Accugas Delivering gas July 2014 Disclaimer This presentation is - - PowerPoint PPT Presentation

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Accugas Delivering gas July 2014 Disclaimer This presentation is - - PowerPoint PPT Presentation

Accugas Delivering gas July 2014 Disclaimer This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale


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Accugas

Delivering gas

July 2014

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Disclaimer

2 December 14 This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an

  • ffer, solicitation or sale in the United States or Nigeria or in any jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful.

The information contained in this presentation has not been audited by independent auditors or other third parties and is based on internal records and reporting systems. Certain statements in this report regarding our prospects, plans, financial position and business strategy may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe” or “continue” or the negative of these terms. All forward-looking statements, including discussions of strategy, plans, objectives, goals and future events or performance, involve risks and uncertainties. While we believe these statements to be reasonable, they are merely estimates or predictions and cannot be relied upon. We cannot assure you that future results will be achieved. Factors, risks and uncertainties that may cause actual outcomes and results to be materially different from those indicated, expressed, projected or implied in the forward-looking statements used in this report include, among others:

  • logistical and operational difficulties associated with operating in Nigeria;
  • changes in governmental regulation, including regulatory changes affecting the availability of permits, and governmental actions that may affect operations
  • r our planned expansion;
  • the exposure to increased market risk and uncertainty as a result of operating in an emerging market;
  • the inability to obtain funds to maintain our ongoing operations, grow our business and complete planned projects;
  • delays, disruptions and disputes with third-party operators, partners and other project participants;
  • limited growth in Nigerian domestic demand for gas;
  • price fluctuations in oil, gas and refined products markets and related fluctuations in demand for such products;

This list of important factors is not exhaustive. When relying on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social, and legal environment in which we operate. Such forward-looking statements speak only as of the date on which they are made. Accordingly, we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely scenario. These cautionary statements qualify all forward looking statements attributable to us or persons acting on our behalf.

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Accugas at a glance

December 14

Accugas , part of the Seven Energy Group, is a midstream business focused on sales and marketing,

processing and distribution of gas to the domestic Nigerian market. Through its extensive gas infrastructure, Accugas serves to assist its upstream partners to monetise their gas resources

Key facts 200 MMcfpd gas processing facility 227 km network of gas pipelines 600 MMcfpd gas distribution capacity 1.3 Tcf of gas under long-term gas sales agreements First commercial delivery of gas in January 2014

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Introduction

4 December 14

  • Since 2010, Accugas has developed significant, wholly-owned, gas infrastructure in

south east Niger Delta

  • Its infrastructure includes:

200 MMcfpd Uquo Gas Processing Facility

227 km of gas pipelines, with a total distribution capacity of 600 MMcfpd. Its principal gas pipelines include: Uquo to Ikot Abasi (62 km), Uquo to Oron (37 km) and the recently acquired East Horizon gas pipeline (128 km)

  • First commercial gas deliveries commenced in early 2014 to the 190 MW Ibom

Power station

  • With the addition of deliveries to the 560 MW Calabar NIPP power station

Accugas will be supplying gas to more than 10% of Nigeria’s power generation capacity

  • In addition, deliveries are made to the UniCem cement plant via the East Horizon

pipeline

  • In total, over 1.3 Tcf of long-term gas sales agreements, with duration of between

10 and 20 years, are in place

With its wholly-owned processing and distribution infrastructure … … Accugas is a leading supplier of gas in south east Niger Delta

Uquo Gas Processing Facility Pipeline from Uquo to Ikot Abasi

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Business model

5 December 14

Business model Processing Distribution Sales and marketing

Provision of gas processing services Transportation of gas through gas pipeline infrastructure from processing facilities directly to offtakers Entering into gas sales agreements with

  • fftakers

Through its business model … … Accugas serves to assist its upstream partners to monetise the production of gas

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Nigeria presents significant growth opportunities …

Market overview (i)

6 December 14

  • At 179 Tcf, Nigeria benefits from having the largest gas

reserves in Africa

  • However, these reserves are highly under-developed owing to

an historic focus on oil – Nigeria is only ranked 23rd in terms of gas production in the world (vs 9th in terms of proved gas reserves)

