WHITEHALL CAPITAL PARTNERS

Oil and gas REPORT

Table of Content

2014 0utlook

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Facts about Nigeria

Global Oil and Gas Overview Analysis of World Oil and Gas

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Page 7 Page 14

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Nigeria Oil and Gas

Governance and the Nigeria Oil and Gas Industry Nigeria Oil and Gas issues in the news Key Players in Oil and Gas Sector Opportunities in the Oil and Gas Sector 2013 Market Report Top Banks in Oil and Gas Finance Oil and Gas Financing Process Introducing Whitehall Capital Partners Key Contacts

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Page 17 Page 18 Page 20 Page 22 Page 26 Page 33 Page 39 Page 45 Page 48

DISCLAIMER

This report is based on information from third parties that we believe are reliable; however, no, representation is made that it is accurate or complete. While reasonable care has been taken in preparing this document no responsibility or liability is accepted for errors or fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer or solicitation to any person to enter into any trading transaction.. Whitehall Capital Partners Limited accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report is for private circulation only. This report may not be reproduced distributed or published by any recipient for any purpose without prior express consent of Whitehall Capital Partners Limited.

Acronyms
AHTs BOD BRIC DPR EPC FPSO Anchor Handling Tugs Board of Directors Brazil, Russia, India, and China. Department of Petroleum Resources Engineering , Construction Procurement and

Floating production storage and offloading Fast Supply Vessel and Intervention

FSIV GDP IOC MOU OECD O&M OPEC

Gross Domestic Products International oil company Memorandum of understanding Organisation for Economic Co-

operation and Development Operations and Maintenance Oil Producing Countries and Exporting

PSV PIB

Platform Support Vessel Petroleum Industry Bill

2014 OUTLOOK
1 2
The signing of loan syndication agreement and plan by the Dangote Group to invest $9 billion to build a refinery/petrochemical/fertiliser complex expected to come on stream by 2016. is a gamechanging development that has the prospect of stimulating the growth and development of the downstream sector of the petroleum industry with far-reaching implications for Nigerias economic growth and transformation. It is expected that the licensing of private refineries will boost job creation and stem petroleum product importation and conserve foreign exchange outflow.

Outlook for the Nigerian Oilfield services sector is expected to be bullish driven by increasing energy demand, new deep water discoveries, and enhanced oil recovery from existing fields

3
It is expected that inflation will remain single-digit .The explicit target for headline inflation of between 7% and 9% for 2014 is attainable. This achievement has barely registered in domestic debt markets, which will be driven by modest fiscal slippage and tapering concerns. Monetary policy may well be tightened as the MPC seeks to lock in offshore investors in the face of fragile oil production.

4
Focus moves from reform to elections. The window for the FGN to pursue its reform agenda has passed, and the focus has moved to the elections due in Feb 2015. The outcome of the elections is clouded by too many uncertainties. There are no marked policy differences among the protagonists, whose energies will be channelled into forging local and national alliances

OUTLOOK

5
On-going and Planned Reforms in the Petroleum Sector: the PIB is currently being delayed at the National Assembly, we are optimistic that the Bill will be passed before the general elections in 2015. The local content initiative of the FGN and the passage of the Petroleum Industry Bill (PIB) will create tremendous opportunities and investments in the oil sector, particularly in the upstream and midstream sectors.

6
Transnational Corporation of Nigeria Plc, a conglomerate with interests in energy and hospitality has announced plans to produce its first oil next year. The company said yesterday in an emailed note to investors that it would pump oil from Lease 281 in the Niger River delta by the end of 2014. It also plans a 5-star hotel in the oil-rich region.

7
SEPLAT is an indigenous exploration and production company incorporated in 2009 by Shebah Nigeria and Platform Nigeria. The companys main objective is to take advantage of oil assets divestitures by IOCs in the onshore and shallow water areas. Seplat holds 45% interest in, and operates OML(s) 4, 38 and 41 acquired from Shell Petroleum Development Company (SPDC) in 2010. The company plans to raise a minimum of $500 million via issuance of new shares in an Initial Public Offer (IPO) with dual listing on the Nigeria Stock Exchange (NSE) and the main board of the London Stock Exchange (LSE). The implication here is that the company will be forced to raise its corporate governance standards and abide with the UK corporate governance code, which is actually considered to be a global benchmark.

FACTS ABOUT NIGERIA

ABOUT LIBERIA
Population (million inhabitants
Land area (1,000 sq km) Population density (inhabitants per sq km) GDP per capita ($ GDP at market prices (billion $)

167.7
924 182

1535 257.43

Value of exports (billion $) Value of petroleum exports (billion $)

142.52 94.64

Nigeria

Current account balance (billion $) Refinery capacity (1,000 b/d) Output of petroleum products (1,000 b/d Natural gas exports (billion cu. m.) Exports of petroleum products (1,000 b/d) Crude oil exports (1,000 b/d)

23.41

445 82.4

28.27

8.2

2368

The most populous country within OPEC, Nigeria has over 167 million inhabitants. Located on the Gulf of Guinea on Africas western coast, Nigeria covers an area of around 924 thousand square kilometres. Abuja, the capital since 1991, has a population of more than one million. English is Nigerias official language, although many local languages such as Hausa, Yoruba, Igbo and Ijaw are also spoken. Apart from petroleum, Nigerias other natural resources include natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc and arable land. The oil and gas sector accounts for about 35 per cent of gross domestic product, and petroleum exports revenue accounts for about 70 per cent of total exports revenue. Its currency is the naira. According to the world fact book, GDP rose strongly in 2007-12 because of growth in non-oil sectors

and robust global crude oil prices.

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GLOBAL OIL AND GAS OVERVIEW

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OIL & GAS-GLOBAL OVERVIEW

The population of the world continues to grow, as well as average standard of living, increasing demand for food, water and energy and placing increasing pressure on the environment. The population of the world doubled from 3.2 billion in 1962 to 6.4 billion in 2005 and is forecasted to grow to 9.2 billion in 2050. Global demand for energy continues to grow, Supplies of oil, gas, coal and uranium are forecasted to peak as reserves are depleted. At the same time, fear of climate change is putting pressure on the energy sector to move away from carbon burning to nuclear, solar and other environmentally friendly energy sources. Oil accounts for between 34% and 37% of the world's primary energy. Components of crude oil are feedstock's to the chemicals, plastics and fertilizer industries. Crude oil is extracted from the earth and refined to create a range of gas (liquefied petroleum gas - LPG), liquid (gasoline, diesel, jet aviation fuel, paraffin, etc) and solid (bitumen) petroleum products. The most sought after crudes are those that are "light" (i.e. contain a high proportion of short chain molecules) and "sweet" (i.e. low Increasingly, oil and gas are found in challenging areas, such as deep water, arctic regions and politically challenged regions of the world. especially in developing countries such as China and India, as the oil and gas industry continues to search for new sources of energy. The global oil & gas market was worth just over US$2,640 billion in 2010, representing almost a 74 billion barrel oil equivalent of consumption. The oil & gas industry is predicted to grow at

a 7% compound annual growth rate, hitting

almost US$3,700 billion by the close of 2015, according to research from Market Line.

sulphur content) as they are easier and

cheaper to refine.

Source EIA , BMI

According BP statistical review 2013, Global oil consumption grew by 890,000 barrels per day (b/d), or 0.9%, below the historical average. Oil had the weakest global growth rate among fossil fuels for the third consecutive year. OECD consumption declined by 1.3% (530,000 b/d), the sixth decrease in the past seven years; the OECD now accounts for just 50.2% of global consumption, the smallest share on record.

Outside the OECD, consumption grew by 1.4 million b/d, or 3.3%. China recorded the largest increment to global consumption (+470,000 b/d, +5%) although the growth rate was below the 10-year average. Japanese consumption grew by 250,000 b/d (+6.3%), the strongest growth increment since 1994. Light distillates were the fastest-growing rened product category by volume for the rst time.

