Overview of the Nigerian Oil and Gas Industry:

Upstream, Midstream & Downstream Activities

By Group Coordinator Corporate Planning & Strategy (CP&S)

NNPC
August 22, 2012

Overview of the Nigerian Oil & Gas Industry

Presentation Outline Overview Oil & Gas Value Chain Oil & Gas Industry & Economy Upstream Sector Commercial Arrangements E & P Trends in the Nigerian Upstream Midstream Sector Refining Trends Natural Gas/LNG Downstream Sector Retail Marketing Structure of the Industry Current Reforms Post PIB Structure Concluding Remarks
2

Overview of the Nigerian Oil & Gas Industry Upstream

Activities related to winning of crude oil and gas, drilling and operation of oil and gas producing wells, construction and operation of oil and gas gathering, separation and treatment facilities and transportation of personnel and equipment to and from upstream petroleum locations

The Oil & Gas Value Chain-Upstream, Midstream, Downstream

Midstream
Construction and operation of crude oil and gas transport pipelines, oil refineries and gas processing facilities, oil and gas storage facilities and coastal or ocean going tankers, rail cars and trucks for transporting and marketing petroleum products on wholesale basis

Downstream
Construction and operation of pipelines for distributing and marketing petroleum products and gas to small customers, storage tank farm for petroleum products and city gate reception terminals for gas Distribution and the sale, marketing and retailing of petroleum and gas products

Beyond primary use of hydrocarbons, there are significant secondary derivatives that are essential for a modern economy 3

Overview of the Nigerian Oil & Gas Industry

Oil & Gas Industry and the Nigerian Economy
Proven Oil Reserves estimated at 37.2bn barrels as at Jan 2012 Proven Gas Reserves estimated at 185tcf as at Jan 2012

Major source of Foreign Direct Investment

Main Stay of the Nigerian Economy

Focus of Exploration has shifted to Frontier Offshore acreages

About 90% of Foreign Exchange Earnings

Major Export of Nigerian Economy

About 80% of Government Revenue

Overview of the Nigerian Oil & Gas Industry

Linkages of the Oil & Gas Industry to Economy
The economic development of any Nation is influenced by the Real Sectors of the Economy
E & P Activities Oil & Gas Supply Financial Services Communication
Power -IPPs Manufacturing Fuel to Rigs Communication

Petroleum Products Petrochemicals Chemicals Fertilizer

Retail Outlets Transport Haulage Manufacturing

Construction Communication, Tourism, Financial Services, Agriculture

Distribution Trading Pipelines, Storage Depots

Upstream Sector

Overview of the Nigerian Oil & Gas Industry

Upstream Sector

Stages of Exploration & Production (E&P)

Production Exploratory & Development Drilling Pre-Drilling Exploration

Abandonment & Restoration

License Acquisition

The upstream oil sector refers to the searching for and the recovery and production of crude oil and natural gas. The various stages are as indicated in the flow chart above

Overview of the Nigerian Oil & Gas Industry

Upstream Sector Balancing Host Government and Investor Company Objectives

Maximum Economic Development of Hydrocarbon Resources

Realization of Countrys Economic Potential Development of National Expertise Broad Control of Overall Activity Balanced Risk / Reward Relationship Stable Political and Fiscal Environment Management of Operations on Sound Commercial Basis

Government

Investor Company

Fiscal Terms

Fiscal terms act as the contractual balance between the financial Objectives of Government and the investor Company

Overview of the Nigerian Oil & Gas Industry

Upstream Sector Commercial Arrangements Revenue Government ($ million) Revenue Government

Balancing Govt. Take

Terms too lenient
Optimal terms

Terms too tough

($ million)

Need to increase government take

Need to provide greater incentive

Government Take (% Project Economic Profit) Rent)

Nigerian Fiscal Arrangement

Royalty/PPT System Production Sharing Contracts Risk Service Contracts
IOCs in JV with NNPC Indigenous companies as concessionaire Indigenous companies as concessionaire and IOC as contractor

NNPC as Concessionaire, IOC as Contractor

NNPC/NPDC as Concessionaire in RSC with AENR & SINOPEC

Overview of the Nigerian Oil & Gas Industry

Upstream Sector Commercial Arrangements (2)

