuecomesfromNNPCearnings
S TheFederalGovernmentofNigeria(FGN),throughNNPC,holdsabout55-60%interestsinmostoftheseIOCsinvolvedingasflaringwhichimpedesindependentregula0onandgoodgovernance.
FGN
MPR
DPR NNPC
NGC NLNG
FMENV
NESREA
GovernmentinsKtuKonsregulaKngoilproducKonandflaring
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
RegulaKon/PoliciesonGasFlaring/APGuse
DescripKon
1969PetroleumActandRegulaKons EncourageduseofAPG,exemptedmul0na0onaloilcompaniesfrompayingroyal0es
1979AssociatedGasRe-injecKonAct(APGRA)
ForbadeflaringofAPGaoerJan1,1984withoutpermissionfromMinisterofPetroleum(notmet)
1985AssociatedGasReinjecKonActAmendmentDecree7
Insignificantfine(about$0.46per1000scfflaredby1998)
1992AssociatedGasFrameworkAgreement(APGFA)
Fiscalincen0vesforcompaniesinvolvedinAPGu0liza0on
2004AssociatedGasReinjecKonActandAssociatedGasReinjecKonAmendmentAct
ProhibitedflaringwithoutpermissionfromMinisterofPetroleum.Obligatedalloilproducingcompaniesincountrytosubmitdetailedplansforgasu0liza0on(notmet)
2008NigeriaGasMasterPlan InvitedforeignIOCstoassistinconstruc0onofgasgatheringplantsandpipelinestosupplyweakpowersector.Alsoincludedaflareouttargetdateforcompaniestostopgasflaringby2008(notmet)
2008NaKonalDomesKcGasSupplyandPricingPolicyandRegulaKons
Establishedadomes0cgassupplyobliga0onarrangementthatguaranteedthesupplyofasufficientamountofgasbyoilandgasproducerstoallac0vepowerplantsinthecountry.Policywouldalsoregulatethepriceofgasusedinthedownstreamgassector
Regula0on:Agencies
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
S 2010AssociatedGasReinjec0on(Amendment)Bill
o ProposedbillwasseqnganewdeadlineforflareoutatDec.31,2012withallowanceforaTemporaryGasFlaringpermitfromtheMPRwithpaymentofafee.
o TheBill,neverpassed,alsos0pulatedthatcompanieswithoutfacili0esforAPGusewouldnotbepermiHedtoengageinoilproduc0on.
S 2010FGNAcceleratedFlaredGasDevelopmentprogramo Controversialdirec0vefromtheFGNtoIOCsmanda0ngthecompanies
toallow13thirdpartyinvestorsaccesstooilfields,flowsta0onsorwellheadstogetgasthatwouldotherwisebeflaredandemployitinpowergenera0onandotherAPGuseprojects.AMoUwassignedbetweentheMPRandtheprivateinvestorsbutdirec0vehasfacedconsiderableopposi0onfrommanyIOCs.
o SomecompanieslikeShell’sSPDCarerepor0ngcompliancewiththedirec0ve:for10%ofitssites,Shellhasbeenlookingforthirdpartyinvestors(withShell/NNPCjoint-venturebuildingitselfthegasgatheringfacili0esfor90%ofthesites).
o AspartofabroaderGasDevelopmentprogram,NNPCisalsoseekingtoaHractprivateinvestmentforlargerbackbonepipelines,inpar0cularthe395-kmCalabar-Ajaokutapipelineandthe740-kmAjaokuta-Kaduna-Kanopipeline,dueforcomple0onin2017.
S Acontroversial2012PetroleumIndustryBillo Wouldcompletelyoverhaulmostoftheaboveactsandraisetaxeson
IOCs,crea0ngacomprehensivelegalframeworkfortheexploita0onofgasandpetroleumresourcesinthecountry.Currentlybeingdebated.
