Africas place in the global hydrocarbons industry

Rolake Akinkugbe Head of Energy Research, Ecobank Group Oliver Kinross Africa Oil and Gas Summit, London January 28 2013

Presentation Outline
Global

fundamentals

Reserves, production & development in Africa Gas Whos investing? Risks, challenges and outlook

Section 1

Global Fundamentals

Global oil demand growth (1000 bpd)

Source: FT

Global crude oil demand and supply

Global oil demand and supply, 2002 - 2013(f), million barrels per day (mbpd)
92 90 88 86 84 82 80 78 76 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Demand Supply

China, the US and Europe account

for 46% of global demand Oil supply growth currently 50% of 2010 levels

Unconventional sources will account for high portion of supply growth in 2013

Demand growth in OECD has contracted

1600

Global oil demand growth (1000 bpd)

1400

1200
1000 800 600 400 200 0 Africa Latin America Asia Middle East Europe FSU North America

-200
-400

2010

2011

2012

Only emerging and frontier markets experienced positive oil demand growth in 2011 and 2012 But Global demand likely to grow 36% by 2035 Demand growth in the years ahead will be non-OECD China, other Asia and Middle East countries

The global supply picture

OPEC and Non-OPEC supply, million bpd, 04-11
Non-OPEC 53 52.5 52 51.5 51 50.5 50 49.5 49 2004 2005 2006 2007 Non-OPEC 2008 2009 OPEC 2010 2011 34.5 34 33.5 33 2012 OPEC

36.5
36 35.5 35

% Share of global oil production

12% 10%

Africa Asia Pacific

17%

Africa supplies around 10 million bpd of

Europe and Eurasia

South and Central America Middle East

crude oil, accounting for roughly 12% of global output in 2012 Oil reserves in Africa grew from 53.4 billion barrels in 1980 to 132.1 billion in 2011

30% 9%

22%

North America

Global oil prices

What global oil markets did in 2012 and what to expect in 2013

Oil prices ended 2012 with an

average of US$111/bbl

Global GDP growth of 3.6% in 2013 (IMF)

With global oil demand likely to remain slow in 2013, oil prices in particular are likely to remain just above the US$100/ bbl

African crude prices 2012 (US$/bbl)

Bonny Light Forcados Cabinda Cole

Sep-17 117.16 118.68 116.14 116.14

Dec-19 115 112.79 109.42 109.03

Global oil and gas CAPEX

Oil & Gas Capital Expenditure by Region, 2012 & 2013, US$ Billion

Global O&G Capex increase in 2013 by 15.5%

350 300 250 200 150 100 50 0 2012 2013

Angola and Ghana deep offshore oil and gas exploration in WA & GOG Mozambique and Tanzania lead East Africa in terms of the number of O&G discoveries in 2012

Asia-Pacific

Europe

The Middle East and Africa

North America

South and Central America

Section 2

Reserves, Production & Development in Africa

Oil reserves and production in Sub-Saharan Africa

Niger 20k Chad 115k Cote dIvoire 40k Ghana 110k Nigeria 2.4m South Sudan 150k*

Cameroon 70k
EG 280k Gabon 220k Congo-B 300k DRC 20k

Current Reserves: 152bn barrels 2013 production: 5.9million bpd

Angola 1.8m

Crude oil production in Sub-Saharan Africa

Nigeria % Share of current oil production by country Angola Equatorial Guinea Republic of the Congo Gabon

Crude oil production forecasts (000 bpd) Cameroon Chad Cote d'Ivoire DRC Equatorial Guinea

2013 70 115 40 20 280

1% 2% 2% 4% 6% 6% 42%

Ghana Chad

Gabon
Ghana Niger Republic of Congo South Sudan*

220
120 20 300 150

Cameroon

34%
Cote d'Ivoire Democratic Republic of the Congo (DRC)

Crude oil production, historic and forecast. million barrels (bbl), 2005 - 2014 3000 2500 2000 1500 1000 500 0 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f Angola Nigeria