Joint Ventures
Between International Oil Companies (IOCs) and NNPC Tax Rate of 65.75% for the 1st 5yrs and 85%, thereafter

Production Sharing Contracts (PSC) NNPC is the Holder of oil Licenses IOCs or Indigenous Companies are engaged by NNPC as Contractors Contractor bears the risks and recover cost thru cost oil Taxation is under the PPT Act Regime and is at 50%

Service Contract
Contractor undertakes exploration, development & Production on behalf of Holder Contractor has no title to Oil

Marginal Field Concession

International Oil Companies (IOCs) relinquish wells that are not commercially viable Wells are assigned to indigenous Oil Companies Contractor is taxed under Companies PPT Act (PPT) regime at 66.75% and 85% thereafter

Tax Payable modified by the terms of MOUs

JVs currently being phased out

Contractor is taxed under Companies Income Tax Act (CITA) on service fees at 30%

Overview of the Nigerian Oil & Gas Industry

Upstream Sector Factors that Influence the Cost of E&P
Composite barrel and its components ($/b)

Crude Oil Prices Clearly Influencing E&P Spending

Upstream Capital Cost 480,000 430,000 140 120 100 80 60 40
Capital Expenditure Crude Oil Price Movement

Capital Expend. (US$Mill.)

380,000 330,000 280,000 230,000 180,000 130,000 80,000 2003 2005 2007 2009 2011

Crude Oil Price

Rig Costs

$/bbl

20
0

Construction Cost

The sustained high crude oil price is expected to continue to drive up oil and gas investment in 2012 More E&P activities are likely to be seen as high oil price makes oil projects economics more robust

Steel Market

Labour Cost

Technology & Environment

High oil prices will allow oilfield service and drilling companies to invest in E&P activities and these activities will contribute to more pipeline and infrastructure activities
More activities are also expected in Unconventional Oil & Gas like Shale and Oil Sands

E & P Trends in the Nigerian Upstream

Overview of the Nigerian Oil & Gas Industry

E&P Trends in the Nigerian Upstream
Exploratory Well Activities

Historical Information on Nigerian E&P Activities

Developmental Well Activities 200 15 No. of Wells 10 5 0
9 6 6 4 14 150

20

19

150 No. of Wells

106

138

Developmental activities picking up in order to sustain production. 74 57 57

100 50 0

2005
25 No. of Rigs per day 20 15 10 5 0 1/95

2006

2007

2008

2009

2010
20 No. of Rigs per Day 15 10 5 0 1/82

2005

2006

2007

2008

2009

2010

Rig Count by Energy Type

Rig Count by Sector

Land Offshore

Oil

Gas

1/97

1/99

1/01

1/03

1/05

1/07

1/09

1/11

1/85

1/88

1/91

1/94

1/97

1/00

1/03

1/06

1/09

1/12

E&P activity has been very low in Nigeria and this is signified by the decline in exploratory wells in recent years Development wells slightly increased in 2010 in order to maintain production levels Focus on most E&P activities in Nigeria have been on finding oil with minimal activity in the gas sector Offshore drilling has been on the increase lately
Source: NNPC, Baker Hughes

Overview of the Nigerian Oil & Gas Industry

E&P Trends in the Nigerian Upstream
Recent Discoveries in Nigeria
Field Discovery by Development Status 14 1000 900

Recoverable Reserve by Discovery Date

12
No. of Fields 10 8 6 4 2 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Under Development Onstream Technical Reserves Ceased Production Probable Development Abandoned

800 700 mmboe 600 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Liquids Gas

2 Fields were discovered in 2011; Etisong North and Tologbene with a cumulative technical recoverable oil & gas reserve of 108 mmboe (mainly Gas) 2011 new discovery is about 44 mmboe lower than 2010 Likewise, in 2012 only 2 reserves were discovered so far; 1 technical and the other probable.
Source: Woodmac

Overview of the Nigerian Oil & Gas Industry

E&P Trends in the Nigerian Upstream
Nigerian Oil & Gas Production
Oil Production Gas Production (mmcfd) 3.0 2.5 2.0 1.5 mbd 1.0 0.5 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Gas Produced % of Total Flared

Gas Production 35% 30% 25% Gas Flare (Percent)