Since 2009.Global oil production, in contrast, increased by 1.9 million b/d, or 2.2%. OPEC accounted for about three-quarters of the global increase despite a decline in Iranian output (-680,000 b/d) due to international sanctions. Libyan output (+1 million b/d) nearly regained all of the ground lost in 2011. For a second consecutive year, output reached record levels in Saudi Arabia, the UAE and Qatar. Iraq and Kuwait also registered signicant increases. NonOPEC output grew by 490,000 b/d, with increases in the US (+1 million b/d), Canada, Russia and China offsetting unexpected outages in Sudan/South Sudan (-340,000 b/d) and Syria (160,000 b/d), as well as declines in mature provinces such as the United Kingdom and Norway

World Oil Demand in 2013, mb/d

Americas Europe Asia Pacific Total OECD Other Asia Latin America Middle East Africa Total DCs FSU Other Europe China Total Other regions Total World 2012 23.70 13.74 8.59 46.03 10.83 6.26 7.58 3.42 28.10 4.41 0.64 7.74 14.80 88.92 1Q13 23.71 13.15 8.95 45.82 10.89 6.21 7.79 3.42 28.30 4.33 0.63 9.79 14.75 88.86 2Q13 23.74 13.54 7.97 45.25 11.02 6.47 7.75 3.42 28.66 4.18 0.59 10.19 14.95 88.86 3Q13 23.87 13.53 8.29 45.69 11.13 6.70 8.18 3.38 29.39 4.59 0.63 9.89 15.10 90.18 4Q13 23.81 13.35 8.74 45.91 11.17 6.59 7.75 3.52 29.04 4.84 0.71 10.41 15.96 90.90 2013 23.78 13.40 8.49 45.67 11.05 6.49 7.87 3.43 28.85 4.49 0.64 10.07 15.19 89.71 Growth 0.09 -0.34 -0.10 -0.36 0.23 0.23 0.29 0.01 0.75 0.07 -0.01 0.33 0.40 0.79 % 0.37 -2.50 -1.21 -0.78 2.08 3.69 3.80 0.26 2.68 1.63 -0.81 3.38 2.68 0.89

Source EIA , BMI

UPSTREAM
Upstream operations deals with the exploration stages of the oil and gas industry, with upstream firms taking the first steps to locate, test and drill for oil and gas. once reserves are proven, upstream firms will extract any oil and gas from the reserve. The upstream sector also involves processes including the searching for and the recovering of crude oil as well as its production. In the upstream sector, discovery or exploration of crude oil takes place which involves intensive and extensive efforts towards ascertaining the actual places where crude oil is located. 2013 witnessed a more widespread improvement in the global economic environment, and expectations are that the often touted green shoots of recovery may survive the winter. Europe is not yet out of the woods, the aftershocks of the Arab Spring rumble on, and BRIC growth rates continue to slip, but the outlook is still cautiously optimistic. Despite this, 2013 upstream oil and gas M&A activity has been at its lowest level in volume terms since 2003, in contrast to the resilient transactions market and resurgent spend levels of last year. Reported total transaction value was down by 17% from 2012. Excluding CNPCs unprecedented $60 billion long term crude supply agreement with Rosneft, transaction values were down 40% from 2012; the lowest total since 2008.

Challenges and opportunities in the upstream oil and gas industry.

Management and Information Global forces such as geopolitical pressures is a challenge to the industry. There is need for knowledge, contacts and skills to effectively adapt to these challenges and geopolitical insecurity in the industry. It is also important that we make appropriate efforts towards anticipating and reacting to the radical changes on the global sphere. Energy Demand and Supply There is intense problem of demand and supply in the upstream sector of the oil and gas industry. It is quite obvious that the demand for crude oil is greater than its supply. Ongoing tensions in the Middle East and economic uncertainty were pointed out in the 13th international Oil Summit but this points towards improved outlook of course the risks cannot be denied Fluctuating Crude Prices The political issues resulting to the fluctuation in crude prices include slow approval of new capital projects, the squeezing of talents as a result of early retirements and acquisition activity. Economic Uncertainty This is another risk faced in the oil and gas sector which has led to the slow movement of some firms in the upstream sector.

GLOBAL NEWS ON MIDSTREAM

Howard Midstream Energy Partners LLC has begun construction on two major liquid handling facilities the Live Oak Stabilizer, an off-spec liquids stabilizer facility near Three Rivers, Texas, and the Brownsville Liquids Terminal, a bulk liquid storage facility within the Port of Brownsville, Texas. Both projects are expected to be completed by mid-2014. Located within the Port of Brownsville, in Foreign Trade Zone 62, the Brownsville Terminal will consist of 21 tanks providing a total of up to 225,000 barrels of bulk liquid storage for upstream, midstream, and downstream hydrocarbons, and other bulk liquids requiring custom terminal services. This automated terminal includes access to a Panamax-class dock with oceangoing vessel and inland barge capabilities, a three-bay truck rack with on-scale loading capabilities, an 11railcar loading and unloading facility, steam heating, real-time product monitoring and control systems, and specialized infrastructure for commodity blending. According to Deloitte LLP 2014 outlook, the Midstream sector, which includes the processing, storing, transporting and marketing of oil and gas, should increase following what has been an explosion in initial development. Last year showed signs of burgeoning infrastructure spending, as midstream capital spending rose 263 percent to $46.4 billion

Ernst & Young 2013 Global oil and gas review indicated the number of midstream announced deals (90) was down by almost 14% in 2013. However, reported or disclosed deal value increased to $71 billion in 2013, an increase of about 17% as against 2012. Midstream transaction activity, both in terms of the number of deals and the reported value of deals, is dominated by the US and Canada. The two countries accounted for more than 70% of all midstream deals and about 70% of the global midstream disclosed value. The report further stated that the deal activity involving pipelines accounted for the largest portion of midstream activity 36 out of the total of 90 deals (40%) and almost $27 billion in disclosed value (about 39% of the total). There were 33 transactions involving gathering assets in 2013 (37%), with total disclosed deal value of almost $27 billion (about 40% of the total). As with the other segments, asset transactions dominate the midstream landscape, accounting for 77% of all deals and about 59% of all disclosed transaction value

2013 TOP 10 MIDSTREAM TRANSACTIONS (BASED ON DISCLOSED VALUE)

Announced date
11 Jun

Nature of asset
US gas transmission and storage assets Global LNG assets US natural gas and gathering systems US Gathering and processing assets US Gathering and processing assets

Sellers
Spectra Energy Corporation Repsol SA PVR Partners LP

Buyers
Spectra Energy Partners LP Royal Dutch Shell Regency Energy Partners LP Crosstex Energy LP Kinder Morgan Energy Partners LP Energy Transfer Partners LP Institutional Investors

Value(US$M)
11124

26 Feb 10 Oct

6700 5497

21 Oct

Devon Energy Corporation Copano Energy LLC

4700

30 Jan

4640

21 Mar

Remaining interest in former 11.7% interest in italian gas storage, pipeline and distribution assets Gas Transmission and storage assets in france US Gas gathering and processing assets

Energy Transfer Equity LP ENI SPA

3750

8 May

3693

5 Apr

Total SA

EDF; Government of Singapore Investment. Corp Inergy Midstream. LP

3262

6 May

Crestwood Holdings LLC: Crestwood Midstream Partners LP RWE AG

2167

1 Apr

Gas transmission assets in the czech Republic

Allianz SE; Borealis Infrastructure

2051

Source: EY Global oil and gas transaction review

DOWNSTREAM
The downstream sector of the oil and gas industry involves the refining of the crude oil and/or raw natural gases obtained in the upstream sector as well as selling or distributing the products obtained. Many products are derived from the refining of crude oil and these may include diesel oil, liquefied petroleum gas (LPG), asphalt, petroleum coke, gasoline, fertilizers, antifreeze, plastics, rubbers, pesticides, synthetic rubber, jet fuel and many more.
DOWNSTREAM CHALLENGES

The downstream sector of the industry has broad scope and tentacles. These include crude supply, trading, refining, product distribution, marketing and retailing. Lots of products are involved here including conventional fuels such as gasoline and diesel and low carbon fuels such as bio diesel. Lots of challenges are faced in the downstream oil and gas sector. The operating capacity of the global refining industries is continually constrained and therefore there is need for expansion in their various phases. Crude oil produced today is becoming heavier and sourer and product specifications are tightened by increasing strict environmental legislation. This has led to the need for changes in the refining configuration of many oil players. The main challenges faced downstream sector is as follows; Business Joint Ventures Global Refining Capacity Distribution Activities for Oil Products Crude Supply Mechanism Manpower and Economy Refinery incapability and the Need for expansion Pricing The cost of Services by

The downstream sector of the industry is the sector that relates with the consumers. Facilities involved in this sector include petrochemical plants, oil refineries, natural gas distribution companies, retail outlets and so forth.

The main processes involved in the upstream and downstream oil and gas operation include the following: Exploration
Extraction

Marketing

Transporting

Refining

ANALYSIS OF WORLD OIL AND GAS

Political: Oil and gas are natural resources that are controlled by the State in most countries and therefore have political dimensions. Because resource ownership is vested in the state, the state provides the legislative, regulatory frame work and fiscal terms for which investors participate in the oil and gas industry. The international dimension of the politics of oil is reflected in the pressure that resource rich countries are subjected to by resource deficient countries in order to guarantee security of energy supply, moderation of price increases and competition for resource capture.

