Role of the National Petroleum Investment Management Services (NAPIMS) in New Investment

1. Role of the National Petroleum Investment Management Services (NAPIMS) in New Investment Presented at “The Global Nigerian-Aberdeen, 2014 Forum”

2. Presentation Outline • Overview of NAPIMS’ Roles & Responsibilities • Nigeria’s Business & Socio-Economic Environment • NAPIMS Business outlook • Investment Opportunities • Challenges • Conclusion 2

3. OVERVIEW OF NAPIMS’ ROLES & RESPONSIBILITIES

4. NAPIMS VISION & MISSION To become World Class Portfolio Managers of Government investments in the Oil & Gas Upstream sector VISION To enhance the benefits accruing to the Federation from its investments in the Upstream Petroleum Industry through effective cost control & supervision of JV & PSC/SC operations as well as opening up new frontiers. Mission

5. NAPIMS Strategic Focus • Increase National Production Capacity • Increase National Reserves • Promote Nigerian Content Development • Promote Technological Transfer into Nigeria • Facilitate & promote harmony between Host Communities & Operators • Encourage Synergy in operations

6. Business Arrangements Authority Vested In 1 JOA Joint Ventures Operating Committee to provide orderly overall supervision, control and direction of all matters pertaining to the Joint Operations DEFINES PARTICIPANTS INTERESTS AND RESPONSIBILITIES 2 PSC Production Sharing Contracts SETS OUT OPERATING PROCEDURES Management Committee to provide orderly direction of all matters pertaining to petroleum operations & work programme SC 3 Service Contracts SETS OUT OPERATING PROCEDURES Ditto

7. Investing in Nigeria’s Hydro Carbon Industry – Setting the Stage • The fundamentals are right, at this moment • Stable Democratic Governance • Need for additional funding of JV activities to complement Government • Reform in the Petroleum sector, to make the sector more independent of Government • Increasing and Significant infrastructural investments • Projected high growth in economic indices between now and year 2020 • Rich portfolio of mega-projects cutting across the various value chains in the hydrocarbon industry 7

8. NAPIMS Medium Term Objectives Achieve and maintain reserves base of 33.7billion barrels by 2013 and 35.9billion barrels by 2017 (net) and 1TCF of gas reserves addition per year. Attain and sustain growth of oil producibility to 3.5 MMbopd in 2013 and 4.0 MMbopd by 2017 and production from 2.2 MMbopd in 2013 to 2.73 MMbopd in 2017. Champion the growth of monetization of hydrocarbon Gas from year 2012 7.3 Bcf/d production to 9.5 Bcf/d by 2017 and flare out by 2016. Maximise sector value especially in the area of domestic gas utilization, and improve transparency in transactions Achieve growth of Local Content Value of 30% in 2013 to 70% in 2017 in the provision of Materials, Services and Equipment to Nigerian Oil and Gas industry Carry out major reforms in the Petroleum Sector with a view to making the Government Agencies more Autonomous 8

9. Investing in Nigeria’s HC Industry – Investment Climate • Industry Open to Public Scrutiny • Established Due Process in Contracting • Transparency & Fairness in dealing with the investment community • Aggressive Development of Deepwater Frontiers • Gas Monetization – holds significant growth potential • Local Capacity Building 9

10. BUSINESS & SOCIO-ECONOMIC ENVIRONMENT

11. Investing in Nigeria’s HC Industry Business & Socio-Economic Environment Source: CIA World Factbook Source: World Bank 11 Source: World Bank Source: World Bank

12. Investing in Nigeria’s HC Industry – Vision 2020 12

13. NAPIMS MEDIUM TERM BUSINESS OUTLOOK

14. Investing in Nigeria’s HC Industry – Investment Opportunities 14

15. Driving Linkages With Other Sectors of Economy Industry Service Sectors Industry Focus Areas Banking Insurance Engineering Training, General practice Local banks Insurance, Fabrication Shipping Logistics Materials Manufacture Oilfield Services National Maritime , Trucking, Port Services Skills pool Spares, tools Heavy industry Steel pipes, Steel industry, Cement, paints Technology Transfer, Employment • leverage the transferability of the 3 primary oil industry focus areas of Engineering, Fabrication and Materials • to exploit the industry’s linkages to key service sectors such as Banking & Insurance, Shipping and Logistics etc. as basis for broad linkage with the economy at large. 15