20%
15% 10% 5% 0%

2009

2007

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

Oil Production by Sector 3.5 3.0 2.5 mbd 2.0 1.5 1.0 0.5 0.0 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017 2021 2025 2029 2033 2037 2041 2045 2049 2053 Deepwater Onshore Offshore 12,000 10,000 mmcfd 8,000 6,000 4,000 2,000 0

Gas Production by Utilization

Export Flared Operations Export as % of Total Domestic

2035 70% 60% 50% 40% 30% 20% 10% 0% Gas Flare & % Export

2010

2007

2008

2009

2011

2012

2013

2014

2015

2016

2017

2018

2019

Majority of Nigerias future Oil production is expected from offshore especially the deep water Gas production is anticipated to grow and unless gas infrastructure is developed export volumes will continue to rise Government currently working towards ensuring more domestic consumption by building infrastructures In light of govt. efforts, gas flare will eventually be phased out with time
Source: Wood Mackenzie, NNPC

2020

Overview of the Nigerian Oil & Gas Industry

E&P Trends in the Nigerian Upstream
Production Cost in Nigeria
30.0 25.0 20.0 US$/bbl 15.0 10.0 5.0 2.0
Chevron ExxonMobil Sinopec Total Statoil ConocoPhillips South Atlantic CNOOC Ltd Petrobras NNPC NPDC Shell Eni

Capex per bbl

2010

2011

12.0 10.0 8.0 US$/bbl 6.0 4.0

Opex per bbl

2010 2011

0.0

Chevron

ExxonMobil

Sinopec

ConocoPhillips

Ave. Nigerian JV Cost

25 20 US$/bbl 15 10 5 0 2008
Opex 10 11 11 14 13 13 12 10

Considerable improvement observed in the Nigerian Upstream Expenditure in 2011 NNPC Capex seems to have declined from $12.7/bbl in 2010 to $11.1/bbl in 2011 Chevron has highest Capex above $26/bbl and OPEX of about $9.3/bbl Average JV Technical Cost has increased from about $23/bbl in 2010 to about $24/bbl in 2011 though there was a $2/bbl decline in Opex while Capex grew by $3/bbl

2009

Capex

2010

2011

Source: Wood Mackenzie, NNPC

South Atlantic

CNOOC Ltd

Petrobras

Oando

Total

Statoil

NNPC

Eni

NPDC

Shell

0.0

Overview of the Nigerian Oil & Gas Industry

E&P Trends in the Nigerian Upstream
Historical Production
120,000 100,000 80,000 bopd 60,000 40,000 20,000 2004 2005 2006 2007 2008 2009 2010 2011

NNPC NPDC Historical Production and Costs Production Cost

25 20
10.83

$/bbl

15
10.38 9.78 6.51

10 5 2008 2009 2010

10.87 6.22 7.58

6.92

2011

T1 ($/bbl) without CHQ Overheads

T2 ($/bbl)

Production is on the increase, above 102,000bbl/d on the average in 2011 due to assets additions from the divested blocks (Seplat)
NPDC average production cost on the decline $13.43/bbl in 2011 lower than average JV cost of $24/bbl

Midstream/Downstream Oil

Overview of the Nigerian Oil & Gas Industry Midstream & Downstream Oil
Transportation & Conveyance Refinery

Activities in the Midstream/Downstream Oil & Gas Sector Natural Gas Distribution & Marketing

Downstream

Downstream

Downstream

Transportation of Oil & Gas to the Refineries and Gas terminals/ Outlets

2 Refineries in PH, 1 each in Kaduna & Warri Installed domestic refinery capacity is 445,000b/d

Downstream

NLNG with commercial capacity of 22mtpa Brass LNG-FID to be taken before end 2012 Train-7 & Olokola under evaluation Gas Processing Facilities to supply pipeline spec gas.