Regula0on:Agencies
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
S 2012PetroleumIndustryBill
Aspartofitsaims,thePIBisexpectedto:o “Enhanceexplora0onandexploita0onofpetroleumandpar0cularlygas
resourcesinNigeriaandforNigerianpeopleo Op0mizedomes0cgassupplies,especiallyforpowergenera0onand
industrialdevelopmentso Deregulateandliberalizethedownstreampetroleumsectoro Createefficientandeffec0veregulatoryagencies”
S ThePIBalsoincludesprovisionslike:o Thecrea0onof2regulatoryen00es-1fortechnicalandcommercial
maHersrelatedtoupstreamandnamedtheUpstreamPetroleumInspectorate,andonefordownstreamresponsibili0esandnamedtheDownstreamPetroleumRegulatoryAgency
o ProvisionsforbreakinguptheNNPCinto3parts(includingana0onaloilandna0onalgascompany)andpriva0zing2parts
o AnemphasisontheDomes0cSupplyObliga0on(DSO)forgascreatedinthe2008Domes0cGaspricingpolicy
o However,thepenal0esins0tutediftheIOCfailstomeettheDSOareweak
S Aswellasprovisionsforapossibletransi0onalgaspricing.ThereiscurrentlynothingconcreteregardinggaspricingintheBill.
Regula0on:Agencies
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
Regula0on:Agencies
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis
S Defini0onandboundariesnotfollowedo Flareoutdatesarerepeatedlyshioedforwardandnotmeto Weakmonitoringandenforcementofregula0on
o Nosignificantpenal0esforflaringoverthelastdecade,andfeebleenforcementofpenal0esisanissue
S Noindependentregulatoro MPRisbothapar0cipantin,throughtheNNPC,and
regulatorof,throughtheDPR,oilandgasac0vi0esinNigeria,crea0ngconflictsofinterestsreflectedinthelaxenforcementofflaringregula0on.Atthesame0me,asajoint-venturepartnerataveryhighlevel(around60%),NNPChasbeenmorethan1-2yearslateinpayingitsequityshareofcashcalls.Bothproblemshavecreatedalotofmistrustamongthecommunityofinvestors.
Whatisthelegalandfiscalframeworkinplacetostopflaringandincen0vizeAPGuse?
Regula0on:Agencies
Regula0on:Legalframeworkand
analysis
Regula0on:Fiscalframeworkand
analysis
S HighPetroleumProfitsTaxAct(PPTA)rates(upto85%ofprofits)(ins0tutedin1959)actedasadisincen0vetogasu0liza0onandspurredtheintroduc0onofanincen0veregime(PPPTA-Sec0on10AamendedbyDecreeNo.30of1999):o Anyamountinvestedinthesepara0onofgasandcrudeoilfromareservoiraswellasanyamount
associatedwithgasdelivery,is‘Allowableexpenseforupstreamopera0ons’o Gasproducedandtransferredfromthenaturalgasliquidfacilitytothegas-to-liquidsfacili0estaxed
at0%taxand0%royaltyo Capitalexpenditureassociatedwithgas-toliquidfacilityiscost-recoverable
o Condensatesthatarere-injectedwillnotleadtoincen0ves
o Thoseincen0vesarealsoapplicabletonon-associatedgas
S Asof1998,alldownstreamgasu0liza0onproject-associatedprofitsaretaxedundertheCompaniesIncomeTaxAct(30%)andbenefitfromtheincen0vesspecifiedbyitsSec0on28G:o Op0ons:Companieseligiblefora3-yeartaxholidayora35%capitalallowanceo Taxdeduc0bleinterestonanyinterestpayableonanyloantakenforagasproject
o VATexemp0ononanyplantandequipmentboughtforgasu0liza0ono Tax-freedividendsundercertaincondi0ons(downstreaminvestmentmadeinforeigncurrencyor
goodsimportsduringthetax-freeperiodaccountformin.30%ofthecompany'sequity;notapplicableifthecompanychosethe35%capitalallowance)
o Acceleratedcapitalallowanceposttaxholiday-90%(+15%ifcompanyoptedfortaxholiday)
u Pricingpolicyofgassupplyandpowerseenasadisincen0ve:o Belowmarket-pricesfordomes0cgas(asof2009$0.12/mmbtudomes0callyvs.$0.50/mmbtuon
exportmarkets),denominatedinlocalcurrency,coupledwiththeterriblecreditra0ngofthePHCN,formerpowerpublicu0lityaswellashighlyunreliablegaspipelines
WhataresomecurrentAPGuseprojectsthatcouldserveasablueprintforfutureprojects?