16. Investing in Nigeria’s HC Industry – Upstream Investment Opportunities • Direct Acreage Operations – Participate in Bidding Round • Farm-In: Marginal fields and Operators requiring technology and funding • Opportunities to lift FGN equity crude • Any Refinery or End User • Internationally recognized Oil and Gas traders • Min. annual turnover > $100 million, Net worth $40 million plus • Evidence of investment in any other sector of the Nigerian economy 16

17. Investing in Nigeria’s HC Industry – Upstream Contracting Opportunities • Contracting Options • Seismic Data Acquisition ,Processing And Evaluation • Geotechnical Data Acquisition, Processing And Evaluation • Geological Data Acquisition And Evaluation: Wire Line, MWD, LWD, PWD • Front End Engineering And Conceptual Design • Drilling And Completion • Tubular – Threading, Fabrication, Supply, etc. • Logistics: Helicopter Services, Ground Transport, Support And Anchor Handling Vessels • Sub sea Well Heads and Equipments. • Shore Facility and Support Services • Capital Construction For Platforms, Hulls, Topsides, Buoys And Peripheral Facilities • Resource And Project Management • Environmental Protection Services 17

18. Investing in Nigeria’s HC Industry – Upstream Gas Opportunities • Implementation of New Pipelines • As JV partner in implementing new transmission and distribution pipelines • EPC Contracts for pipelines and facilities • Supply of line pipes, fittings, pressure reduction skids etc • Maintenance / Monitoring of Pipelines • SCADA systems • Intelligent pigging • Opportunity for Gas as CNG • Replacement of liquid fuel with CNG in the auto industry • Interim supply method for gas consumers • Involvement of third parties • Advanced personnel training 18

19. KEY INSTITUTIONS

20. Investing in Nigeria’s HC Industry – Key Institutions • Department of Petroleum Resources • Technical Regulator – Upstream & Downstream • Nigerian Investment Promotion Commission (NIPC) • Established to encourage, promote and coordinate investments in Nigeria • Nigerian Content Monitoring Board (NCDMB) • Increase Nigerian content in the Upstream Value Chain • Nigerian Petroleum Exchange (NipeX) – Division of NNPC • a single electronic platform to enable interactions between the Operating companies in Nigeria, their Suppliers and NNPC 20

21. Investing in Nigeria’s HC Industry – Key Institutions NipeX Focus : • Oriented for buyers (buyer-centric) Operator Supplier Supplier Operator Supplier Target Market • Oriented to satisfy the needs from the oil industry – initially upstream Operator BUY NipeX SUPPLY Supplier Supplier Operator Supplier Geographical Scope • Oriented to satisfy the needs from companies operating in Nigeria Operator Supplier Supplier Operator Supplier ... … It is a system that will provide a single electronic platform to enable interactions between the Operating companies in Nigeria, their Suppliers and NNPC 21

22. CHALLENGES

23. Investing in Nigeria’s HC Industry – Challenges • Petroleum Industry Reforms: Slow but will surely get there • Funding: Adequate funding to develop infrastructures which would stimulate growth in the domestic market – Roads, Electricity, Rail System, Gas Grid, etc • Contracting strategy and approvals: Overall contracting strategy to minimize number of contracts and speedy approval is a challenge but the issue is being tackled – NIPEX • There is need for sustainable development of oil and gas projects, and the need to create employment in the oil producing regions • There is need for Government to continue to work towards maintaining social, economic and security stability 23

24. CONCLUDING REMARKS

25. Investing in Nigeria’s HC Industry – Concluding Remarks • Enormous Opportunities For Upstream Investing. • Gas Monetization Key Focus Of Government • Gas Supply issues being addressed through the Gas Master Plan for the industry • Pricing issues being addressed through the Aggregate Pricing Framework • Government of Nigeria is encouraging local industries and companies to improve production capacities through gas utilization • Contracting strategy and approval issues being addressed through NIPEX / JQS • Establishment Of In-country Facilities Could Give Competitive Advantage – National Content Development. 25

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