The Outlook For Energy:
A View to 2030
O. A. AVURU,fnape
Managing Director/CEO
SEPLAT Petroleum Development Company Limited
LBS BREAKFAST CLUB MEETING – APRIL 2013
OUTLINE
NIGERIAN TRENDS: A Historical Perspective of Policies and Activities
WEST AFRICAN TRENDS: Growth and Investment in Oil and Gas
GLOBAL ENERGY TRENDS AND OUTLOOK TO 2030
IMPLICATIONS
CONCLUSION
2
Policies
1960s
Exploration rights in onshore and offshore areas
were extended to other IOCs besides Shell.
, leading to significant exploration activities both onand off- shore Nigeria
1970s
Nigeria’s entry into OPEC in 1971 and
establishment of the NOC (now NNPC) in 1977 saw
the country recording significant exploration and
production growth
1980s
Signing of Memorandum of Understanding (MOU)
between NNPC and IOCs in 1986.
1990s
2000s
2010s
Introduced sole risk terms to indigenous oil
companies in 1990-94
Introduced RAB into revised MOU in 1991.
Introduced AGFA in 1992, initiated LNG, Oso cond,
EGP, WAGP projects.
Deepwater block allocated under PSC terms (1993)
Entry
Exit
SPDC/BP (1938)
Mobil (1955)
Texaco , Chevron (1961)
ELF, AGIP (1962)
Phillips Oil (1965)
Ashland Oil (1973)
Pan Ocean (1973)
Dubri (1981)
Conoil, Statoil, Oriental (1990)
Famfa (1991)
Conoco, Moni Pulo (1992)
Peak Oil, Amni (1993)
Addax, Sapetro, Petrobras (1998)
Bid Round (2000)
Marginal Field Development Programme (2004)
Gas Master Plan (2008)
Licensing rounds (2005, 2006, 2007)
Marginal field operators (2004)
Oando energy (2003)
Sahara, Afren (2004)
BG, Centrica, KNOC (2005)
ONGC (2006)
CNOOC (2007)
Nigerian Oil & Gas Industry Local Content Act
(2010)
Seplat, Eland (2010)
First Hydrocarbon (2010)
Neconde (2011)
Heritage (2012)
3
BP (1979)
Ashland (1998)
Centrica (2012)
BG (2012)
Conoco Phillips (2012)?
HISTORICAL TRENDS IN OIL PRODUCTION AND POLICIES
NIGERIA'S CRUDE PRODUCTION AND RESERVES (1970 - 2011)
8000
80.00
Oil Reserves
Crude Production
70.00
Production (MBopd)
6000
MOU signed in
1986
Decline due to
harsh fiscal
terms /
economic
slump
5000
4000
3000
Decline due to
ND unrest
60.00
50.00
PSC in
1993
No significant
reserves growth
40.00
30.00
RAB in
1991
2000
20.00
1000
10.00
0
1970
1975
1980
1985
1990
1995
2000
2005
Source BP 2012 Statistical Review.
4
2010
Reserves (Billion Bbls)
7000
Historical trends in gas production and reserves addition
NIGERIA'S GAS PRODUCTION AND RESERVES (1975 - 2011)
400
Gas Reserves
Gas Production
6.0
350
NLNG
T1-3 in
1999
AGFA in 1992
initiated all
future gas
projects
4.0
3.0
EGP2 in
2000
300
250
200
EGP1 in
1997
150
2.0
Start of
commercial gas
prod
1.0
No-flaring
legislation in
‘80s
100
50
0.0
0
1970
1975
1980
1985
1990
1995
2000
2005
Source BP 2012 Statistical Review * Data does not include Flared gas and Re-injected gas
5
2010
Reserves (TCF)
Production (Bcfpd)
5.0
Shell’s GbaranUbie, EGP3, WA
GP in 2010
WEST AFRICAN TRENDS- Introduction
•
Estimated 2.8% of world oil (68 billion barrels) is in Sub-Saharan Africa
•
44 billion barrels in the Gulf of Guinea
•
Oil and gas play strategic role in economies of West African countries
giving them power and influence on world stage
•
Africa's contribution to world reserves has increased from ~7.0 per cent
in 1995 to ~ 8 per cent in 2011
•
Growing reserves in Libya, Nigeria and Angola
•
Trend likely to continue with new discoveries announced in
Africa is on an upward
growth curve. This
growth is underpinned
by a longer-term
process of economic
and regulatory reform
that has occurred
across much of the
continent.