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S NotableAPGuseprojects:theNigeriaLNG(NLNG)projectwithNNPCandShellasprimaryshareholdersandsomeGTL,NGLandIPPprojects.
S Someaddi0onalLNGproject(OlokolaLNG(OK-LNG)andBrassLNG)aswellaspowerplantsaretremendouslydelayed.
S Giventheirdistrustofthegovernanceoftheoilandgassector,IOCscurrentlypreferhighreturnexportop0onslikeLNGandGTLprojectstonecessaryIPPprojectsforthecountry.Thatsaid,1)aPIBGaspricingpolicyshioingtowardsmarketpricesforgasandobliga0ngIOCstoallocateaspecifiedamountofgastothedomes0cmarketalongwith2)the2013PHCNpriva0za0onandpowertariffhikes(duetowithdrawalofsubsidies)mayshiothistrend.HoweversomeIOCsnowstatethattheyhavealreadycommiHedtheirgasreservesintolongtermGasSalesandPurchaseAgreementsintheexportmarkets.
Whatpowerneedscouldtheflaredgassa0sfy?
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S Significantgasreservesooenreferredtoasa“gascountrywithsomeoilinit”o Provenreservesat180.5trillioncubicfeet(tcf)asof2011
S Thepowersectormakesupover70%ofthetotaldomes0cgasdemand.
S Withanelectricityaccessrateof51%andopera0onalinstalledcapacityofonly3500MWthereissignificantpoten0alintheuseofflaredAPGtomeetthecountry’selectricityneeds.
Whatpowerneedscouldtheflaredgassa0sfy?
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S Demandinthepowersectorisexpectedtogrowsignificantlyincomingyearswithmoregaspowerplantsbeingbuilt/renovatedfollowingthepriva0za0onofPHCN.
S APGcanbeu0lizedtomeetthisdemand.
Source:NwachukwuandEboh,2013
SowhyisAPGnotbeingusedprimarilyforpowergenera0on?
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S UnaHrac0vegaspricingandelectricitytariffregimesinthecountry(asdescribedpreviously)
S UnreliablegaspipelinenetworksbecauseofpoormaintenanceonthepartofNGC
S ByoneDPRsource,somepreviousAPGforpowergenera0onprojectsfromIOCsspurredbythedirec0vetomeettheGasPlan’s2008flareoutdeadlinewere:o A350MWplantinBonnybyMobil
o A900MW,two-partconstruc0onplantinOkpaibyAgip
o ThetakeoveroftheAfamandSapeleplantsbyShellandtheaddi0onof700MW
S Theseeffortsfailedlargely(exceptforpart1oftheOkpaiplantbyAgipandpartoftheAfamplantbyShellpresentedaoer)dueto:o RefusaloftheFGNtoguaranteesteadypaymentstotheIOCsforanypower
generatedandsoldtothePHCN
o AssociatedwarinessofIOCsduetoPHCN’sterriblecreditra0ng(itwasowingover$60milliontotheNNPCforgassuppliedasof2009)
S The2013PHCNpriva0za0oneffortsandthenewPIBGasPricingpolicymightmakeAPGuseforthedomes0cpowersectormoreaHrac0veforoilcompanies.
APGusecompanycasestudy:EniOkpaipowerplant(IPP)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S ProjectParKcipants:
o NAOC-ajointventureofNNPC(60%),Eni(20%andprojectoperator)andConocoPhilips(20%)
S ProjectDescripKonandMoKvaKon:
o Nigeria’s1stIPP,completedin2005byENI.
o PartofEni’s2008“ZeroGasFlaring”policyandtoadhereto2008FGNFlareoutdeadline,alsoaCDMproject.Itwasoriginallyintendedasatwo-part900MWconstruc0onbutscaledbackduetofactorsmen0onedinprecedingslide.
o Generates480MWofpower.450MWofthiselectricityistransferredforconsump0onbyNigeria’seasternregion,while30MWareusedbyEni.