  • Of this, only 14% reaches the domestic market, with the

majority being exported as LNG, flared or used in E&P

  • Supply for the domestic Nigerian gas market is estimated to

remain tight until at least 2020, if not 2025

  • In addition, Nigeria has very little processing and distribution

relative to its reserves, production and potential demand

  • Of its c.2,000 km of gas pipelines, only a third is dedicated to

domestic consumption with the remaining being dedicated to LNG exports

  • Although there are a number of ongoing and planned

infrastructure projects, Nigeria is likely to remain infrastructure constrained for the next 10 to 15 years Breakdown of use of Nigeria’s gas production (2012) Supply and infrastructure

24% 24% 38% 14%

Flared Upstream use Exported Power industry and other

9 30 48 65 179 UK Netherlands India Egypt Nigeria 3 3 5 6 7 India Nigeria Egypt UK Netherlands 2 8 9 14 28 Nigeria Egypt Netherlands India UK Proved gas reserves (2013) Tcf Total gas production (2013) bcfpd Gas pipelines ‘000 km

… for players such as Accugas

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Demand for domestic demand is forecast to grow strongly …

Market overview (ii)

7 December 14

  • Large, growing population of 174 million, the largest in Africa.

In addition, the population is young and rapidly urbanising

  • Fast growing economy (6.9% p.a. forecast from 2013 to 2019)
  • However, the pace of economic growth is constrained by lack
  • f investment in infrastructure, chronic power shortages and a

reliance on expensive diesel for power generation

  • In addition, Nigeria currently imports the vast majority of its

consumed petroleum products (with $17.5 billion spent annually for power generation alone) Strong growth in domestic demand for gas Compelling economics to switch from diesel to gas Fast growing market Power sector reforms

  • There is increased focus by the Nigerian Government to develop

power infrastructure to support growth …

  • … with a target of 40 GW of installed power capacity by 2020 (vs

6 GW at present) – the majority to come from new gas fired power stations

  • Strong growth in demand for gas expected (11.3% from 2012 to

2025)

  • Power sector to continue to be the most important sector but

with feedstock industries forecast to grow the fastest

22.21 Ibom Power Calabar NIPP UniCem Diesel 2012 2015 2020 2025 Light domestic industry Gas powered industries Feedstock Power Bcfpd 1.8 3.6 5.2 7.2 Weighted average price: $2.80

… due to demographic and economic growth and power sector reforms

$/MMbtu

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South east Niger Delta demand

8 December 14

Accugas’ processing and distribution infrastructure is positioned … … near areas where significant demand has been identified

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The gas opportunity

9 December 14

With available capacity … … Accugas is well positioned to leverage its assets for the benefit to its partners

  • Accugas serves to assist its upstream partners to monetise the production of gas
  • It works closely with regional governments in south east Niger Delta in the

creation of gas infrastructure linking resource with demand

  • It enters into long-term gas sales agreements with power stations and local

industries for the supply of gas to ensure reliable generation

  • Gas has also the advantage of being a lower cost fuel than most alternatives
  • With capacity built into its distribution infrastructure, the Company is capable of

providing a long-term supply of gas to additional offtakers for power generation and for local industry located across south east Niger Delta, from Port Harcourt in the west to Calabar in the east

  • As part of the Seven Energy Group, with its integrated upstream and midstream
  • perations, Accugas offers access to expanding new markets, as well as cost

pricing advantages over non-vertically integrated companies

  • Accugas is currently in discussion with a number of additional offtakers regarding

gas supply to both existing and proposed projects and works closely with each of its partners to help them realising their projects

Gas Receiving Facility at Ibom Power Construction of the pipeline from Uquo to Oron

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Nigeria 7 Anifowoshe Street Victoria Island Lagos, Nigeria Tel: +234 1 277 0600 United Kingdom 4th Floor, 6 Chesterfield Gardens London W1J 5BQ United Kingdom Tel: +44 20 7518 3850

  • Email. info@sevenenergy.com

www.sevenenergy.com

Accugas is a wholly-owned subsidiary of Seven Energy, an indigenous Nigerian oil and gas exploration, development, production and distribution company with a vision to become the leading supplier of gas to the Nigerian domestic market for power generation and industrial consumption