Ernst and Young
Ghana, Egypt, Algeria, Libya, Tunisia, Mozambique, and Uganda in 2011
•
West Africa is new petroleum province with multi billion barrel potential
•
The majors are there, and so are many smaller players
Source: BP statistical review of world energy 2012
6
WEST AFRICAN RESOURCES
Reserves, 1/1/2012
Country
NIGERIA
Commercial
Discovery
1956
ANGOLA
1955
1956
13.5
10.9
GABON
1962
1967
3.7
1
CONGO
1984
1957
1.9
3.2
EQUATORIAL
GUINEA
1984
1991
1.7
1.3
CHAD
1972
2003
1.5
0
GHANA
CAMEROON
MAURITANIA
2007
1972
2001
2010
1977
2006
0.7
0.2
0.1
5
4.7
1
COTE D’IVOIRE
1977
1980
0.1
1
First prod Oil, Bbbls
1958
37.2
Gas, Tcf
180.5
Sources: BP Statistical Review 2012 / US EIA
7
Significant Reserves Growth
Three broad bands of Club Membership
1955 - 1975
Angola, Nigeria, Gabon, Cameroon, Chad
1975 - 1995
Cote d’Ivoire, Equatorial Guinea, Congo
RECENT
Mauritania, Ghana
Sources: BP Statistical Review 2012 / US EIA
8
Significant Reserves Growth
• Oil and gas activity in West Africa extends
West Africa Reserves (1995 - 2011)
from Mauritania to Angola
95
100
86
Billion Boe
80
60
• Nigeria and Angola have largest
reserves, ~ 86% of the total sub-region’s
reserves as of January 2012
67
50
• New production countries -
40
Chad, Ghana, Côte d’Ivoire and
Mauritania - have joined
Nigeria, Angola, Cameroon in sub-region
20
0
• Chad, Côte d’Ivoire, Liberia and
1995
2000
2005
2011
Mauritania
Eq. Guinea
Cote d'Ivoire
Ghana
Nigeria
Chad
Cameroun
Gabon
Congo
Angola
Mauritania have all discovered oil in
commercial quantities
• Sub-Saharan African countries compete
with each other to attract investment
Sources: BP Statistical Review 2012 / US EIA
9
Where Will Future Growth Come From?
– Since 2007, West Africa has seen more success in exploration than other regions
of the world – making it attractive for investment.
– West Africa Transform Margin, deepwater West Africa, and offshore East Africa
are the areas currently attracting most exploration interest.
– Since Jubilee discovery in 2007, companies are exploring others parts of region
(Ghana to Mauritania), looking for analogous Cretaceous turbidite prospects.
– Offshore explorations in Sierra Leone and the Cote D’Ivoire look
promising, making them high potential areas for investment beyond Nigeria and
Angola.
– In Sub-Saharan Africa an estimated 40 billion plus barrels of oil equivalent exist in
technical reserves – most of it in Niger Delta Basin.
– An estimated additional 55 billion barrels oil equivalent in yet-to-find
resources, the second biggest region in the world after Latin America
Source: Wood Mackenzie
10
Oil and Gas Future Growth
Mid-sized companies hold
about 46,000 sq km of acreage
in the West African transform
margin
Deepwater activities in West
Africa mostly carried out by
majors; circa 80,000 sq km
acreage in their possession
Sources: Wood Mackenzie
11
Summary of Facts
– Africa’s place as a significant producer and net exporter of oil in the world is forecast
to grow to ~ 15% by 2020 due to new discoveries in West Africa and East Africa
– Significant growth potential exists in West African sub-region
– According to Wood Mackenzie, there are ~ 40 bn barrels of discovered but
undeveloped reserves plus 55 bn barrels of yet-to-find
Sources: Wood Mackenzie
12
GLOBAL ENERGY TREND AND OUTLOOK TO 2030
• Global energy trend is driven by
GDP and population growth.
• World population is projected to
grow from 7 billion in 2011 to 8.3
billion by 2030. (1.3b more
people will need energy)
• By 2030, world income is
expected to double from $80
trillion in 2011.
• Primary energy consumption is
projected to grow linearly to 17
billion toe by 2030.
Non OECD
• Over 70% of growth projections
comes from emerging economies.
OECD
Source: BP’s energy outlook 2030
13
GLOBAL ENERGY TREND
• Strong correlation
between energy
production and
consumption growth.
• Growth in energy
production will also be
dominated by non-OECD
countries by 2030.
• Asia Pacific region
accounts for about 35% of
global energy production
by 2030 (consisting of gas
and coal mainly from
China, Indonesia and
Australia).
• Energy production will
grow in all regions except
Europe.
Source: BP’s energy outlook 2030
14
GLOBAL ENERGY TREND
• Global energy mix
continues to evolve.