Political events such as the Arab Spring, Iran nuclear crisis and the Syrian civil war all contribute to geopolitical tensions and reflect the uncertainties in which the oil and gas industry operates under.

Economics: GDP growth is impacted directly by oil and gas prices and therefore there is a link between energy consumption and the strength or weakness of the global economy. Global oil demand as at 1st half of 2011, stood at 87.8mpbd while supply was 87.15mpbd but these figures are higher than 86.8mpbd and 86.4mpbd for 2010. However, they are lower than earlier projections because of slowing global economic recovery especially in developed countries. As economic growth slows in emerging economies of China and India, prospects for increased global oil demand are also dimming. When oil prices are low, demand especially in the transportation sector grows rapidly and at high prices demand destruction takes place. Due to the link between prices and demand, investment decisions are made based on long term view of prices. Most oil companies manage the volatility of oil price and governments must do likewise if they are natural resource dependent like Nigeria. In low price environments, incentives are used by governments to attract investors

Security: The third factor is security. Resource nationalism often creates a demand by some sub-national groups for resource control and more equitable distribution of natural resource proceeds. Due to the high natural resource economic rent, there is often a contest by the ruling elite resulting in agitation which can sometimes breed violence. The recent NigerDelta militancy is a typical example of this phenomenon which has been tackled by the implementation of the amnesty program. In many areas of the world, border disputes are often aggravated by the presence of natural resources. For example the Spratly islands in the South China Sea where various nations are laying claims to what is thought to contain significant natural resources. Nearer home the recently resolved Nigeria Equatorial Guinea border disputes and the Nigeria Cameroun (Bakassi) disputes are examples of how the control of natural resources can create security challenges among neighbors. Similarly, external interests often follow natural resource opportunities.

Environment: Oil and gas operations need to be properly carried out to minimize environmental footprints especially in sensitive coastal areas because hydrocarbons can be pollutants if improperly handled. The environmental impacts of improper handling of oil and gas activities are evident in illegal bunkering, artisan refining activities and land or water pollution. There are numerous sites in Nigeria where environmental degradation is quite acute. The recent UNDP report on Ogoni land for example has shown the devastation caused by such activities. The consequential environmental degradation from pipeline vandalism also requires significant investment in the future to remediate. The government of Nigeria is tackling such activities through enforcement and the Hydrocarbon Pollution Restoration Program (HYPREP)

NIGERIA OIL AND GAS

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NIGERIA OIL AND GAS

The Nigerian oil and gas industry is a highly regulated one. Key stakeholders comprise of Government and the marketers. While government is responsible for making policies, interacting with regulatory authorities for feedback on the impact of

its policies and creating and enabling investment in the sector, Marketers are
responsible for the importation and supply of petroleum products throughout the country or to contract for the supply of petroleum from local refineries in line with key prescribed regulations.

Nigeria has an abundance of natural resources, especially hydrocarbons. The petroleum industry in Nigeria is the largest industry and main generator of GDP in the country. It is the 10th largest oil producer in the world, the third largest in Africa and the most prolific oil producer in Sub-Saharan Africa. An OPEC member since 1972, Nigeria has proved reserves of oil at 36.22 billion barrels.

The Nigerian economy is largely dependent on its oil sector which accounts for 95% of its foreign exchange earnings. According to an Ernst and Young Report 2011 on oil and gas, at the end of 2010, African oil and natural gas reserves were estimated to be between 200 210 billion barrels of oil equivalent (boe), with the Oil & Gas Journal providing a slightly higher estimate than the US Department of Energy (DOE). Reserves are currently dominated by Nigeria, Algeria and Libya, which collectively account for more than 77% of the regions total proved reserves.

The Oil and Gas industry is divided into three major categories below:

The Oil and Gas industry is divided into three major categories below
The upstream oil industry is the single most important sector in the countrys economy, providing over 90% of its total exports. It produces 1.825 million bbl/day. Oil is produced from five of Nigerias seven sedimentary basins: the Niger Delta, Anambra, Benue Trough, Chad, and Benin. The Niger Delta, the Onshore and Shallow Offshore basins can be considered to be fairly well explored. Ventures here are low risk and the basins contain about 80% of producing wells drilled in Nigeria Nigeria has the worlds 8th largest proved natural gas reserves at 5.215 trillion cubic meters and is a very important supplier of LNG to European buyers exporting over 20.55 billion cubic meters. The country has currently produced over 32.82 billion cubic meters and consumed over 12.28 billion cubic meters. The Nigerian government estimates $15bn private investment is required by the end of the year 2010 to meet its development goals. The downstream industry in Nigeria is another key sector in the countrys economy. The country consumes over 286,000 bbl/day. The country has four oil refineries, eight oil companies and about 750 independent petroleum products marketers.

Insufficient capacity utilization of the refineries has resulted in shortages of refined product and the need to increase imports to meet domestic demand.

Upstream

Midstream

Downstream

GOVERNANCE AND THE NIGERIA OIL AND GAS INDUSTRY

The idea of the Petroleum Industry Bill popularly called the PIB began in 2007 following the recommendations of a Presidential Committee set up to carry out oil and gas sector reforms in Nigeria. The reforms were expected to form the nucleus of Nigerias aspiration to become one of the most industrialized nations in the world by the year 2020. For the country to realise this tall dream, it was envisaged that the major source of revenue to the Federation account, (the oil and gas sector) must be re-positioned for greater efficiency, openness, and competition built on corporate governance as obtained in other resource-rich nations. (NEITI and the PIB). The PIB is highly viewed to be the key to achieving a transparent regulatory framework and competitive fiscal rules of general application is being pushed vigorously by the ministry. In 2002, Tony Blair launched the Extractive Industries Transparency Initiative (EITI) at the Johannesburg summit on sustainable development. It involves governments, companies, investors and civil society organisations. The approach relies on the governments of host countries (where the extraction is taking place) to take the lead and to publish all revenues they receive from companies. Where these host governments are willing to act, the EITI can bring important progress. It will not work for countries where the government does not engage, even though it is likely that it is in these countries that reform is most needed. Much benefit can be derived from a transparent Oil and Gas industry with effective Governance. Extractive industries (oil, gas and mining) have generated enormous revenues for a number of countries. Revenue payments, when effectively spent, have the potential to bring about dramatic improvements in citizens lives. When spent on public investments in health and education services, they can help lift poor children out of poverty. Paradoxically, huge revenues from extractive industries have frequently fuelled corruption, exacerbated conflict and weakened economic development, resulting in damaging impacts on childrens lives. Effective use of revenues is strongly linked to accountability, which in turn requires transparency of information. Where a country is receiving payments for the rights to oil, gas and minerals, its citizens need to know about the types and volumes of these payments. This information can help to exert pressure on governments for better spending on key basic services such as health and education, for example, through Poverty Reduction Strategy processes. Commercial oil companies need to focus on the mid- to long term and deliver adequate shareholder returns, reduce marginal costs, sustain scale and pursue as much growth as they can; National oil companies must continue to manage long-term resource needs, maximise short-term income, make the right commercial and partnership choices-and persist with building infrastructure capacity in the near future; The oilfield service sector must work to absorb the new capacity expansion coming on stream, deal with falling client budgets and cope with the increasingly short-term focus of shareholders.

NIGERIA OIL AND GAS ISSUES IN THE NEWS

Jonathan silent on role in N155bn oil scandal, Punch Newspaper May 2012 - The Federal Government has refused to explain the role played by President Goodluck Jonathan and other government officials in a scandal allegedly involving government officials, Shell, ENI subsidiaries in Nigeria, a Nigerian oil firm and a former petroleum minister.
However, on Thursday, the civil society and opposition parties criticized governments silence, while also calling for a probe. A report by the United States-based anticorruption NGO, Global Witness, had said that Nigerian subsidiaries of both Shell and ENI agreed to pay $1.092bn to the Federal Government for oil block OPL 245. Nasir El-Rufai The Punch Newspaper Feb 2014 - The House of Representatives Ad hoc Committee on fuel subsidy found that the NNPC paid itself N847.94 billion even after it had been paid N844.94 billion by the Petroleum Products Pricing and Regulatory Agency in 2011, suggesting that the company had been making double withdrawals for years from the treasury. The NNPC was found not to be accountable to anybody, the committee said. Curiously, the government has not deemed it fit to make the NNPC halt its practice of selling 100 per cent of Nigerias crude through middlemen. It was found that it sells to these third parties at $9-10 less per barrel than the prevailing price, representing millions of dollars in losses to Nigerians each year. How about the scandals surrounding its concessionary allocation of 445,000 barrels per day and the crude oil swaps? Oil and gas has highest bribery rate By Guy Chazan July 2012 FT With most oil and gas produced in thirdworld countries, the industry is far more exposed to the risk of corruption than other kinds of business. To cite one example, Nigeria, Africas biggest oil producer, and a place where western oil majors such as Shell, Total and ENI have been operating for decades, comes 143 out of 182 in Transparency Internationals 2011 corruption perception index.

