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 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 or 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. 2 December 14
Accugas at a glance 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 3 December 14
Introduction With its wholly- owned processing and distribution infrastructure … • 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 Uquo Gas Processing Facility 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 Pipeline from Uquo to Ikot Abasi … Accugas is a leading supplier of gas in south east Niger Delta 4 December 14
Business model Through its business model … Business model Processing Distribution Sales and marketing Provision of gas Transportation of gas through Entering into gas sales processing services gas pipeline infrastructure agreements with from processing facilities offtakers directly to offtakers … Accugas serves to assist its upstream partners to monetise the production of gas 5 December 14
Market overview (i) Nigeria presents significant growth opportunities … • At 179 Tcf, Nigeria benefits from having the largest gas Breakdown of use of Nigeria’s gas production (2012) reserves in Africa • However, these reserves are highly under-developed owing to 14% an historic focus on oil – Nigeria is only ranked 23 rd in terms of Flared 24% gas production in the world (vs 9 th in terms of proved gas reserves) Upstream use • Of this, only 14% reaches the domestic market, with the Exported majority being exported as LNG, flared or used in E&P 38% 24% Power industry and other • 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 Supply and infrastructure relative to its reserves, production and potential demand Proved gas reserves (2013) Total gas production (2013) Gas pipelines • Of its c.2,000 km of gas pipelines, only a third is dedicated to Tcf bcfpd ‘000 km domestic consumption with the remaining being dedicated to Nigeria 179 Netherlands 7 UK 28 LNG exports Egypt UK 65 6 India 14 • Although there are a number of ongoing and planned India 48 Egypt 5 Netherlands 9 infrastructure projects, Nigeria is likely to remain infrastructure constrained for the next 10 to 15 years Netherlands Nigeria 30 3 Egypt 8 UK India 9 3 Nigeria 2 … for players such as Accugas 6 December 14
Market overview (ii) Demand for domestic demand is forecast to grow strongly … Fast growing market Compelling economics to switch from diesel to gas • Large, growing population of 174 million, the largest in Africa. $/MMbtu 22.21 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 of investment in infrastructure, chronic power shortages and a reliance on expensive diesel for power generation Weighted average price: $2.80 • In addition, Nigeria currently imports the vast majority of its consumed petroleum products (with $17.5 billion spent annually for power generation alone) Ibom Power Calabar NIPP UniCem Diesel Power sector reforms Strong growth in domestic demand for gas Bcfpd • 7.2 There is increased focus by the Nigerian Government to develop power infrastructure to support growth … 5.2 • … with a target of 40 GW of installed power capacity by 2020 (vs 3.6 6 GW at present) – the majority to come from new gas fired power stations 1.8 • Strong growth in demand for gas expected (11.3% from 2012 to 2025) • Power sector to continue to be the most important sector but 2012 2015 2020 2025 Light domestic industry Gas powered industries Feedstock Power with feedstock industries forecast to grow the fastest … due to demographic and economic growth and power sector reforms 7 December 14
South east Niger Delta demand Accugas ’ processing and distribution infrastructure is positioned … … near areas where significant demand has been identified 8 December 14
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