S ProjectLocaKon:
o NeartheNAOC’sOilandGasProcessingPlant(OGPP)intheKwaleregioninDeltastateinsoutheasternNigeria
S AssociatedGasUse:
o Usesabout80millioncubicfeetperday(mmcfd)
o UsesformerlyflaredAPGatKwale’sOGPPoperatedbyNAOC
o AlsousesgasextractedfromitsoilareasintheDeltastates
S ProjectTechnology:
o Integratedcycledplantwith2gasturbinesand1steamturbine
o 14kmpipelinefortranspor0ngfuelgasfromNAOCsystemtopowerplant,commissionedbyNAOC
o Overheadtransmissionlineof130kv,54kmsinlength,joinsplanttona0onalgridinOnitsha,AnambrainEasternNigeria
APGusecompanycasestudy:EniOkpaipowerplant(IPP)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL) Figure:Eni(NAOC)OkpaiIPPAPGprojectschema0c.
Source:Linzi,Eni
S ProjectParKcipants:o TheShellPetroleumDevelopmentCompanyofNigeriaLimited(SPDC)(JVincluding
NNPC(55%),Shell(30%),TEPNG(10%),NAOC(5%)),Shellistheoperator
S ProjectDescripKonandMoKvaKon:o Mo0vatedinpartby2008GasMasterplanwhichs0pulatedaflareoutdeadlineof2008
o ACDMproject,theAfamVIpowerplantgeneratesgridelectricityfromahighefficiencyplantu0lizinglowcarbonintensitygaswithsomeallowanceforthesystemtoabsorbAPG.
o Opera0onalin2008-investmentcostsbyitsJVpartnersofupto$1.3billion.
o Genera0ng650MWthepowerplantscontributes14%ofNigeria’sgrid-connectedpowergenera0ngcapacityin2015.
o Duetoreportedgasshortages,theplanthassufferednumerousshutdownssinceitbecameopera0onal.
S ProjectLocaKon:o Powersta0onlocatedinRiversState,intheNigerDeltaregion
S AssociatedGasUse:o GassupplyismainlyfromtheOkolomagasplant,withgasfromtheAfamNAPGfield,a
produc0oncapacityof240mmscfdofnon-associatedgasbutallowingthesystemthecapacitytoabsorbAPGthroughtheNGCregionalgasnetwork.
S ProjectTechnology:o Installa0onofnewcombinedcyclegasturbinesinaplantfiHedwithair-cooled
condensersand40mhighstacks
o Addi0onally,theAfamVIplantreplacesexis0ngAfamI-IVunits,whichhadnotbeenopera0onalforsome0me.
APGusecompanycasestudy:ShellAfampowerplant(IPP)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
APGusecompanycasestudy:ShellAfampowerplant(IPP)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL) Figure:ShellAfamVI(inpurple)IPPAPGprojectschema0c.
Source:UNFCC,CDM
S ProjectParKcipants:
o NLNG:NNPC(49%)andShell(25.6%),TotalLNG(15%),Eni(10.4%)o NLNGInlong-termgassupplyagreementswith3jointventures:SPDC(Shell),TEPNG(former
EPNL)andNAOC(Eni)
S ProjectDescripKonandMoKvaKon:
o OneofthemostsignificantAPGuseprojectsinNigeria
o Earlymo0va0onwasadesiretou0lizecountry’ssignificantnaturalgasreservesandmeetrisinginterna0onaldemandandaHrac0vepricesforLNG
o 6liquefac0onunitsortrainspossessingaproduc0oncapacityof22mtpaofLNG;Firstproduc0onofLNGin1999
o Costofthefirst2trainswasabout$3.6bnandfinancedbyNLNG’sshareholders(withNNGC’ssharecarriedbyShell).The3rdtrain’scostofabout$1.8billionwasfinancedby3rdpartyinvestorswithloansin2002.Thenext2trains,4and5,costaround$2.2billionandwerefinancedbyamixofrevenuegeneratedin-houseand3rdpartyloansintheamountofabout$1.06billion.Train6cost$1.7billionandwasfinancedbytheshareholders.
o Currentlymanages16long-termLNGsalescontracts(thesebuyersincludeEnel,RepsolGasNaturalLNG(Stream),Botas,GDFSuez,GALPGN,BGLNG,Endesa,ENI,Iberdrola,ShellWesternLNGBVandTotalGasandPowerLtd.)