• Industralization and
growing
power
demand increase the
world’s appetite for
primary energy.
• Oil and natural gas
remain the largest
single
source
of
energy
in
the
foreseeable future.
• Renewables (including
biofuels) grow the
fastest from 2011 to
2030.
Source: BP’s energy outlook 2030
15
OIL OUTLOOK - 2030
Source: BP’s energy outlook 2030
16
OIL OUTLOOK - 2030
• Global liquids consumption is projected to reach 104 million b/d by 2030 with
greatest growth coming from China and other non-OECD Asian countries.
• Though oil is still the dominant fuel, high oil prices have led to the substitution of oil
by other fuels where cheaper alternatives are available.
• Tight oil will drive global supply growth and is projected to grow more than six-fold to
reach 9% of global supplies by 2030.
• North America will continue to dominate tight oil output with limited growth
elsewhere. Russia and China are also expected to develop their tight oil resources by
2030.
• With the Americas dominating global supply growth , shale and unconventional oil
will constrain output and create a challenging future for OPEC
• Oil exporting countries to the Americas, like Nigeria, have to find alternative markets
when the US becomes a net exporter of oil.
17
GAS OUTLOOK - 2030
• World natural gas growth is
projected to reach 459 billion
scf/d by 2030, mainly from non
OECD countries.
• Shale gas growth will gradually
spread beyond the US making
significant contribution to
global gas.
• Surge in North America’s
domestic gas production
impacts the global market
• Despite all the attention
surrounding the shale gas
revolution, world gas demand is
underpinned by conventional
gas production .
Source: BP’s energy outlook 2030
18
GAS OUTLOOK - 2030
• Natural gas demand growth is concentrated in the non OECD with LNG playing a
growing role in supply.
• Sustained growth of shale gas raises the prospect of LNG exports from North
America by 2030
• Outside North America, unconventionals are in their infancy but likely to play a
growing role in the long term as current technology and regulatory hurdles
recede.
Source: BP’s energy outlook 2030
19
NIGERIA OIL OUTLOOK - 2030
Liquids Production
• Nigeria liquid
production is expected
to grow by 17%
between 2012 and
2030.
Capacity
6.0
Nigeria Liquid Production Outlook
Million barrels/d
5.0
4.0
• Liquid export is
expected to stay
relatively flat during
the outlook period.
3.0
2.0
1.0
0.0
2010
2015
Export
2020
2025
2030
Consumption
Data Source: EIA, Annual Energy Outlook 2012
20
• Domestic
consumption increases
significantly by 2017
due to higher
domestic refining.
• Gas production in Nigeria
grows from about 6 bcfpd in
2012 to about 10 bcfpd in
2030.
NIGERIA GAS OUTLOOK- 2030
Share of Gas Production
• Domestic gas consumption
increases from 1bcf/d in
2012 to about 3bcf/d in
2020.
Billion Cubic Feet/d
12
8
• Major increase comes from
domestic gas
consumption, mainly the
power sector.
4
0
2010
2015
Export
2020
Domestic
Reinjected
2025
Flared
2030
• Export gas grows to about
6bcf/d due to new LNG
projects like NLNG T7 and
Brass LNG in 2017 and
2019, respectively.
WoodMackenzie/ NLNG Yearly Bulletin
21
IMPLICATIONS
•
Access to North America’s unconventional gas has shifted global LNG market
dynamics and may almost eliminate the need for imports into North America in the
future.
•
Interest in unconventional gas production is growing, even in Europe, Nigeria’s
biggest LNG export market. If Europe is successful as the US, LNG production from
Nigeria may be significantly reduced.
•
May precipitate reforms to accelerate domestic gas consumption in Nigeria
•
Though demand remains strong in China and India, there is potential tightening of
competition as oil and gas exporters seek new market.
•
With the changing supply dynamics in North America, OPEC production will likely be
impacted in the future.
•
So, while we see that the U.S. is not a significant export market for Nigerian LNG, the
real danger to Nigeria lies in potential U.S. export of her shale gas to global LNG
market
22
CONCLUSION
•
The world will produce the energy it needs to fuel continued economics growth.
•
Oil and natural gas will remain the largest single source of energy in the foreseeable
future.
•
Increased energy demand can be met as long as competition is present to drive
innovation, unlock resources and encourage efficiency.
•
Over the period to 2030, the US becomes nearly self-sufficient in energy, while China
and India become increasingly import dependent.
•
Nigeria must recognize that a significant resource shift has turned a key trade region
into a possible direct competitor.
•
Nigeria needs to develop clear regulatory and competitive policies, as the U.S. and new
players from Africa compete for the same export market.
23
THANK YOU
24