Distribution of refined products to storage and sales outlets Pipelines belong to NNPC-PPMC MarketingProcurement & Sales of Refined petroleum products Distribution and marketing of gas to commercial customers

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Oil
Pipeline Network

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Oil
Refining Capacity
NPHR KRPC WRPC
(125,000BPSD) (110,000BPSD) (150,000BPSD)

Summary of Midstream/Downstream Assets & Infrastrucrure

Current NNPC Supply & Distribution Infrastructure 5,120 kilometers Of Pipeline Network 21 Petroleum Products Depots 9 LPG Depots Atlas Cove Terminal PPMC Escravos Terminal Bonny Export Terminal MT Oloibiri/MT Tuma

OPHR

(60,000BPSD)

1989 1979 1978

1965/1972 Simple . Complex . State of the Art

445,000BPSD

Refining Capacity Per Capita, % 10 1.37 0

Algeria Egypt Libya

6.17 0.96 0.3

Nigeria

1.11
S/Africa

New Refineries

0.81 %
Bayelsa Refinery Kogi Refinery Lagos Refinery

850,725m3

1,202,001m3

CRUDE

PMS

578,238m3

DPK

748,398m3

AGO

TOTAL PROPOSED NEW CAPACITY

750,000BPSD

Linkage To Existing Backbone Mandatory

Downstream Infrastructural Growth Plateaued In The Early Nineties. NNPC Is Re-strategizing To Face Current Consumption Challenges & Preparing For Additional Product Volumes From Envisaged New Refineries
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Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Oil
Refineries Performance
1Q11

Refinery Performance
60 50

Capacity Utilisation (%)

1Q12 2Q12
51.8

2Q11

3Q11

4Q11

43.18
38.33 31.8 28 27.8 28.72 21.7 33

42.9

Capacity Utilisation (%)

40 30 20 11 10 0 KRPC PHRC

26
12 14.34

17.71

12.7612.2

14.2

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

3Q11 4Q11

KRPC 11.9 25.5 30.9 12.8 11 28 31.8 17.71 27.8 28.72

PHRC 6.1 0.0 12.2 18.0 12 14.34 21.7 12.76 12.2 26

WRPC 29.2 44.8 55.6 43.0 33 38.33 51.8 43.18 14.2 42.9
60 50

WRPC
2,000,000 1,800,000 1,600,000 1,400,000 1,200,000

1Q12 2Q12

NNPC refineries performances increased during the quarter due to reduced incidents of pipeline vandalism & power failure

PMS Stock/Day Sufficiency (000Ltrs)

40
30 20 10 2Q12 1Q12 4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 1Q10 4Q09 3Q09 2Q09 1Q09 2012 2011 2010 2009 2008

Provisional figures shows 2Q12 capacity Utilization improved when compared to 1Q12 Average PMS stock increased from 968,805.63Ltrs and 35.72days in 1Q12 to 1,348,431.50Ltrs and 38.53days sufficiency by end 2Q
Source: ERDM Analysis (figures are provisional)

1,000,000
800,000 600,000 400,000 200,000 0

Quantity ('000 litres)

Days' Sufficiency
22

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Oil
Strategies to turn around Refineries

Implement a new business model for Refineries Raise Refinery Performance, Financial Value and
Security:

FCC Unit of Warri Refinery

o Improved Capacity Utilisation (60% in 2012, 70%

by 2013 and 90% by 2015)

o Improved PMS Yield o Enhanced Supply/Evacuation Management o Improved Operational maintenance and
reliability
70

o Increased Capital Investments Performance of the Refineries is being vigorously

monitored and defined intervention priorities are being addressed, prior to comprehensive rehabilitation
the Nations Refineries to their original design capacities local refining capacity

Refinery Performance based on Av. Cap Util (%)

60
50 40 30 20 10 0

NNPC in dialogue with original Contractors to restore

Establishment of 3 Greenfield Refineries to improve on

Source: NNPC

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
KRPC PHRC WRPC

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Oil
NNPCs Retail & International Trading Business

All NNPC trading activities to be combined into a Shipping

& Trading Unit
Duke Oil

Retail Business and Bulk Sales to be a single Organization

Hyson/

Increased Retail Market Share through Affiliates and High

volume Stations o No. of Acquired & Affiliate Stations increased to 505 in 2010 from 157 in 2009 operational

Calson

Napoil

NNPC International Trading Business

o 12 Floating Stations constructed, 11 Deployed, and 6

Nigermed

Nidas

o Sustained Policy of Zero tolerance for fuel scarcity

o Improved domestic market share volumes Retail to capture 10-15% by end 2013 and 20%
by 2015, currently at 12%.

Nikorma

Build large retailer capabilities at point of sale Pilot new products e.g. Lubricants, Aviation fuel and Car
wash etc.