Saharareporters.com March 2014 Unsettled by questions swirling around the world about Nigerias missing crude oil earnings as well as the overall management of the Nigerian economy, Finance Minister Ngozi Okonjo-Iweala has launched a major public relations campaign to save her reputation from ruin. Several sources disclosed that the minister wants to insure her political survival while sending signals to the international financial community that she is angry with those behind the scandal in the oil sector, specifically Petroleum Minister Diezani Alison-Madueke.

In the last three months, Nigeria has been the focus of international attention. Reporters, financial analysts and investors have raised concerns about the unresolved controversy over the billions of dollars of crude oil sales that the Nigerian National Petroleum Corporation (NNPC) reportedly did not remit with the Central Bank of Nigeria. The 2013 Resource Governance Index (RGI) of the Revenue Watch Institute (RWI), which measures the quality of governance in the oil, gas and mining sector of 58 countries across the globe has placed Nigeria 40th in the overall global ranking.). The 58 countries that were accessed produced ca. 85 per cent of the world's petroleum, 90 per cent of diamonds and 80 per cent of copper. The extractive sector contributed a third of gross domestic product and half of total exports on average. Nigeria with oil revenues that totalled about $50.3 billion in 2011, ranked 40 out of 58 countries with relatively strong performance on its institutional and legal setting component contrasting with poor enabling environment (http://marineandpetroleum.com/content/nigeria-ranks-40th-quality-governanceoil-and-gas#sthash.luSXyncJ.dpuf) In conclusion the main issues can be summarised as follows: Substantial public access to information but incomplete revenue disclosure policies Nigerias minister of petroleum resources grants licenses for oil exploration, while the Department of Petroleum Resources (DPR), under the minister, oversees the licensing process and regulates the sector, yet some revenues in royalties, rents, license fees and bonus payments still bypass the treasury and are not reported to the legislature. Lack of contract transparency and incomplete reporting on most aspects of the petroleum industry. Government is yet to embrace openness and accountability in its operations Incomplete government monitoring, with substantial conflict-of-interest disclosure requirements, based on the practice where the Minister of Petroleum Resources still exercises wide discretionary powers in the award of oil licenses, with limited oversight of the process by the National Assembly.

KEY PLAYERS IN THE NIGERIA OIL & GAS SECTOR

Nigerian National Corporation Petroleum

Chevron Nigeria Limited

Type Industry Founded Ownership No of Employees Products Public Oil and Gas 1937 100% chevron 10,000 Crude Oil, Gas, petroleum products, petrochemicals, NA www.chevron.com

Type Industry Founded Headquarters Products

Public Oil and gas 1977 Abuja, Nigeria Crude Oil, Gas, petroleum products, petrochemicals,

Total Asset Website

Website www.nnpcgroup.com

CHEVRON IN THE NEWS Chevron Reports Fourth Quarter Net Income of $4.9 Billion and 2013 Earnings of $21.4 Billion Chevron, GE Form Technology Alliance Chevron Announces Quarterly Dividend (Jan. 29, 2014) Chevron Makes Final Investment Decision on Alder Field in the United Kingdom Chevron Issues Interim Update for Fourth Quarter 2013

NNPC IN THE NEWS NNPC refutes product importation stoppage NNPC moves to intensify domestic gas use AlisonMadueke urges oil and gas operators to comply with nuclear regulations Revenue shortfall: NNPC flays relentless attacks on major crude oil arteries FG kicks off second marginal fields bid round assures of transparency and accountability in bid process Alleged unremitted $20b revenue: NNPC says CBN governor wrong again

KEY PLAYERS IN THE NIGERIA OIL & GAS SECTOR

Mobil Producing Nigeria
Type Industry Founded Ownership No of Employees Products Total Asset Website NA www.exxonmobil.com.ng Public Oil and Gas 1955 100% Exxon Mobil NA

Shell Nigeria
Type Industry Founded Ownership No of Employees Products Total Asset Website NA www.shell.com Public Oil and Gas 1961 100% RD Shell 1800

MOBIL IN THE NEWS ExxonMobil affiliates in Nigeria communicate key messages and company activities via publications and news releases. Mobil Producing Nigeria partners with FRSC on Road Safety Awareness ExxonMobil, NBA, WNBA, and Africare Launch New Empowerment Initiative for Nigeria's Youth Esso enrolls six new Universities under University support Program EEPNL Awards 13 International Post Graduate Scholarships to Nigerian Students

SHELL IN THE NEWS Shell starts production from second Mars platform in deep water Gulf of Mexico Shell starts production from second Mars platform in deep water Gulf of Mexico New Shell CEO Ben van Beurden sets agenda for sharper performance and rigorous capital discipline Royal Dutch Shell plc fourth quarter and full year 2013 results announcement

Phillips Nigeria
Type Industry Founded Ownership Headquarters Products Public Oil and gas 1977 100% ConocoPhillips Abuja, Nigeria Crude Oil, Gas, petroleum products, petrochemicals,

Agip Nigeria
Type
Industry Founded Ownership No of Employees Products

Public
Oil and Gas 1962 100% ENI NA Crude Oil, Gas, petroleum products, petrochemicals,

NIGERIA OIL AND GAS: OPPORTUNITIES, CHALLENGES AND OUTLOOK

Over the next several decades, the oil and gas industry faces challenges as well as opportunities, as oil and gas will continue to remain two of the most important fuels propelling the global economy. The discovery of substantial deep-water oil resources in Nigeria and neighbouring Equatorial Guinea and huge prospects in the JointDevelopment Zone (JDZ) between Nigeria and the Democratic Republic of Sao Tome and Principe have tremendous opportunities but not without their attendant challenges. The countrys leaders and communities in the oil-producing areas have come to the common realization that the oil and gas industry must, in conjunction with Government, adopt new strategies to foster overall national development. An overriding aspect of this process will be the need for the oil and gas industry operators to be responsive to the economy and welfare of the oil communities in which they operate, and local contractors and suppliers in the services industry. According to an UNCTAD Oil Servicing report, the development of oil blocks located in deep water, marginal fields and the JDZ, offshore and onshore, has created opportunities for the development of local capabilities in deep water engineering and construction, and increase in indigenous participation in the E&P industry. Opportunities include capacity building for staff and personnel associated with projects through knowledge transfer and increase in technological and technical expertise, local business/capability development, and development of local and international partnerships; the promotion of Nigerian content in sub-contracts through use of goods available in Nigeria or services rendered by Nigerians; job creation for Nigerian professionals and skilled workers and indigenous staff recruitment; and training and education of Nigerians.

The oil and gas industry has lots of influences in the world today. Oil and gas have direct influence on every other commodity in the market. Therefore it is critical to identify risk and solutions through technological innovation to maintain global economic balance and need.
-Global Energy

NIGERIA OIL AND GAS: OPPORTUNITIES, CHALLENGES AND OUTLOOK

According to Ecobank research IOCs operating in Nigeria would have sold at least 300,000 bpd-worth of equity in onshore and shallow water producing assets in the Niger Delta region resulting in a monetary value of at least $5bn. Since 2010 the total number of blocks sold by IOC and NOCs is 22. It must be noted that despite the growth of Nigerias financial sector Nigerian banks still lack the financial base to make any meaningful impact on local content development. Even the leading Nigerian banks are small when it comes to energy financing. Most Nigerian banks operate in problematic environment, as most indigenous contractors lack effective business structures oftentimes operate as a one man company, with the MD running what could be a relatively large business like an entrepreneur (oftentimes rendering the business stale and not being able to take advantage of the opportunities presented to them). Others are not really in the business because more often than not the person who gets the contract is not the one looking for finance. Other obstacles include: a thin industrial base, lack of adequate power, water and other infrastructure, an underdeveloped capital market. According to the 2012 BGL study the argument of some industry stakeholders that over 70 percent of the contracts awarded to Nigerian companies are executed overseas, thereby defeating the primary objective of Nigerian content development which is to develop incountry capacity by executing contracts in Nigeria using Nigerian local resources.

