A Concept Plan for Allocation of Methane ResourcesA Concept Plan for Allocation of Methane Resourcesfor Lake Kivufor Lake Kivu’’s Optimal Developments Optimal Development

••Principles of ConcessioningPrinciples of Concessioning••Allocating Geographic ZonesAllocating Geographic Zones

••Allocating GasAllocating Gas--bearing Resourcesbearing Resources

The Authority created to develop Lake Kivu must, through a procThe Authority created to develop Lake Kivu must, through a process of ess of concessioning, ensure that the available resource is allocated aconcessioning, ensure that the available resource is allocated and used in nd used in a way that ensures fair, safe, competitive and responsible devela way that ensures fair, safe, competitive and responsible development.opment.This process is the primary tool in governing the social contracThis process is the primary tool in governing the social contract between t between gas developers, their host countries and their riparian populatigas developers, their host countries and their riparian populations.ons.

•• Process must enable and encourage investment on Lake KivuProcess must enable and encourage investment on Lake Kivu•• Protect each countryProtect each country’’s economic and social interestss economic and social interests•• Provide for an appropriate spectrum of viable energy (power, gaProvide for an appropriate spectrum of viable energy (power, gas & fuel)s & fuel)•• Provide for costProvide for cost--effective energy supply to people, commerce & industryeffective energy supply to people, commerce & industry•• Maximise resource value delivered through its efficient utilisaMaximise resource value delivered through its efficient utilisationtion•• Enable longEnable long--term, sustainable resource useterm, sustainable resource use•• Provide a fair, secure & equitable allocation of resource to Provide a fair, secure & equitable allocation of resource to concessionairesconcessionaires•• Ensure that the resource is neither damaged, abused or destroyeEnsure that the resource is neither damaged, abused or destroyedd•• Ensure compliance by concessionaires to the Management PrescripEnsure compliance by concessionaires to the Management Prescriptionstions

Historically concessions have been applied for and granted on thHistorically concessions have been applied for and granted on the e basis of output, i.e. MW of Power. This form of allocation is subasis of output, i.e. MW of Power. This form of allocation is subject to bject to abuse through the use of lowabuse through the use of low--technology, inefficient gas extraction technology, inefficient gas extraction and power conversion equipment. and power conversion equipment. This approach can result in wastage of the resource and deliver This approach can result in wastage of the resource and deliver less less energy each year, and over the life of the resource, than is posenergy each year, and over the life of the resource, than is possible or sible or desirable. The total concessionable resource cannot be determinedesirable. The total concessionable resource cannot be determined.d.For this reason, the resource must be allocated and measured in For this reason, the resource must be allocated and measured in its its original form, as a volume of gasoriginal form, as a volume of gas--bearing water. Efficient use is thus bearing water. Efficient use is thus rewarded.rewarded.

••Geographic zones in a radial modelGeographic zones in a radial model••Centred on the deepest part of the lakeCentred on the deepest part of the lake••Allows each concessionaire access to all depth zones Allows each concessionaire access to all depth zones ••Spacing between plants will be specifiedSpacing between plants will be specified••Concession area will show the plant siting optionsConcession area will show the plant siting options

NASA Satellite Photos NASA Satellite Photos –– Lake KivuLake Kivu

DRCDRC RwandaRwanda

UgandaUganda

Goma GisenyiGoma Gisenyi

NASA Satellite Photos NASA Satellite Photos –– Lake KivuLake Kivu

Power Plant SitesPower Plant Sites

Goma GisenyiGoma Gisenyi

Gas Plant SitesGas Plant Sites

DRCDRC RwandaRwanda

UgandaUganda

Concessions Map(Conceptual only)� Rwanda

� A – Gisenyi� B – Cap Rubone� C – Rambo� D –� E – Kibuye

� DRC� A – Goma� B – Goma West� C – Kabuno� D – Ishungu� E – Kalehe� E1 – Idjwi (east)

•• Methane Resources are allocated as illustrated on a Methane Resources are allocated as illustrated on a ““piepie--chartchart”” modelmodel•• Quantum based on equally distributing each level of methane resQuantum based on equally distributing each level of methane resourceource•• ““piepie--sliceslice”” shows the total allocation of methane in each zoneshows the total allocation of methane in each zone•• Allocation based on a percentage of the countryAllocation based on a percentage of the country’’s share of the bilaterally s share of the bilaterally agreed maximum rate of extraction (see graphics)agreed maximum rate of extraction (see graphics)•• Power output from a concession is a function of the plant effiPower output from a concession is a function of the plant efficienciesciencies