New developments West Africa & the Gulf of Guinea

Nigeria - In 2013: ExxonMobils Ehran North Phase 2 Field, ENIs Oberan field - Lingering uncertainty over PIB Angola - BPs PVSM field to reach 150,000bpd in 2013 - Total capacity could rise above 1.9million bpd in 2013 Ghana - Jubilee reached 110,000bpd in 2013 - Could reach 120,000bpd Cote dIvoire - Discovery by Vanco n block CI-40 in December 2012 The rest of core West Africa - Small production increase in Chad, Niger, - No discoveries in 2012 - On-going exploration : Liberia, Sierra Leone etc

Could pre-salt plays be a big game changer

Source: Cobalt Energy, Incorporated, 2012

There is potential for pre-salt discoveries West Africas deep offshore region

On-going exploration in Angola, Congo and Gabon

New developments: East and Southern Africa

East & Southern Africa

Crude oil discoveries in Kenya by Tullow at the Ngaima-1 and Twiga-1 wells in the Northern Kenya in mid-2012.
Licensing round likely in 2013 in Kenya In 2012, Uganda passed oil law South Sudan could resume production, starting at 150,000bpd Namibia is southern Africas hotspot Watch Petrobras Nimrod prospect

Section 3

Gas

Natural Gas
More golden opportunity than golden age
Global LNG Prices Spot Prices, US Henry Hub/Japan, 2011 - 2012 US$/MMBTU
20 18 16 14 12 10 8 6 4 2 0

LNG Japan
US Henry Hub

Natural gas has bounced back from its 2009 decline Will grow by 60% in the next decade Production in Africa could reach 440bcm by 2035 (IEA)
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

Gas exports from Equatorial Guinea and Nigeria; Angola to start in 2013

Golden opportunity
Availability of low cost associated gas East Africa could also have an LNG cost advantage Opportunities for industry fertilizers, petrochemicals etc.

Developer Notore Chemicals Dangote Group Indorama Group Ferostaal Rashtriya Chemicals Wentworth Resources Olam & Tata group

Country Nigeria Nigeria Nigeria Cameroon Ghana Tanzania Gabon

Capacity (metric tonnes) 1500000 3500000 1000000 1000000 1000000 800,000 3500000

Cost (US$ million) 1000 2800 1800 n/a 1000 1500 3000

A major gas frontier at a time of declining nuclear use in the east

Gas Volumes Discovered in Mozambique and Tanzania & Potential Resources
Trillion cubic feet (tcf) Potential Resources No of 5 million metric tonne per annum (mmpta) trains supported

80 70 60 50 40 30 20 10
Discovered Resources

14 12 10

8
6 4 2

0
Area 1 Mozambique Area 4 Mozambique Blocks 1, 3 & 4 Tanzania Block 2 Tanzania Mozambique potential Tanzania potential

Source: WoodMackenzie, 2012

Over 100 trillion cubic feet (tcf) has been discovered to date in East Africa, and there is considerable upside remaining.

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Section 3

The competitive landscape: Independents, local players, and BRIC investors

The competitive landscape

Independents
Major discoveries in 2012 by E&P independents ENI has been an exception
% Deep Offshore West Africa, Major oil and gas discoveries Jan Sept 2012 Date 24-Sep-12 20-Sep-12 21-Aug-12 25-Jul-12 18-Jul-12 Discovery Caporolo-1 Sankofa East-1X R-5 (Fortuna East-1) R-4 (Tonel-1) Wawa-1 Paon-1X Kosrou-1 Country Angola Ghana Equatorial Guinea Equatorial Guinea Ghana Cote d'Ivoire Cote d'Ivoire Operator Maersk ENI SpA Ophir Energy Ophir Energy Tullow Oil Tullow Oil Anadarko

Indigenous Companies
-

7-Jun-12 19-Apr-12

Still few and far between with the exception of Nigeria Most are unlisted privates Shoreline Energy Southwest Energy (Ethiopia)