S ProjectLocaKon:
o Constructedon2.27squarekmofmostlyreclaimedlandinFinima,BonnyIslandinRiversStateinSouthernNigeria
S AssociatedGasUse:
o Asoftoday,NLNGhasconvertedsome119bcmor4.2tcfofAPGtoLNG/NGLproductsforexport
o Gascollectedbythe3jointventuresinsupplyagreementswithNLNGfromtheiroilfields
o NLNGhassignedSalesandPurchaseAgreements(SPAs)withoff-takers(allNigeriancompanies)todeliver250,000tonsofLPGintotheNigerianmarketannually.Thefirstdeliverywasin2007.
S ProjectTechnology:
o DiversifiedgassupplyfromAPGandNAPGand6primarygastransmissionpipelineswith4onshorepipelinesthroughmorethan110communi0es
APGusecompanycasestudy:NLNG(LNG)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
APGusecompanycasestudy:NLNG(LNG)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL) Figure:OverviewofNigeriaLNGproject.
Source:hHp://www.hydrocarbons-technology.com/projects/bonny/bonny1.html
S ProjectParKcipants:
o TotalE&PNigeriaoperatesOML102witha40%interest,withNNPCholding60%.
S ProjectDescripKonandMoKvaKon:o Rou0neflaringwascompletelyhaltedinDecember2014whichrepresenteda
10%reduc0onintheoverallflaringofTotalo MostoftheAPGfromtheOfonfieldisexportedviaanew70kmpipelinetothe
Amenamoffshoregashub,andisthenbroughttotheNLNGfacilityo Someofthegasisalsore-injectedtoenhanceoilrecoveryo Averysmallpartisalsousedforown-sitepowergenera0ono AttheGlobalForumoftheGlobalGasFlaringReduc0onPartnership(GGFR),of
September9,2015,Total’sNigeriansubsidiaryreceivedaGGFRExcellenceAward,recognizingtheelimina0onofrou0neflaringontheOfonfield.
S ProjectLocaKon:o TheOfonfieldislocated65kmsoffshoreinwaterdepthsof40meters.
Produc0onstartedin1997andiscurrentlyat25,000barrelsofoilequivalentaday.
S AssociatedGasUse:o 1millioncubicmeterperdayofgasaremone0zedo Inphase2oftheproject,Totalhasbeendrilling24newwells.Whentheseare
completed,3millioncubicmetersperdayofAPGwillbemone0zed.
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
APGusecompanycasestudy:Total’sOfon(OML102)
S ProjectParKcipants:o ExxonMobil:35%,NNPC:65%
S ProjectDescripKonandMoKvaKon:o APGusedforreinjec0ontorecoverNGLs.Producing110,000barrelsperday(bpd)Natural
GasLiquid(NGL)fortheexportmarket.o Expected,atitsincep0onin1998,torecover350millionbarrelsofNGLfromExxon’sOso
condensatefieldoverits20+yearlifespano Costofprojectreportedtobebetween$218-$900million.Mobilfron0ng35%ofthetotal
costoftheprojectinequity,NNPC’s65%shareintheprojectcostiscoveredbyaloanfromtheWorldBank,theInterna0onalFinanceCorpora0on(IFC),amongothers-firstupstreampetroleumprojecttobesponsoredbytheWorldBankinNigeria.
S ProjectLocaKon:o Proceedsfromanoffshoreloca0onattheOsofieldandanonshoreoneattheBonnyRiver
OilTerminallinkedbypipelineso OilMiningLeaseNo.70,about35milesoffshorefromMobil’sQuaIboeoilterminalin
Ibeno,Akwa-IbomstateinsoutheastNigeria
S AssociatedGasUse:o Mone0zeNGLsthatareproducedtogetherwiththenaturalgasflowfromtheOso
condensatefieldand‘otherassociatedgasproduc0on’o APGisre-injectedasanimportantNGLrecoverysystem,therebyminimizingflaring.
S ProjectTechnology:o Theprojectconsistsof21oil/condensatewells,8playorms,1pointmooring,and130miles
ofoffshorepipelines.Italsohas3primarystoragetanksandloadingfacili0esonshoreatQuaIboeterminal.