Resource Depletion Models

Moderate Yield Case - Conservative High Yield Case – High Power Scenario

-

200

400

600

800

1 000

1 200

0 20 40 60 80 100

MWe

Years of Extraction

Power Output - Duration Options for Lake Kivu (Maximum Potential Case - Highest Efficiency)

40

45

50

55

60

70

Targeted Years of

Operation

Resource Depletion Models� Maximum Potential Case – High Recovery, Highest Power Efficiency

Resource Accumulation

Resource Allocations based on 50 yrs @640MW

Rwanda A, 20%

Rwanda B, 20%

Rwanda C, 20%

Rwanda D, 20%

Rwanda E, 20%DRC E,E1, 20%

DRC D, 20%

DRC C, 20%

DRC B, 20%

DRC A, 20%

Peak Power Potential (MW)

Peak Power Peak Power Potential (MW)Potential (MW)

km3 of CH4 in each concession by zonekmkm33 of CHof CH44 in each in each concession by zoneconcession by zone

Lake Zone AllocationLake Zone Lake Zone AllocationAllocation

Resource Distribution for 50 years @640MW

Rwandan or DRC 50 year Concessions

A B C D E Kivu Total

Distribution (for example) 20% 20% 20% 20% 20% 100%LRZ Resource (km3 CH4) 3.55 3.55 3.55 3.55 3.55 35,5URZ Resource (km3 CH4) 1.78 1.78 1.78 1.78 1.78 17.8PRZ Resource (km3 CH4) 1.34 1.34 1.34 1.34 1.34 13.4IZ Resource (km3 CH4) 1.60 1.60 1.60 1.60 1.60 16.0Total Resource (km3 CH4) 8.27 8.27 8.27 8.27 8.27 82.7Peak Power @40% eff.(MWe) 64 64 64 64 64 640Peak Power @60% eff.(MWe) 96 96 96 96 96 960Res. Zone Power only (MWe) 51 51 51 51 51 510

Guidelines for Concessioning� Geographic Allocation� Radial slices of lake’s surface

� mapped with origin at lake’s deepest point

� Concession areas to include shore access for power plant & facilities

� Geographic concession area independent of size of resource allocation

� All concessions can access every depth of lake with this “pie” layout

Guidelines for Concessioning� Resource Allocation� Resource “slices”, each of say 20% of available resource

� Concessions to be volumetric allocation of resource water from each of LRZ, URZ, PRZ and IZ (not as previously stated in MWe)

� Differentiated Gas Royalties rates may be determined for each of LRZ, URZ, PRZ and IZ to encourage maximum resource use

� Time limit on concessions to be set, at say 25 years, renewable for 25 yrs

Concessioning Issues� Process for concessioning: � Bidding is a common practice to distribute concessions

� Defaulting concession agreements need retraction & re-issue

� Funds raised must be allocated to infrastructure & capacity building

� Protection or reorganisation of any existing rights to be evaluated

� Bid documents to include MP’s to clarify requirements

� Trade-ability of successful concession bids to be controlled

� Number of bids allowed per bidder to be capped at 1 or 2

� Bid docs to request time-line of implementation

Concessioning Issues

� Infrastructure� GoR is to provide road and 110/220kV power-line access

� Power interconnection studies are required

� Milestones� Time bounds to be set for concession development

� Concession milestones to be proposed in bid documents

� Negotiations will finalise concession milestones

Concessioning Issues

� Financial� Tax and duty concessions & incentives to be provided in bid

documentation as applicable to local and foreign investors

� Guarantees required on removal of plant & pipeline at end-of-life to be specified.

� Clarity is required on repatriation of investments and profit for foreign investors

••The protection of Lake Kivu as a productive asset and ongoing reThe protection of Lake Kivu as a productive asset and ongoing resource for source for the people of the region is dependent on a proper concessioning the people of the region is dependent on a proper concessioning policy that policy that rewards responsible and efficient use.rewards responsible and efficient use.

••Without resourceWithout resource--based definition, the governments will never know how based definition, the governments will never know how much resource they can put out to concession.much resource they can put out to concession.

••High yield and high output ~960MW can be made possible from LakeHigh yield and high output ~960MW can be made possible from Lake KivuKivu

••Policy needs to be written accordinglyPolicy needs to be written accordingly

Rwanda A, 20%

Rwanda B, 20%

Rwanda C, 20%

Rwanda D, 20%

Rwanda E, 20%DRC E,E1, 20%

DRC D, 20%

DRC C, 20%

DRC B, 20%

DRC A, 20%