Midstream/Downstream-GAS

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Gas Commercialization Typical Midstream in Advanced Set-up

Storage

Demand for energy will likely increase 1.2 % per year until 2035 EIA
Piped LTC

Client/Hub

Hydrocarbons will continue to supply at least half of the worlds energy needs over that period Gas has Diverse Portfolio ranging from Storage, piping, transportation, LNG, Power

Gas Commercialization

PowerGen

LNG

Gas commercialization is becoming complex so also are the capabilities required Dearth of skilled technical talent poses threat to Oil & Gas Industry

Transport

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Gas Resource Base

Proven Natural Gas Reserves, 2010

1,800
1,680

1,600
1,400 1,200

Trillion cubic feet

1,046

1,000 800 600 400

899

265

263

245 199 185 176 159

200

Russian Federation Iran Qatar Turkmenistan Saudi Arabia United States UAE Nigeria Venezuela Algeria

Pre-1999
Gas Utilisation Challenge Era (Fiscal Incentives)

1999
NLNG ERA

Post 2005
Demand Explosion ERA (Gas Master Plan)

Nigerian Domestic Gas Sector is undergoing development Nigeria currently exports about 3bcf/d and utilises about 780 mmscf/d) Implementation of Gas Master Plan will mitigate some of the Gas Infrastructure challenges

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Historical Gas Usage in Nigeria

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Nigerias dominance in West Africa Gas

Nigeria has over 180 tcf of commercial and technical reserves accounting for 84% of total gas reserves in West Africa LNG has been an attractive marketing option for Nigerian gas allowing producers to monetize large volumes of gas at international prices Nigeria LNG has also benefited from tax breaks to encourage investment Domestic gas supply has been limited by the lack of a domestic gas infrastructure and poor commercial framework FGN is currently implementing measures to correct this via two major policies reforms: o Gas and Power Sectors reforms (the Roadmap for Power Sector Reform and the Gas Master Plan) FGN is implementing plans to increase prices for gas sales to the power sector o Gas-to-power prices were set at about US$1.5/mmbtu at the end of 2012 29 o Expected to rise to US$2/mmbtu by the end of 2013

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Nigerian Gas Master Plan-Focus Areas

Focus Areas of the Gas Master-Plan

1
Short/Medium Term Gas Availability (Domestic Obligations)

2
Sustainable Commercial Framework

3
Scalable Gas Infrastructure

4
Stimulate Gas Based Industrialization Grow Demand (Gas Revolution)

Reviewed gas prices Developed an Specific focus on and contractual infrastructure Gas to Power framework to sustain blueprint pipelines Entrenched the DSO investment in supply and CPFs concept to stimulate growth supply

Launched Gas Revolution to stimulate demand and crystallize economic development

In pursuit of Government objectives in developing the gas sector, a focus on the 4 key areas culminated in the Gas Revolution Initiative
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Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Nigerian Gas Revolution Framework

The Gas Reform is anchored on a robust strategic framework that is focused on maximum economic impact through gas. Aims to drive linkages with agriculture, manufacturing and dispersed small enterprise through Power

STRATEGIC FRAMEWORK FOR NIGERIAN GAS

GAS TO POWER

GAS BASED INDUSTRIALISATION

By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.

HIGH VALUE EXPORT

LNG

Regional Pipelines

Significantly increase gas supply to the Power Sector Focused delivery plan to support existing and ongoing power plants by PHCN and NIPP Deliver Gas for at least 12GW by 2015

Deliver on Presidents Gas Revolution Agenda to: Position Nigeria as the regional hub for gas-based industries such as fertilizer, petrochemical and methanol Transform gas sector to value adding sector
31

Consolidate Nigerias position and market share in high value export markets Targeted LNG export opportunities Regional gas pipelines that help consolidate nations footprint and influence

Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
Gas Infrastructure Development Framework
Gas Master Plan Infrastructure Implementation

Trans Sahara Gas Pipeline

Brass LNG Location

West African Gas Pipeline

Implementation of Gas Master Plan with Pipeline Infrastructure & Central Processing Facilities Domestic Gas Pipeline Expansion; Liquefied Natural Gas Projects (Train 7, OK LNG and Brass LNG - FID to be taken before end 2012) Gas to Liquids & Natural Gas Liquids Projects West African Gas Pipeline Trans Saharan Gas Pipeline Project providing alternative route to Europe thru Algeria