APGusecompanycasestudy:ExxonMobilOsocondensateproject(NGL)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
APGusecompanycasestudy:ExxonMobilOsocondensateproject(NGL)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
Figure:ExxonMobilAPGuse:OsoNGLprojectloca0onSource:OffshoreMagazineVol58Issue10
APGusecompanycasestudy:ChevronEscravosproject(GTL)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S ProjectParKcipants:o 75%Chevron(CNL)15%NNPCand10%Sasolo SasolbringinghereitsFischer–Tropschprocesstechnology
S ProjectDescripKonandMoKvaKon:o ConvertsAPGtoGTLdieselandGTLnaphthao Project’smo0va0onsincludedtheestablishmentofincen0vesbytheNigerianNa0onalGas
PolicyofMarch1995(materializedbytheincen0vesofPPTAandCITAestablishedin98-99).o Mo0va0onsalsoincludedthecrea0onofagreementwithNGCtoacceptanddeliverlean
(dry)gasfromAPGtodomes0cmarkets.o Theprojecthasacapacityof34,000bpdwithan0cipatedexpansionto120,000bpd.o Construc0onstartedin2005andtheprojectcameonlinein2014.
S ProjectLocaKon:o LocatedintheEscravosregionintheNigerDeltaregionofNigeria
S AssociatedGasUse:o AssociatedgasfromtheOkanandMefaoilfieldsintheOilMiningLease49,Deltaregionof
Nigeria
S ProjectTechnology:o Thetechnologyusedconsistsofanoffshoregasgatheringandcompressionplayorm(GSCP),
agasplantonshore,andafloa0ngstorageandoffloadingvessel.o Aoertheliquidsareextractedfromtheassociatedgas,theleo-overleangaswouldbe
compressedanddeliveredintoa16-ingaspipelinetotheNGC.o TheWestAfricanGaspipelinelinkstoChevron’sexis0ngEscravos-Lagosgaspipeline
APGusecompanycasestudy:ChevronEscravosproject(GTL)
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL) Figure:ChevronEscravosGTLprojectschema0c
Source:OilandGasJournalVol.96Issue16
Poten0alfutureprojects
PowerGenera0on(IPP)
LiquefiedNaturalGas(LNG)
NaturalGasLiquids(NGL)
GastoLiquidConversion(GTL)
S SomepotenKalAPG-unlockinginfrastructureprojects:
o PowerPlants:ThegovernmentisrequiringallIOCstobuildatleastoneIPPaspartofthe2008GasMasterplan.Asaresult,Totalhasplannedtodevelopa400MWIPPonOML58inRiversStateandExxonisplanningtoconstructa500MWIPPatitsQuaIboeTerminal.Theprojectswereslatedtogoonlineafewyearsago.Theyarecurrentlydelayedbytonon-availabilityofupstreamprojectstosupplygasfeedstocktotheplants.
o GasGatheringFacili4es:ShellthroughitsSPDCisinves0ng$2bnintwoprojectstoextendgas-gatheringfacili0esto90%ofitsopera0ons:theSouthernSwampAssociatedGasSolu0on(SSAPGS)andtheshallow-waterForcados-Yokriprojects,withacombinedcapacityof185,000barrelsofoilequivalentadayatitspeak.Itisalsointendedtoproducegasfordomes0cpowerconsump0on.Oncecompleted,itshouldreduceShell’sgasflaringby95%.Thereportishoweverdelayedbyalackoffunding.
o Addi4onalpipelines:NNPChasbeentryingtoaHractfundingforlargerbackbonepipeline(395-kmCalabar-Ajaokutapipelineandthe740-kmAjaokuta-Kaduna-Kanopipeline).Nigeriahasalsotheambi0ontobuildatrans-Saharangaspipeline(firstproposedin2002)thatwouldtravelthroughNigerandAlgeria,andlinkDeltagasreservestoEuropeanmarkets.TotalandRussia’sGazpromhaveshowninterestintheprojectbuttheheoycostes0mates(ofabove$30bn)andanunstablesecuritysitua0onintheDeltaandSahararegionshavestalledtheproject.
ReferencesS Adesina,Ezekiel.GasU4liza4oninNigeria&EmergingOpportuni4es.Rep.NOGTECHConference2012,26Jan.2012.