It is believed that operational challenges are partially responsible for these divestments. Such divestments represent a major opportunity for local players to ascend into the league of major upstream players in Nigeria.
Local companies, today, own more than 100 oil blocks across the oil producing regions as well as 30 marginal ones. According to Ecobank this will most certainly double over the next few years. There is no single factor that can be attributed to the recent divestments, but we believe that a combination of several relevant trends such as, onshore operational and security threats, rationalising of IOCs local portfolios towards offshore opportunities, growing regional competition as well as global capital reallocation.

The delay in PIB is likely also a contributing factor. Such divestments have certainly lead to local financing opportunities. We note that Nigerias banks access to capital represents less than half of the US$2bn+ funding requirements for the next wave of divestments, in this way global and regional support will be required. (Ecobank research).

Furthermore the block winners in some cases were not able to make the initial signature bonus payment, let alone taking the field to production.

What is forward?

the

way

Outlook for investment

Despite recent discoveries in other West African countries as well as in East Africa, Nigeria will still remain the destination of most major investments on the continent as it is envisaged that based on the size of the countries reserves in both oil and natural gas, investments made in the country will yield higher returns in the mid to long term. This is further substantiated by the significant size of investments made by the IOCs over the years. Naturally a lot will certainly depend on the successful passing and subsequent implementation of the PIB. Pending new licensing rounds and the passing of the PIB, opportunities still exist for investments in assets owned by Independent companies that are in need of capital to finance exploration and production activities for marginal and shallow water oil blocks.

According to an article written by Jean Balouga in the International Association of Energy Economics Third Quarter review 2012 The high cost of funds is a factor that jeopardizes indigenous oil service companies ability to compete effectively with their counterparts from Europe and the United States, who are well endowed with capital. This untoward development has reduced Nigerian banks, not yet cut out for longterm projects and with a penchant for quick business and immediate returns, to mere cash centres. This has had a major negative impact on several projects in the Oil and Gas sector often ensuring failure as a result of the short term nature of funds being availed. He further goes on to assert that Policy makers in Nigerias oil and gas industry must seriously consider the idea of establishing a strong energy bank that would empower local contractors/investors. This would increase their level of participation and give them the necessary experience that would engender technology transfer. We are certainly in favour of this view as this would add depth to financial expertise within the sector. It is important to note that a number of marginal fields up for sale belonged to local players who till now were unable to access the necessary finance and technical expertise to explore their assets. Such was predicated by a number of factors such as volatility in the Niger Delta region as well as lack of transparency on the parts of the asset owners.

Also, Nigerias gas infrastructure development programme is expected to attract an investment of over N2.4tn ($16bn) within the next four years, in line with the three-point strategic focus of the Gas Master Plan (GMP). Therefore, opportunities for investments exist in the areas of financial services, gas transmission pipelines, pipe milling and fabrication yards, upstream gas development, LNG and LPG plants and gas processing facility/gas-based manufacturing industries

OIL AND GAS INDUSTRY ANALYSIS USING FIVE PORTER FORCES

Elements Threat of New Entrants Ranking Medium Comments The industry is highly regulated and highly fragmented. Some regulatory requirements have separated the major players from the fringe players. Operators can choose whether to be major players or to be sub-players. The threat of new entrant is therefore modest The major suppliers of petroleum products are NNPC and other foreign oil producing countries. Due to the sensitivity and the high importance of products, suppliers tend to influence the market to a great extent The industry is highly fragmented ,hence it would be of expected that buyers control the market. However due to high importance and sensitivity of the products, buyers tend to be on the receiving side, taking all the price hikes by the supplier although large industrial buyers are able to turn the bargain in their favor A lot has been done to find substitute for petroleum products but no significant success has been achieved in that direction. Liquefied Natural Gas, using oil from plant to power automobiles and the use of other methods to substitute the domestic use of petroleum products have not been commercially successful. Competition within the major and independent marketers is historical. There has forever been a fierce war to claim and re-claim market share. The independent marketing industry is highly fragmented and competitive. (has about 3800 players) Due to high importance of petroleum, it is clear that operators in the industry are in good and vibrant business. One can reasonably conclude that the industry is very attractive and should be ranked as high.

Bargaining power Suppliers

High

Bargaining Power Buyers

Medium

Threat of substitutes

Low

Competitive Rivalry within the Industry

High

Overall industry Attractiveness

Moderate

Aquitane Oil and Gas Research

REVIEW OF 2013 REPORTS

Deepwater fields attracted $48billion FDI in 20 years Between 1993 and 2013, Deep water fields foreign direct investment (FDI) of $48 billion from international oil companies (IOCs). According to the MD of SNEPCo, the investments came through deep water projects such as Abo (Agip), Erha (Mobil), Bonga(Shell), Usan(Total), Agbami(Chevron) and Akpo oil fields. It is stated that the IOCs would invest about $165bn in the oil and gas industry in the next five years which is twice the value of the NSE James Bay resources completed acquisition of Ogedeh Marginal Field Interest James Bay resources limited received ministerial approval for the assignment of a 47 per cent interest in Ogedeh marginal field to it BICTA energy.

The company intends to immediately re-enter the existing well on the block and begin commercial production

2013 witnessed a lot of activities in the oil and gas sector. There were new assets up for sale, new farm-ins, new
Chevron to sell its stakes in OMLS 83,85,52, 53 and 55 In June, 2013 Chevron put up 5 oil mining leases for sale(OML) as the international oil company exodus from the onshore area continues. The sale is being coordinated by BNP Paribas which was recently able to secure a staggering $ 1.8 billion for the ConocoPhillips assets. 20 companies were invited to bid for the assets Sale of more onshore assets by Shell Shell petroleum development company (SPDC) announced that it has begun a strategic review of the interests that it holds in selected offshore leases in the SPDC joint ventures . SPDC stated that it has been following a strategy of selective divestment of its onshore portfolio.

FDIs and discoveries.

Oil theft continued to wreck havoc with Shell having to defer

150,000 bpd after the damage of the trans Niger pipeline

2013 Review
Sale of documents to prospective buyers for four oil blocks Shell sent out documents to prospective buyers of four oil blocks and pipeline it put up for sale, as the Dutch giant continues its determined exit from the onshore and shallow water areas of the prolific Niger Delta. The oil blocks up for sale were Oil Mining Leases (OMLs) 18, 24, 25 and 29, which together produced 70,000 barrels of oil last year. Also up for sale is the Nembe Creek Trunk Line (NCTL), a vital oil pipeline, which has frequently been targeted by oil thieves. Cameron signed with EEPNL an agreement An agreement was signed with EEPNL an ExxonMobil affiliate, for the supply of subsea production systems to the Erha North Phase 2 development. The scope of supply includes five subsea production trees, two water injection trees, three manifolds, production and topside controls and associated equipment. Deliveries will commence in 2014

It is essential that any investor purchasing marginal and shallow water oil blocks in the Niger Delta area, immediately engage the local community (through their elders/leaders) to ensure smooth operations.

Most vandalism and oil theft is as a result of disenfranchised communities throughout the region. It is also essential to study the failures of CSR strategies employed in order to undertake more effective strategies.

Pem offshore limited contract with chevron

signed

Privatisation of Refineries The federal government plans to begin the privatisation of four of its state owned oil refineries before the end of the first quarter of next year. The refineries, which have a combined capacity of 445,000 bpd, should be privatised within 18 months. The refineries are 124,00bpd Warri Refinery, 60,000bpd Old Port Harcourt refinery, 150,000bpd new Port Harcourt refinery and 110,000bpd Kaduna refinery.

Pem offshore limited signed a US$1 million five-year contract (about N160 million), with Chevron Nigeria Limited, to train and promote human capacity development in the Nigerian maritime and petroleum sectors. The five year contract with Chevron is broken down into $200,000 (N32 million) annually, earmarked to train 40 Nigerians on scholarship who would be picked and pre-qualified by the oil major.

Petroleum stocks boosts NSE Market Capitalisation By N126Billion More blue chip companies witnessed price appreciation as equity trading at the nations bourse closed in an upward note on the 13th of November resulting to a further increase in market capitalization by N126b.

Ahead of the 2014 Budget: Approves $76.5 Oil Benchmark

Senate

The Senate on the 14th of November 2013 adopted the report of its committee on the Medium Term Expenditure Framework and Fiscal Strategy Paper for the implementation of the 2014 budget, which fixed the oil benchmark at $76.5 per barrel. The 2013 budget is being implemented based on $79 per barrel after an initial disagreement between the two arms of government on the appropriate figure. The senators argued that there was inadequate explanation on the need to increase the oil benchmark contrary to President Goodluck Jonathans proposed $74 per barrel. They also complained about unsatisfactory implementation of the 2013 budget and an alleged overspending on recurrent expenditure to the detriment of the capital projects.