Source: NNPC, Woodmac

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Overview of the Nigerian Oil & Gas Industry

Midstream/ Downstream Gas
NNPCs Strategy across the Gas Value Chain

Development of Independent Power Plants Project Engaged in Midstream/Downstream Gas

Operations

Operator

Plant

Plant Capacit y (MW) 1,350

Status

Unlock Nations proven & undiscovered Gas

Reserves

NNPC/ IPP

Abuja

Pre-Front End Engineering Design Activities ongoing. Power Plant completion date is Q2, 2014

Domestic Gas Infrastructure o Develop distribution networks thru Gas Hubs Response to Government Direct Investment &
Incentives

Kaduna

900

Pre-Front End Engineering Design Activities ongoing. Power Plant completion date is Q2, 2014

Rapidly growing domestic market o Power sector o Gas based Industries Rapidly growing LNG Export Position o NLNG T7 planned, Olokola Plant under evaluation o Brass LNG-FID will be taken before end 2012 Consolidating a regional position o WAGP Project o Continued progress on the Trans-Saharan Gas Project

Structure of the Industry

34

Overview of the Nigerian Oil & Gas Industry

Structure of The Industry
Structure of the Nigerian Oil & Gas Industry prior to Reforms

PPPRA
(Price Regulator.

Administrator of PSF)

This structure comprises various institutions and operating entities often 35 with blurred boundaries and non commercial focus

Overview of the Nigerian Oil & Gas Industry

Nigeria Aspirations for Oil & Gas Industry
Growth in oil reserves and managed expansion in production capacity

Maximize Oil & Gas Sector value to economy Enhance multiplier effect of Oil & Gas Embark on aggressive exploration to increase Transit from an Oil Industry to an integrated
Oil & Gas Industry

Reserves from 37.8bn to 40bn bbls by 2020

Production capacity to 4.5 mbd by 2020 Offshore: 15%

Nigerias Focus Area for the Oil and Gas Industry

Reposition Gas for rapid domestic, regional and export penetration

Develop Domestic Gas Market Increase Gas Reserves from 187tcf to 215tcf by 2020 Policy shift towards reducing Gas Flaring Niger Delta: 85% Capture economic value & generate as much Create new industries-Gas would create multiplier
effect (Gas to Power, Manufacturing & Fertilizer Ind.) revenue from Gas as Oil

Revitalize downstream capacity to support domestic energy needs

Domestic self-sufficiency Offshore: 14% Efficient supply and distribution system

Reform key institutions to anchor sustained growth in the industry

Implementation of PIB Improve Nigerian Capacity & Local Content Address Environmental issues & Entrench
Global HSE Standards & Principles in the Sector
36

Niger Delta: 86%

Overview of the Nigerian Oil & Gas Industry

Structure of The Industry Petroleum Industry Bill Intervention Objectives Of Reform
Clear

delineation of roles and functions within the sector

Enhance value addition

Strict business orientation of NNPC as a National NOC Strong, viable and independent downstream sector Optimal utilization of natural gas for domestic and export markets Diversification of the economy Greater environmental protection Increased Nigerian content Participatory schemes involving host communities
Regulation & Monitoring

Policy

Ministry of Petroleum Resources Commerci al Operations

37

Overview of the Nigerian Oil & Gas Industry

Concluding Remarks
The Nigerian Petroleum Industry remains the largest and most vibrant in Sub-Saharan Africa and still has a lot of potentials, especially in areas of the deep water and untapped gas resources The Oil Sector accounts for about 90% of export earnings and about 80% of government revenues In addition to oil, Nigeria holds the largest natural gas reserves in Africa which is envisaged to be the next vehicle for the nations domestic economic growth The expansion of Liquefied Natural Gas (LNG) infrastructure and policies to eliminate gas flaring are poised to accelerate growth in the sector in terms of both export and domestic use in electricity generation and gas based industries Product importation will still be required to meet demand even at the optimal operational capacity of current Nigerias Refineries The PIB will trigger increased Investments, infrastructural developments across the entire value chain and increase government revenue when eventually passed

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