S Adole,Tracy."Agisbasedassessmentoftheimpactsofgasflaringonvegeta0oncoverindeltastate,Nigeria."(2011).
S "AfamGas&PowerSupply."-ShellGlobal.ShellGlobal.
S Akanni,Fred."WESTAFRICA."Offshore.OffshoreMagazine,1Oct.1998.
S Alike,Ejiofor."GasFlare:OilFirmsDenyInvestorsAccesstoSites."ThisdayLive.ThisdayLive,25Mar.2011.
S "BonnyIsland,Nigeria."OverviewoftheNigeriaLNGProject.Hydrocarbons-technology.com.
S "BuildingtheBackboneofNigeria’sEnergyInfrastructure."PipelinesInterna4onal.PipelinesInterna0onal,June2011.
S "CDM:AfamCombinedCycleGasTurbinePowerProject."CDM:UNFCC.UNFCC,29Oct.2012..
S Eni.EniAnnouncestheInaugura4onoftheOkpaiPowerPlantinNigeria.Eni.Eni,1Apr.2005.
S "EscravosGas-to-LiquidsProject,NigerDelta,Nigeria."EscravosGas-to-LiquidsProject,NigerDelta.Hydrocarbons-technology.com,n.d.
S "EscravosGTL-Nigeria."Unidro.Unidro
S "Es0matedFlaredVolumesfromSatelliteData,2007-2011."GlobalGasFlaringReduc4on.WorldBank,2011.
S "Explora0on&Produc0onProjectsatTotal."Total.Total.
S “Facts&FiguresonNLNG2013."NigeriaLNG.Rep.NigeriaLNGLimited.
ReferencesS "GasFlare:OilFirmsDenyInvestorsAccesstoSites."NigeriaBusinessNews.BusinessNews,26Mar.2011.
hHp://businessnews.com.ng/2011/03/26/gas-flare-oil-firms-deny-investors-access-to-sites/.
S "Gasu0lisa0on|DepartmentofPetroleumResources."DepartmentofPetroleumResourcesDPRNigeriaGASUTILISATION.DepartmentofPetroleumResources(DPR).
S "GlobalGasFlaringEs0mates."DefenseMeteorologicalSatelliteProgram.NOAA.
S Kennedy,Charles."Nigeria'sOilIndustryThreatenedbyPetroleumIndustryBill."OilPrice.com.OilPrice.com,25Aug.2013.
S Linzi,Paolo."RecoveryofAssociatedGasforIndependentPowerGenera0on"Docstoc.com.EniE&PDivision(GlobalForumFlaringReduc0on&GasU0liza0on).
S Madueme,Stella."Gasflaringac0vi0esofmajoroilcompaniesinNigeria:Aneconomicinves0ga0on."Interna4onalJournalofEngineeringandTechnology2.4(2010):610-617.
S Manken,Ajay."NigeriaNaturalGasWai0ngtoBeTapped."FinancialTimes.FinancialTimes,10Oct.2013.
S "Mobilteamplansnigeriannglproject."Oil&GasJournal.Oil&GasJournal(OGJ).
S "Mone0singanOceanofGas:NewProjectsHelptheCountrytoReaptheGainsofItsMajorResource."OxfordBusinessGroup,EconomicResearch&ForeignDirectInvestmentAnalysis,2013.
S "NAPIMSGasDevelopment."NAPIMSGasDevelopment.Na0onalPetroleumInvestmentManagementServices(NAPIMS).hHp://www.napims.com/gasdev.html.
S "NigeriaGas."NigeriaGas.NigerianNa0onalPetroleumCorpora0on(NNPC).hHp://www.nnpcgroup.com/NNPCBusiness/BusinessInforma0on/InvestmentOpportuni0es/NigeriaGas.aspx.
S "NigeriaLNG."NigeriaLNG.NigeriaLNGLimited.hHp://www.nlng.com/faqs.aspx.
ReferencesS "Nigeria:GasFlaresS0llaBurningIssueintheNigerDelta."IRINnews.IRIN,8Mar.2012.
S "Nigeria'sEscravosGasProjectStartsup."OilandGasJournal.OilandGasJournal(OGJ).
