Oil and Gas Report

WHITEHALL CAPITAL PARTNERS

Oil and gas REPORT

Table of Content

o 2014 0utlook Page 5

o Facts about Nigeria Page 6

o Global Oil and Gas Overview Page 7

o Analysis of World Oil and Gas Page 14

o Nigeria Oil and Gas

o Governance and the Nigeria Oil and Gas Industry

o Nigeria Oil and Gas issues in the news

o Key Players in Oil and Gas Sector

o Opportunities in the Oil and Gas Sector

o 2013 Market Report

o Top Banks in Oil and Gas Finance

o Oil and Gas Financing Process

o Introducing Whitehall Capital Partners

Page 15

Page 17

Page 18

Page 20

Page 22

Page 26

Page 33

Page 39

Page 45

o Key Contacts Page 48

2

DISCLAIMER

3

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

Anchor Handling Tugs

BOD

Board of Directors

BRIC Brazil, Russia, India, and China.

DPR

Department of Petroleum Resources

EPC

Engineering , Procurement and

Construction

FPSO

Floating production storage and

offloading

FSIV

Fast Supply and Intervention

Vessel

GDP Gross Domestic Products

IOC

International oil company

MOU

Memorandum of understanding

OECD Organisation for Economic Co-

operation and Development

O&M

Operations and Maintenance

OPEC

Oil Producing and Exporting

Countries

PSV Platform Support Vessel

PIB

Petroleum Industry Bill

2014 OUTLOOK

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

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

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.

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 game-

changing 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.

1 2

3 4

OUTLOOK

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.

5

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.

6

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.

7

ABOUT LIBERIA

Nigeria

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.

Population (million inhabitants 167.7

Land area (1,000 sq km) 924

Population density (inhabitants

per sq km)

182

GDP per capita ($ 1535

GDP at market prices (billion $) 257.43

Value of exports (billion $) 142.52

Value of petroleum exports

(billion $)

94.64

Current account balance

(billion $)

23.41

Refinery capacity (1,000 b/d) 445

Output of petroleum products

(1,000 b/d

82.4

Natural gas exports (billion cu.

m.)

28.27

Exports of petroleum products

(1,000 b/d)

8.2

Crude oil exports (1,000 b/d) 2368

FACTS ABOUT NIGERIA

GLOBAL OIL AND GAS OVERVIEW

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.

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

sulphur content) as they are easier and

cheaper to refine.

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.

Global demand for energy continues to grow,

especially in developing countries such as

China and India, as the oil and gas industry

continues to search for new sources of

energy.

Increasingly, oil and gas are found in

challenging areas, such as deep water, arctic

regions and politically challenged regions of

the world.

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. Non-

OPEC 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

2012 1Q13 2Q13 3Q13 4Q13 2013 Growth % Americas 23.70 23.71 23.74 23.87 23.81 23.78 0.09 0.37 Europe 13.74 13.15 13.54 13.53 13.35 13.40 -0.34 -2.50

Asia Pacific 8.59 8.95 7.97 8.29 8.74 8.49 -0.10 -1.21 Total OECD 46.03 45.82 45.25 45.69 45.91 45.67 -0.36 -0.78

Other Asia 10.83 10.89 11.02 11.13 11.17 11.05 0.23 2.08 Latin America 6.26 6.21 6.47 6.70 6.59 6.49 0.23 3.69

Middle East 7.58 7.79 7.75 8.18 7.75 7.87 0.29 3.80 Africa 3.42 3.42 3.42 3.38 3.52 3.43 0.01 0.26

Total DCs 28.10 28.30 28.66 29.39 29.04 28.85 0.75 2.68

FSU 4.41 4.33 4.18 4.59 4.84 4.49 0.07 1.63 Other Europe 0.64 0.63 0.59 0.63 0.71 0.64 -0.01 -0.81

China 7.74 9.79 10.19 9.89 10.41 10.07 0.33 3.38 Total Other

regions 14.80 14.75 14.95 15.10 15.96 15.19 0.40 2.68

Total World 88.92 88.86 88.86 90.18 90.90 89.71 0.79 0.89

World Oil Demand in 2013, mb/d

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 ocean-

going vessel and inland barge

capabilities, a three-bay truck rack with

on-scale loading capabilities, an 11-

railcar 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

Nature of asset

Sellers Buyers

Value(US$M)

11 Jun US gas

transmission and

storage assets

Spectra Energy

Corporation

Spectra Energy

Partners LP

11124

26 Feb Global LNG assets Repsol SA Royal Dutch Shell 6700

10 Oct US natural gas and

gathering systems

PVR Partners LP Regency Energy

Partners LP

5497

21 Oct US Gathering and

processing assets

Devon Energy

Corporation

Crosstex Energy

LP

4700

30 Jan US Gathering and

processing assets

Copano Energy

LLC

Kinder Morgan

Energy Partners

LP

4640

21 Mar Remaining interest

in former

Energy Transfer

Equity LP

Energy Transfer

Partners LP

3750

8 May 11.7% interest in

italian gas storage,

pipeline and

distribution assets

ENI SPA Institutional

Investors

3693

5 Apr Gas Transmission

and storage assets

in france

Total SA EDF; Government

of Singapore

Investment. Corp

3262

6 May US Gas gathering

and processing

assets

Crestwood

Holdings LLC:

Crestwood

Midstream

Partners LP

Inergy

Midstream. LP

2167

1 Apr

Gas transmission

assets in the czech

Republic

RWE AG 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.