Specifically, at close of transactions the previous day, market capitalisation of the listed equities appreciated by N126 billion or 1.04 per cent to N12.234 trillion from N12.108 trillion recorded earlier. Also the All/ Share Index ASI improved by 395.29 basis points to 38293.59 points from 37898.30 point.
An analysis of the transactions showed that Conoil Plc led gainers table, appreciating by N5.80 kobo to close at N62.55 per share while Forte Oil followed with a gain of N5.50 kobo to close at N115.64 per share.

Transcorp Plc To Production In 2014

embark

on

Oil

Analysts confirm Conoil Has Prospects For High Returns

Conoil Plc has been picked as a stock that would deliver high returns to investors by Analysts at Dynamic Portfolio Limited given the companys earnings and share pricing trend. The analysts based their projections on expected substantial growth in the companys full-year earnings for the period ending December 31, 2013 as well as its traditional dividend payment policy of reflecting improved earnings in dividend payout.

Transnational Corporation of Nigeria Plc, a conglomerate with interests in energy and hospitality has announced plans to produce its first oil in 2014. Transcorp stated that it would pump oil from OPL 281 in the Niger River delta by the end of 2014. Transcorp partners in the block are Sacoil Holdings Limited (Sacoil) to develop and Energy Equity Resources Limited.

Afren Plc soars On Higher Oil Estimate At Nigerian Ogo Field

House of Reps disclose NNPC Sold $20.9Bn Crude, Remitted Only $7Bn The House of Representatives on the 21st of November 2013, ordered another round of investigation into crude oil sales and remittances by the Nigerian National Petroleum Corporation with focus on the volume and value of crude oil sales and remittances from January 2013 to date. The investigation, which will last four weeks, is to be conducted by an ad-hoc committee of the House. The resolution of the House followed a motion moved by Mr. Haruna Manu, who raised the alarm that about $13.9bn crude oil revenue could not be accounted for by the NNPC.

Afren Plc (AFR) a U.K. energy explorer in Africa and Iraq rose to a two-year high in London trading after finding more oil off Nigeria than previously forecast.
Afren on the 20th November 2013 climbed as much as 13 percent to 168 pence, the highest intraday price since July 2011. The company more than tripled its estimate of recoverable oil at the Ogo prospect, drilled with Optimum Petroleum Development Ltd and Lekoil Ltd, to 774 million barrels from 202 million barrels. Nigeria, Africas biggest oil-producing nation, accounts for most of Afrens sales, providing it with cash to invest elsewhere including South Africa and Kurdistan. The discovery looks to be one of the most important made in West Africa in recent history.

N3.97Tn Worth Of Investment is being targeted by FG From Gas The Federal Government through its developed gas master plan is expecting about N3.97tn ($25bn) worth of investments through gas processing, transmission and downstream utilisation, the Director, Department of Petroleum Resources, Mr. George Osahon, has said. Osahon said the plan was aimed at strengthening the gas market towards meeting the governments aspirations of achieving the goals of Vision 2020, adding that such investments would transform the economy. He said, Opportunities for investment are available in pipeline construction system, gas gathering and processing. Also, Nigeria has the worlds 7th largest reserves of gas with a further potential for a further 600 trillion cubic feet in undiscovered reserve.

BPE Confirms Refineries In 2014

Privatisation

of

The Bureau of Public Enterprises (BPE) has said that the bureau would privatise the four refineries in the country in 2014 as part of the ongoing oil sector reforms. BPE also urged Nigerians not to be apprehensive about the refineries sale because only capable and visionary investors would be considered in the privatisation process. Unfortunately there appears now to be confusion as the President in a Statement made in January 2014, through The Special Adviser to the President on Media and Publicity, Dr. Reuben Abati in January The Presidency on Thursday said the Federal Government had no plan to sell any of the nations refineries contrary to the news making the rounds about the imminent sale of the facilities.

Chevron Increases Total Global Fund Investment To $60M Chevron Nigeria Limited, CNL disclosed that Chevron Corporation has committed an additional $5 million over two years to the Global Fund to Fight AIDS, Tuberculosis and Malaria to target the prevention of mother-to-child transmission of HIV, PMTCT, in Nigeria. This commitment raises Chevrons 8-year investment in the Global Fund to $60 million, making the company the single largest private sector partner to the organization.

Local Content Law has driven Investment worth $5Bn To Nigeria

The Executive Secretary, Nigerian Content Development and Monitoring Board, Mr. Ernest Nwapa has stated that the implementation of the Local Content Act by the Federal Government has attracted $5bn worth of investments into the economy and created about 38,000 jobs since 2009.
According to him, the implementation of the Act has ensured that most industry services are now executed in-country and not taken abroad as was the case in the first 50 years of oil exploration and production in Nigeria.

Nigerias Gas Industry Investment To Hit $25Bn The Gas Master Plan facilitated by the federal government which aims at harnessing the countrys huge gas resources and reduce significantly massive gas flare by oil exploration and production companies would attract monumental investment flow which would boost the economy by $25 Bn. It was further stated that the policy is designed to assure gas availability for the growing gas demands driven by rising gas prices, power sector reforms and investor confidence in Nigeria.

Oando To Complete $1.68Bn ConocoPhillips Acquisition by Jan 31 Oando Energy Resources, the Upstream subsidiary of Oando Plc listed on the Toronto Stock Exchange, will complete the $1.68bn acquisition of the Nigerian assets of ConocoPhillips by January 31, 2014. This acquisition, would be a transformational milestone, making Oando the largest indigenous exploration and production company in Nigeria with 50,000 barrels of oil equivalent per day in production, 236 million in 2P reserves and over 500 million in contingent resources.

NLNG Floats $1Bn Financing Scheme For

Contractors
In a bid to ensure that its registered contractors and vendors have access to bank loans at very competitive terms and rates, the Nigeria Liquefied Natural Gas Limited (NLNG) Limited has launched a $1billion local vendors financing scheme The company has also signed a Memorandum of Understanding (MoU) with five participating banks - Access Bank, First Bank of Nigeria, Standard Chartered Bank, United Bank for Africa and Zenith Bank to kick off the scheme. The financing scheme, which was a demonstration of the companys commitment to the Nigerian Content, was also in line with the companys vision of helping to build a better Nigeria.

Orion Oil, Ecobank Capital, Sign $500M Deal

Ecobank Capital, the investment banking arm of Ecobank Group, leading pan-African bank, has successfully raised, on behalf of Orion Oil Limited, the sum of $500m to be utilised for the prepayment of crude oil cargos to be supplied by Socit Nationale des Ptroles du Congo (The National Oil Company of the Republic of Congo). Orion is a privately held company whose principal activities include the physical trading of crude oil and refined products. The company focuses on the value chain of the oil & gas industry, supplying approximately 100,000 metric tons of refined products each month along the West African coast and holding interests in oil & gas fields in Congo

Lekoil To Raise $100M Through Share Placement Lekoil, an oil and gas exploration and development company with a focus on Nigeria and West Africa, has entered into a placing agreement with Mirabaud Securities and has conditionally raised, in aggregate, gross proceeds of approximately $100 million through the placing of, in aggregate, 113,282,000 new ordinary shares at a placing price of 55 pence per ordinary share with certain existing and new institutional and other investors via an accelerated book-build. The net proceeds of the placing are estimated to be $97 million and will be used to fund the completion of drilling and testing of the Ogo-1 and Ogo-1 ST, the future development of OML 113 offshore Nigeria, which contains the Aje Field. The funds will also go toward general corporate and working capital purposes, including the full repayment of the loan facility that the company has entered into with Afren Plc.

Total Downstream Investment In Nigeria Hits N150Bn In 3 Years The management of Total Nigeria Plc have estimated that its downstream investment in Nigeria between 2010 and 2013 is over N150 billion. MD, Total, Alex Vovk also disclosed at the Oil Trade and Logistic (OTL) Africa Downstream 2013 Expo in Lagos maintained that over the last three years, TNP as one of the major in the oil and gas industry in the country, made investment of more than $100 million to sustain its core business of importation, storage and distribution of petroleum products; fuels or specialties products such as lubricants and LPG through retail, industrial and aviation channels of sales; in the downstream sector.

An Indigenous Firm Discovers Oil In Niger Delta

New cross Petroleum Limited, an indigenous oil and gas company has discovered crude oil in the Niger Delta. The oil company made the discovery after drilling the Efe-1st well located in the Efe field of the Oil Prospecting Licence 283 block, which is in the northern Niger Delta Depobelt. Newcross, the operator of OPL 283 (formerly OML56) and its partner, Rayflosh Petroleum, under a Production Sharing Contract with the Nigerian National Petroleum Corporation (as the concessionaire), said it made the discovery with the support of the NNPC and the Department of Petroleum Resources.