S “NigeriaEndorses2030FlaringIni0a0ve;RaisesOwnGoalto2020.”Brief.WorldBank,18Aug.2016.
S "NNPC/MobilOsoCondensateProject:BlurredEarningsfromHugeInvestment."Na4onalDailyNewspaper.Na0onalDailyNewspaper,11Mar.2013.
S Nwachukwu,Clara,andMichaelEboh."PowerCrisisEndsSoonasFGIncreasesGasSupply–Alison-Madueke."VanguardNews.VanguardNews,30July2013.
S OffshoreEnergyToday.com.“TotalflaresoutonOfon(Nigeria).”7.Jan.2015
S Okenabirhie,Theresa,“TheDomes0cGasSupplyObliga0on…”TheUniversityofDundee,DPRNigeria
S Okere,Roseline,“Nigeriaburnsoff$5billionresourcesyearlyfromgasflaring.”TheGuardian,6Nov.2015
S Oni,SamuelIyiola,andMarkAbioyeOyewo."GasFlaring,Transporta0onandSustainableEnergyDevelopmentintheNiger-Delta,Nigeria."JournalofHumanEcology33.1(2011):21-28.
S “Ofon2:improvingtheenvironmentalfootprintofouroilfacili0es.”Total.TotalSept.2015
S Oshobi,Oyetola“TheChallengesofpricingdomes0cgasunderthepetroleumindustrybill”,Babalakin&Co,2009
S Ososami,Lolade."Nigeria:DevelopmentsInNigeria´sTaxRegimeForGasU0liza0onProjects."Mondaq.Abraham&Co,1Dec.2008.
S O0o0o,Dennis."Gasflaringregula0onintheoilandgasindustry:ACompara0veAnalysisofNigeriaandTexasRegula0ons."Academia.edu.Academia.edu,May2013.
S Oyewunmi,Tade.”TheNigeriangasindustry:policy,law®ulatorydevelopments.”Rep.AdepetunCaxton-Mar0nsAgbor&Segun(ACAS)Law,Feb.2013..
ReferencesS "Projects:OsoCondensateFieldDevelopmentProject|TheWorldBank."TheWorldBank.WorldBank.
S "ReducingCarbonandFlaringIntensity:ExpandingAccesstoModernEnergyServices."SustainableEnergyforAll.SustainableEnergyforAll.
S Shaad,Wilson,“AccesstoSustainableEnergy:…FocusonNigeria”Interna0onalIns0tuteforEnvironmentandDevelopment(IIED),2009
S “Shelldelaysgasprojectsoverfundingconstraints.”Shell.Shell,22June2016.
S Sonibare,J.A.,andF.A.Akeredolu."Naturalgasdomes0cmarketdevelopmentfortotalelimina0onofrou0neflaresinNigeria'supstreampetroleumopera0ons."Energypolicy34.6(2006):743-753.
S TaHersall,Nick."ShelltoSpend$2BillionReducingNigeriaGasFlaring."Reuters.ThomsonReuters,19May2010.
S "TaxIncen0vestotheGasIndustry."Fron4erMarketIntelligence.Fron0erMarketIntelligence,22Oct.2007.
S TotalStartsProduc0onfromNigeria'sAkpoField."Oil&GasJournal.Oil&GasJournal(OGJ).
S Ukpohor,ExcelTheophilusO."NigerianGasMasterPlan:StrengtheningtheNigeriaGasInfrastructureBlueprintasaBaseforExpandingRegionalGasMarket."WorldGasConferencetechnicalpaper.2009.
S "U.S.EnergyInforma0onAdministra0on-EIA-Nigeria."Nigeria.U.S.EnergyInforma0onAdministra0on–EIA.
S Uwazie,Chinonyelum,KingsleySawyerr,AdegbemisolaAdekola,andTolulopeOlaiya."GasFlaringinNigeria:AnOverviewoftheAssociatedGasRe-Injec0on(Amendment)Bill2010(the“Bill”)."AinablanksonNewsleXerApril2011(Apr.2011):Ainablankson.
S VanMeurs,Pedro.NigeriaPetroleumIndustryBill—2012.Rep.Ernst&Young,25Oct.2012.
S WorldLNGReport2011.Rep.Interna0onalGasUnion(IGU).