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:

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 by

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

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

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 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

Upstream

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.

Midstream

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.

Downstream

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

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.

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 anti-

corruption 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.

Oil and gas has highest bribery rate By

Guy Chazan July 2012 FT

With most oil and gas produced in third-

world 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.

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?

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.

NIGERIA OIL AND GAS ISSUES IN THE NEWS

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-governance-

oil-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 Petroleum

Corporation

Type Public

Industry Oil and gas

Founded 1977

Headquarters Abuja, Nigeria

Products Crude Oil, Gas,

petroleum products,

petrochemicals,

Website

www.nnpcgroup.com

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

Chevron Nigeria Limited

Type Public

Industry Oil and Gas

Founded 1937

Ownership 100% chevron

No of Employees 10,000


petroleum products,

petrochemicals,

Total Asset NA

Website www.chevron.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

KEY PLAYERS IN THE NIGERIA OIL & GAS SECTOR

Mobil Producing Nigeria Type Public


Founded 1955

Ownership 100% Exxon Mobil

No of Employees NA

Products

Total Asset NA

Website www.exxonmobil.com.ng

Shell Nigeria Type Public


Founded 1961

Ownership 100% RD Shell

No of Employees 1800

Products

Total Asset NA

Website www.shell.com

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

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

Agip Nigeria Type Public


Founded 1962

Ownership 100% ENI

No of Employees NA


petroleum products,

petrochemicals,

Phillips Nigeria

Type Public

Industry Oil and gas

Founded 1977

Ownership 100% ConocoPhillips

Headquarters Abuja, Nigeria


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 Joint-

Development 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

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 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).

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 in-

country capacity by executing contracts

in Nigeria using Nigerian local resources.

NIGERIA OIL AND GAS: OPPORTUNITIES, CHALLENGES AND OUTLOOK

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 long-

term 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.

Furthermore the block winners in some

cases were not able to make the initial

signature bonus payment, let alone taking

the field to production.

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.

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

Outlook for investment

What is the way

forward?

OIL AND GAS INDUSTRY ANALYSIS USING FIVE PORTER FORCES

Elements Ranking Comments

Threat of New

Entrants

Medium 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

Bargaining power

Suppliers

High 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

Bargaining Power

Buyers

Medium 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

Threat of substitutes Low 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.

Competitive Rivalry

within the Industry

High 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)

Overall industry

Attractiveness

Moderate 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.

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

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.

2013 witnessed a lot of

activities in the oil and

gas sector. There were

new assets up for sale,

new farm-ins, new

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 an agreement

with EEPNL

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

Pem offshore limited signed

contract with chevron

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.

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.

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.

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.

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.

Ahead of the 2014 Budget: Senate

Approves $76.5 Oil Benchmark

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.

Transcorp Plc To embark on Oil

Production In 2014

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.

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.

Afren Plc soars On Higher Oil Estimate

At Nigerian Ogo Field

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 Privatisation of

Refineries In 2014

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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 AND GAS FINANCE

Nigerian Banks

(Commercial 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 of the banks

actively involved in the Oil

and Gas financing and

their key major

transactions.

TOP BANKS IN OIL AND GAS FINANCE

Oil &Gas Financing Summary.

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 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

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'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

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


Skye bank has financed some prominent projects which include Pan Ocean oil corporations Ovade-Ogharele gas processing plant in the Niger Delta.

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



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.

Over the years, the bank has committed over $1.0 billion to Oil and Gas deals and among its recent oil

and Gas finance achievements include:

-Financed the highest number of marginal fields of

any bank

-Actively participated in the SPDC divestments

- Financed the highest number of rig acquisitions in

Nigeria

-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.

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

total assets were valued in excess of

US$7.3bn (NGN:1.7 trillion).

As at June 2013, the bank operates 240

branches in Nigeria, 20 branches in Benin

Republic, 2 branches in Senegal, 1 branch in

Togo and 3 branches in Cte dIvoire.

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.

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.


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.

Oil & Gas Financing Summary.

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.

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.

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.


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 sub-

Saharan 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).


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.

Commencement

Documentation

Marketing

Selection of Investors/Lenders

Negotiation

Transaction Close

WHCPT OIL AND GAS FINANCING PROCESS

1

2

3

4

5

6

COMMENCEMENT AND

DOCUMENTATION

Ph

ases

Act

ivit

ies

Commencement Documentation

Appointment of by Client

Forward list of documentation requirements to Client

Commence preparation of transaction documents:

Investors teaser for Equity Raise

Lenders teaser for Debt Raise

Information Memorandum

Financial Model

Valuation Report for Equity Raise

Calculate Coverage Ratios for Debt Financing

Marketing

Executive Summary should be answering the following questions What is the project? Where is it located? Why is the project viable? Whe

Documents

Oil and Gas Report