Oil Revenue Drops By N189Bn

Revenue accruable to the Federal Government from crude oil exports dipped by N188.5 billion to N457.2 billion in August 2013, compared to N645.7 billion recorded in July. According to data obtained from the Central Bank of Nigeria, CBN, in its Economic Report for August 2013, the amount received by the government from crude oil in August, is the lowest since the beginning of 2013 and the lowest in a one-year period. Specifically, crude oil revenue in January 2013 stood at N591.4 billion, rising to N647.6 billion in February, before dropping to N595.3 billion in March. Thereafter, it was ups and downs, as the figures rose again in April to N613.4 billion; N641 billion in May, dropping again to N559.4 in June, rose again in July to N645.7 billion, before dropping its lowest to N457.2 billion in August. This contrasts sharply with earnings of N749.1 billion year-on-year to August 2012, the highest over a 12-month period.

OIL AND GAS FINANCE

Nigerian (Commercial

Banks banks) are

playing a major role in upstream. midstream and downstream oil and Gas financing unlike when the funding of Oil and Gas

projects was the exclusive

preserve of international finance institutions. These reports provides a summary and their Gas of the banks and major actively involved in the Oil financing key

transactions.

TOP BANKS IN OIL AND GAS FINANCE

Oil &Gas Financing Summary.
Established in 1894, literally the first bank in Nigeria. Has a large branch network. It is the country's largest bank by assets. As of June 2013, the bank had assets totalling approximately US$21.3 billion (NGN:3.336 trillion). The bank oil and gas financing portfolio is disclosed to be $3bn. According to the executive director corporate banking group of the bank, the bank has participated immensely in both upstream and downstream transactions in the industry. The total financing package represent 37.40 percent of the Bank's portfolio It is further stated that some of the banks oil and activities include vessel finance facility of $52m for the purchase of two jack-up barges to be leased to Mobil producing for the execution of a contract.

The bank's profit before tax, for the twelve months ending 31 December 2012 was approximately US$542.5 million (NGN:86.2 billion). At that time, the bank maintained a customer base in excess of 8.5 million individuals and businesses.
The bank has strong compliance with financial laws and maintains a strong rating from the Economic and Financial Crimes Commission of Nigeria

The bank also provided $15.15m term loan to finance the acquisition of two vessels to service a five-year charter party contract awarded by chevron Nigeria Limited to Fymax Marine and Oil Services Limited

Oil &Gas Financing Summary.

Skye bank has financed some prominent projects which include Pan Ocean oil corporations OvadeOgharele gas processing plant in the Niger Delta. A commercial bank based in Nigeria It is one of the twenty-six (26) commercial banks licensed by the Central Bank of Nigeria, the country's banking regulator. As of September 2010, the bank's total assets were valued in excess of NGN:1.07 trillion, with profit after approximately NGN 2.84 billion Pan ocean is the operator of the Oil Mining Lease (OML) 98 with 40 percent equity, while the Nigerian National Petroleum Corporation (NNPC) holds the remaining 60 percent. Skye bank provided funding for Pan Oceans 40 per cent equity under the joint venture with NNPC The banks loans exposure to the oil and gas sector for Q2, 2013 rose to $1 billion (Approximately 159 billion) of which out of the total $1 billion in loans, the upstream sector including the sole financing of four marginal fields and part financing of an additional four , used up $700 million downstream and $200 million while total loans to oil service companies amounted to $120 million

TOP BANKS IN OIL AND GAS FINANCE

Oil &Gas Financing Summary. Diamond bank is a large financial services provider in West Africa. Headquartered in Lagos, Nigeria's commercial capital, the bank maintains a banking subsidiary in Benin, Senegal, Cote d'Ivoire, Togo and The United Kingdom. As of December 2012, the bank's Over the years, the bank has committed over $1.0 total assets were valued in excess of billion to Oil and Gas deals and among its recent oil and Gas finance achievements include: US$7.3bn (NGN:1.7 trillion). As at June 2013, the bank operates 240 any bank branches in Nigeria, 20 branches in Benin -Actively participated in the SPDC divestments Republic, 2 branches in Senegal, 1 branch in - Financed the highest number of rig acquisitions in Togo and 3 branches in Cte dIvoire.
Nigeria
-Financed the highest number of marginal fields of Diamond bank was awarded the best oil and gas investment company in 2012 for Africa and the London based world finance magazine confirmed it position as one of the leading financial institutions in Nigeria with a positive bias for funding of Oil and Gas projects.

The bank got an award in 2012 as the Best Oil and Gas Investment Company in 2012 for Africa by London based world finance magazine. Its position has been confirmed as one of the leading financial institutions in Nigeria with a positive bias for funding oil and gas projects.

-Financed the first Nigerian wholly owned jack up barge of over 200ft. -One of the projects financed by the bank is orient petroleum Anambra River Production facility in Aguleri which was launched as the first ever production facility of Oil from an inland basin in Nigeria.

Fidelity Bank Plc began operations in 1988 as Fidelity Union Merchant Bank Limited. By 1990, it had distinguished itself as the fastest growing merchant bank in the country. It converted to a commercial bank in 1999, following the issuance of a commercial banking license by the Central Bank of Nigeria, the national banking regulator. That same year the bank rebranded to Fidelity Bank Plc. In 2011, the bank was ranked the 7th most capitalized bank in Nigeria, the 25th most capitalized bank on the African continent and the 567th most capitalized bank in the world. As of December 2013, Fidelity Bank Plc. was a large financial services provider in Nigeria with total assets estimated at over US$6.318 billion (NGN:1+ trillion), and shareholders' equity in excess of US$1 billion (NGN:158 billion).

Oil & Gas Financing Summary.

Fidelity Bank is one of the major financier in the Oil and Gas Industry. The bank alongside with other local and International banks and legal firms won the award for the $1.5bn syndicated financing for 2012 drilling programme of the Nigerian National Petroleum Corporation / Exxon Mobil joint venture through their special purpose vehicle, RDP Funding Limited. The bank also requested Citibank to lead-manage a planned 5-year Eurobond estimated $350M to fund Oil , Power and Infrastructure projects. In February 2013, the bank also launched a $100 million 2 year loan facility managed by Citibank, which analysts said tested the water for possible bigger issuance.

TOP BANKS IN OIL AND GAS FINANCE

Oil & Gas Financing Summary.
Access Bank is a large financial services provider, with an asset base in excess of US$12.6 billion (NGN:2.02 trillion), as of February 2012. The shareholders' equity in the bank is valued at approximately US$2.33 billion (NGN:373.5 billion). The bank received its license from the Central Bank of Nigeria in 1989, and listed on the Nigerian Stock Exchange in 1998. 2002: Access Bank was taken over by a core of new management lead by Aig and Herbert. 2005: Access Bank acquired Marina Bank and Capital Bank (the former Commercial Bank (Credit Lyonnais Nigeria)) by merger. 2007: Access Bank established a subsidiary in Banjul, The Gambia. This bank now has a head office and four branches, and the bank has pledged to open another four branches. 2008: Access Bank acquired 88% of the shares of Omni finance Bank, which was established in 1996. It also acquired 90% of Banque Prive du Congo, which South African investors had established in 2002. Access Bank acquired 75% of the shares of Bancor SA, in Rwanda. 2009: Finbank (Burundi) joined the Access Bank network 2011: Access Bank in talks with the Central Bank of Nigeria to acquire Intercontinental Bank Plc.

Access Bank is one of the leading banks in the country trading in ordinary shares and a three-year convertible bond listed on the Nigerian Stock Exchange and also an over the counter (OTC), Global Depository Receipts (GDR) traded on the London Stock Exchange which it exploits for financial major projects across the major segments of the economy.

The bank is rated as Nigeria's Corporate Bank lender plans to be the world most respected African Bank by 2018 but has set a mid-cycle goal post by 2015 of being a high performing Nigerian diversified banking leader.
Access bank has the capability to finance Oil and Gas projects being one of the Nigerias largest financial services provider with an asset base in excess of N2 trillion ($12.6 billion as at February 2012). The bank stated that it will participate in the financing of oil firms acquiring divested assets from Shell and Chevron using some of the financing of Oil firms acquiring divested assets from Shell and Chevron using some of the proceeds of its $350 million Eurobond sale.