09-Feb-12 04-Jan-12

Cameia-1 Azul-1

Angola Angola

Cobalt International Maersk

Independents in the driving seat of frontier exploration

Presence in West Africa and the Gulf of Guinea (2011)
SENEGAL & GUINEA-BISSAU Ophir Tullow Premier Oil FAR Ltd

Tullow Oil and Gas Reserves by Region, MMBOE (2004 - 2010)

300 Europe Africa South Asia

GUINEA Hyperdynamics Dana Petroleum

250 200 150

SIERRA LEONE Anadarko Tullow

100

50
0 2004 2005 2006 2007 2008 2009 2010

LIBERIA Anadarko,Tullow, Mitsubishi Africa Petroleum

COTE DIVOIRE Afren Anadarko Vanco Energy

GHANA Anadarko, Hess Corp Tullow, Afren, Kosmos Vanco

CAMEROUN Noble Energy, Kosmos, Victoria Oil and Gas Bowleven,

GABON Maurel et Prom Sasol, Tullow, Vaalco

EQUATORIAL GUINEA Noble Energy, Tullow, Ophir, Vanco Energy

2 2

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Upstream competitive landscape in East Africa

Africa Oil Corp,Petrotrans,Tull ow, CNOOC Africa Oil Corp,Ophir, Asante Oil,Prime Resources
Ethiopia
Somalia

Tullow, CNOOC, Total, Dominion Petroleum, Tower Resources, Heritage

Uganda

Kenya

Tanzania

Tullow, Afren, Africa Oil Corp, Anadarko, Total,Lion Petroleum, Simba Resources,Vanoil,BG, Apache

Mozambique

Anadarko, Cove Energy, ENI, Galp

Afren, ExxonMobil (Madagascar, Seychelles)

Ophir, BG Group, Statoil, Exxon Mobil, Petrobras, Dominion, PanAfrican, Antrim, Statoil,Maurel and Prom,Beach etc

Asian markets for Africas gas

Thailand discussion LNG partnership with NNPC for gas infrastructure, NLNG Train 7, offtaker of OKLNG In the last 2 years, Asian countries have struck deals worth over US$20 billion for gas projects in SSA South Korea plans to export 1mn tonnes of LNG in the next 20 years as part of a $84bn - 5.64 mn tonnes 20-year LNG supply contract with Total and Shell

In 2011 China lends Ghana $3bn for oil and gas, $800mn will be for gas projects

SINOPEC investment in Cameroons PETCEN gas fields

Singapores Olam to spend $1.3bn on gas processing facilities in Gabon

Chinas PetroTrans acquired 4 Ethiopian gas fields in 2011 for $130mn

8 7 6

Forecast Natural Gas Consumption of key Asian Countries, Trillion Cubic Feet, 2012-2020

China lends Tanzania 1.5bn for gas processing facilities and gas fired power plant in 2011

5
4 3 2

KOGAS has a major stake in the 40 tcf Rovuma offshore 4 gas field in Mozambique

1 0
2012 2013 2014 Japan
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2015 China

2016

2017

2018 India

2019

2020

South Korea

South Korea signed trade agreement with Angola for LNG Z purchase

Section 4

Risks, challenges and outlook

Changes in global oil trade patterns

US imports of African hydrocarbons have dropped by nearly 1million bpd
Share of Africa s oil exports, 000 bpd
6000 9.5 9 4000 3000 2000 8.5 8 7.5 7 6.5

US crude oil production and net imports to 2013, million bpd

5000

1000
0 2007 Asia 2008 US 2009 Europe 2010 Other regions 2011

Production

Imports

General shift in exports of African oil and gas towards the east African crude oil is declining in importance to the US Replacement of high premium Africa crude oil grades with cheaper alternatives

Other pertinent challenges

Regulation

Infrastructure Transparency Creating local value Security Local content policies and implementation The social licence Partnerships Investing and saving for the future

Resource-rich models: Which way for Africa?

Global economic dynamics have altered the fundamental premise of the resource-curse debate Present vs. Future Consumption The Botswana-Malaysia examples Government accountability to an informed public

Section 3

Thank you & Questions Twitter: @EcobankResearch