Stanbic IBTC Bank is a leading provider of integrated financial services, pensions and wealth management products and services. It offers all its clients a wide range of personal & commercial banking products through over 180 branches spread across every state in Nigeria and our online banking platforms.

Oil &Gas Financing Summary

Stanbic IBTC and the standard Bank group has built a strong reputation as a responsible and professional financial service provider to the Nigerian Oil and Gas Industry. Stanbic IBTC Bank has successfully supported Nigerian and International Companies in providing trade, asset acquisition and field development financing across the upstream, midstream and downstream segments of the Oil and Gas industry. As a member of the Standard group, the bank can draw on its depth of experience from an international resources poor base in structuring and executing multifarious Oil and Gas transaction. The bank has led a number of significant transactions in the Oil and Gas industry and has been active in the transformation of the industry over the last couple of years with a bulk of the deals in the last 24 months.

It also offer self-service channels powered by sophisticated technology to bring convenient banking to customers. clients can also get custodial services through Stanbic Nominees Nigeria Limited, our custody arm and non-pension asset custodian, acting in a nominee capacity for clients transactions in securities and other investments.
Stanbic is a key player in financial inclusion and are poised to take banking to the doorsteps of our customers; taking care of the banking needs of different categories of persons and businesses.

TOP BANKS IN OIL AND GAS FINANCE

Zenith Bank Plc, a leader in financial services with headquarters in Nigeria and subsidiaries in the United Kingdom, Ghana, Sierra Leone, Gambia, and South Africa (Representative Office), offers premium solutions to its teeming customers. It is a bank growing its customers' businesses and wealth in the last 20 years and this has positioned Zenith Bank as the financial institution of choice. The bank business is built on its core principle of working in customers' best interest. Over the years, the Zenith brand has become synonymous with the deployment of state-of-the-art technologies in banking. Service standards is delivered in its business environment and the bank is in the business to always deliver exceptional services to all its expanding clientele. The bank has successfully been involved in various oil and gas financing transactions

UBA is a large financial services provider in Nigeria with subsidiaries in 20 subSaharan countries, with representative offices in France, the United Kingdom and the United States. It offers universal banking services to more than 7 million customers across 750 branches. Formed by the merger of the commercially focused UBA and the retail focused Standard Trust Bank in 2005, the Bank purports to have a clear ambition to be the dominant and leading financial services provider in Africa.[Listed on the Nigerian Stock Exchange in 1970, UBA claims to be rapidly evolving into a pan-African full service financial institution. The Group adopted the holding company model in July 2011.As of December 2011, the valuation of UBA Group's total assets was approximately US$12.3 billion (NGN:1.94 trillion), with shareholders' equity of about US$1.07 billion (NGN:170 billion).

TOP BANKS IN OIL AND GAS FINANCE

Standard Chartered re-entered Nigeria in 1999 and opened to customers on 15 September 1999 as a wholly owned subsidiary of Standard Chartered Bank Plc, headquartered in United Kingdom. It now has thirty six branches located in major cities across the country offering a wide range of products and services in both consumer and wholesale banking. It employs over 700 employees and sees Nigeria as a growth centre. The organic growth strategy of Standard Chartered Bank Nigeria (SCBN) is delivering substantial growth in profitability. Despite the challenges in the external environment, SCBN has consistently achieved stunning results due to best-in-class cost management and strong asset book management. SCBN is delivering on 'turbocharge' expansion strategies for both Consumer Bank (CB) and Wholesale Bank (WB) businesses over the next three to five years.

Heritage Banking is the latest entrant to the banking industry in Nigeria. The bank started operations fully on March 4, 2013 and presently operate from over eight experience centres. The bank intend to deal in the financing of downstream activities such as importation and local trading of petroleum products. Supported by world-class technology and leveraging on its skills and expertise, the bank intend to create niche for itself in the upstream, midstream and Oil-Services sub-sector of the industry.

The mainstay of its participation in the industry would include the financing of field development activities, construction of crude and gas pipelines, financing the acquisitions of vessels and barges for the IOCs and other indigenous companies . The bank also intend to assist in the acquisition of land and swamp rigs on behalf of its customers , finance EPC contracts and other contracts in the Oil Servicing space.

WHCPT OIL AND GAS FINANCING PROCESS

2
Commencement

3
Documentation

Marketing

Selection of Investors/Lenders

Negotiation

Transaction Close

COMMENCEMENT AND DOCUMENTATION

Phases

Commencement

Documentation

Investors teaser for Equity Raise

Appointment of

by Client
Lenders teaser for Debt Raise Information Memorandum

Forward list of documentation requirements to Client

Financial Model Valuation Report for Equity Raise Calculate Coverage Ratios for Debt Financing

Commence preparation of transaction documents:

Activities

Executive Summary should be answering the following questions

Marketing

What is the project? Where is it located? Why is the project viable? When is the project scheduled and when are funds needed? Where is the fund utilised?6 How much funding is needed, how much has been invested How much is available for the funding process?

MARKETING AND FINDING OF INVESTORS

Phases

Procedure

Conduct informal market sounding with foreign investors to gauge their appetite Executive summary should be sent to the foreign investor and at this point the investment banker may not disclose Client information Execution of Non Disclosure agreement by Whitehall Capital and Foreign Investors Forward Investors teaser or Lenders teasers as appropriate Receive non binding letter of interest from Foreign Investors showing their committed amount Forward Information Memorandum to the foreign investors Open Physical or Virtual data room for foreign investors to access documents from the client

Activities

SELECTION OF INVESTORS/LENDERS

Phases Phases

Selection of potential investors/lenders

Discuss list of interested investors with client

Activities

Agree final list of potential investors/lenders with Client Receive final commitment letter from investors/lender Due Diligence is carried out by foreign investor. Generally, the due diligence is focused on; Financial Business Technological

NEGOTIATION

Phases

Negotiating with Potential Investors

Activities

Coordinate negotiation with foreign investors Transfer of proceeds to dedicated account by the foreign Investors Execution of Facility agreement for lenders and Share Purchase Agreement for equity investment

TRANSACTION CLOSE

Phases

Transaction close

Activities

Transfer of proceeds to Client Transaction Close Post transaction report to client highlighting key hurdles during execution phase and the mitigant used.

INTRODUCING WHITEHALL CAPITAL PARTNERS

A Leading financial and project advisory company

WHCPT is a Financial and Project advisory services company involved in assisting companies fund mobilization efforts. It is founded by experienced principals with over 70 years work experience in finance, risk management and project development both locally and across the globe. We have evolved an array of advisory services in almost all sectors of the economy by foreseeing the changing needs of clients in a rapidly opening economy, over the years . We are known for professionalism and business ethics in providing a full range of Investment, Advisory and Financial Services under one umbrella.

Experienced Team

WHCPT people are the building blocks of its success. Our entrenched brand and ideals enable us attract talent from diverse backgrounds including bilingual (French) capabilities. We believe in intellectual capital which is our driving force in creating economic value WHCPT has a dedicated team of seasoned professionals with cumulative local and international experience of over 70 years and industry insight. WHCPT takes pride in its diligence and attention to detail in executing all mandates.

Global Reach

WHCPT aims to provide Credible, Professional, Customer Focused and Cutting Edge world-class advisory services. .

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OUR UNIQUENESS

Our Uniqueness

These enable us to:

Strong Track record

Deliver an integrated approach that draws on the experience and competence of the firm. Offer complete end-to-end finance solutions to clients at all levels. Deliver best-in-class deal structuring and implementation capabilities Deliver value creation for our clients. Develop an optimal execution road map that provides insights. Think innovatively, practically. but act and

MultiDisciplinary Approach

Global Reach/ Local Presence

Deep Industry Sector Expertise

Strong execution capabilities

Customer Focused

Deliver results above beyond expectations.

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WHY WHCPT

WHCPT Experience

WHCPT has acquired significant experience in financial and project advisory, Risk and Consulting, Real Estate, Equipment Procurement and Financing and other value added services In the local and international markets

Our team consists of first class, well trained finance/Accounting, Risk Management and Oil and Gas professionals, with global experience who have undertaken big ticket deals.
Our Strength

We have an exceptional transaction team with wide range of experience in various sectors Presence in Africa with access to local knowledge

Our Commitment

Our services are designed keeping in view the specific requirements of our clients. WHCPT is committed to bringing into the equation our extensive( team and corporate) experience in executing similar mandates

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KEY CONTACTS

FOR FURTHER FOLLOWING:

INFORMATION

PLEASE

CONTACT

THE

Michael Ogunbiyi mogunbiyi@whcpt.com

Chuks Megafu Cmegafu@whcpt.com

korede Ogunkoya kogunkoya@whcpt.com

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