Boost Nigeria’s Economy via Gas Monetization and Oil Refining Dr. Soni O. Oyekan President Prafis Energy Solutions 4 th Intl. Petroleum Downstream Conference.

Boost Nigeria’s Economy via Gas Monetization and Oil Refining

Dr. Soni O. OyekanPresidentPrafis Energy Solutions

4th Intl. Petroleum Downstream ConferencePort Harcourt 2015University of Port HarcourtAugust 19/20, 2015

1

Address Outline

State of the Economy of Nigeria Sector Strategies PrioritizationProfitable Oil RefiningGas Monetization Summary

2

Huge Plusses of Nigerian Economy

• Africa’s largest economy – can rank 9th by 2050 37.3 billion barrels proved oil reserves, 13th

190 Tcf of gas, potential 600 Tcf, 7th

31 billions boe oil sands; 3 billions tons of coal

• 2.4 MMBPD of oil and liquids

• Banking, communications & entertainment growing

• Agric, services, industrial are GDP contributors

• 6th in the world in farm output

• 247 million population by 2030!

3

Major Challenges of the Economy• Weak infrastructure, industrial base, defense

• Oil & foreign revenues

• 22 % drop in foreign reserves

• $64B debt in 2015

• Oil losses of 400 MBPD

4

• Endemic corruption & impunity

• Massive environmental pollution

• Investors flight

Major Challenges of the Economy

• Federal character, population are burdens

• National threats, oil piracy

• Huge expensive governance

• PIB, insecurity

• Oil and gas investments

• Ineffective taxation system

5

CountryTax Rev(% GDP)

Nigeria 6.1

Tanzania 12.0

France 44.6

UK 39.0

USASweden

27.0 45.6

Thanks Super Eagles

6

• Can do attitude

• Significant contributions in Diaspora

• Lagos State & Eko Atlantic City

• National mindset change

Policy Costs Impacts – US Case

• US Private sector

• 17 MMBPD refining capacity

• Nigerian regulations and uncertainties

• Landscape insecurity and losses

• Global investments

• Inaction impacts GDP, jobs, revenues, etc.

7

Maintain Effective Defense• Strong deterrent forces - partner with military allies

• Oil piracy and insecurity

• Stable operating environment

• Business friendly policies

• Reduce cost of oil & gas business

• Strong and independent judiciary

• Bolster investors confidence

• Jobs creation & brighter future

8

Achieve 100 GW Electricity Power • Vision 2020 40 GW

• 1.3 GW of 5.5 GW in April 2015

• Gas supply, pricing & vandalism

• GenCos and DisCos

• Infrastructure reliability/security

• Solar, hydro, coal, wind, nuclear

• Petroleum, biomass

• Generation and distribution

• Economic development

• Jobs creation & higher standards of living

9

Oil Business Sector Strategies• Oil E&P and marketing business

• Oil trading patronage

• Oil blocks patronage

• Review, amend & assess PIB

• Increase transparency

• Oil thefts & vandalism

• Grow oil and gas revenues

• Efficient taxation system

10

0

50

100

150

200

250

300

350

Oil Reserves of Selected Countries, Billions Barrels

Ven Saudi Canada Iran Iraq UAE Nigeria USA

Attract Major Joint Partners • Fiscal & security incentives

• Joint partners equity in oil refineries

• Increase production of dry gas

• Associated gas flaring less than 25 Bcf per year

• Polluters clean up and fined per PIB

• Qtrly performance reviews

11

0

2

4

6

8

10

12

14

16

Category 1

Total Petroleum & Liquids, MMBPD

USA SA Rus China

Canada UAE Iraq Nigeria

A Simplified Refinery Flow Diagram

NHTCatalytic Reformer

Gas Recovery

SulfurPlant

FCCU

H/C

CokerUnit

GasolineBlending

DHTDistillate

Fuels

TamUnit

VacUnit

Coke

Asphalt

Diesel Fuels

Gasoline

Sulfur

LPG, C3=Hydrogen

CrudeOil

12

Strategies for Refined Products

• 85 to 95% UF global

• No TAR since 1992

• 305 MBPD demand vs 140 MBPD produced

• Toll refining to meet demand

• 500 MBPD Dangote refinery

• Rationalize current refining assets

• Joint venture refineries with oil production partners in Nigeria

Dec 2011 Refinery DataOniwon's Response

13

22% UF in 2013

Strategies for Refined Products

• Global refineries are efficient• Higher clean fuels• Asphalt, chemical feeds• Toll manufacturing during refinery outages, TARs, etc

• Global joint venture refining• Refined products export business

• Profitability, revenues• Economic development• Job creation and training

0

20

40

60

80

100

120

Crude PMS DPK AGO

Toll Mfg. Can Yield More Fuel

Nigeria Global

14

15

Block Drawing of a Typical Refinery

Effective Oil Refinery Management

• Multiple crude units

• Good design, construction and start up

• Reliable feedstock, chemicals and services

• Successful routine & TAR maintenances

• Optimal frequency for process units TARs

• Trained staff and excellent refinery monitoring

• Establish safety culture

• Strong central refining engineering support group

• Review key performance and economic indices (KPIs)

16

Nigeria 3rd in Gas Flaring

• Gas reserves of 190 Tcf, potential 600 Tcf• Net 5 Bcfg/d, • Nigeria flares ~500 Bcf/yr, 10% of global• Same as Russia and Iran • Saudi Arabia flared 131 Bcf in 2011• Environmental and health hazards• Revenue loss is $3.0 to $5.0B/y.!

17

Short Term Gas Strategies

• Gas for 50% power generation • Hydro, solar, coal, methanol, biofuels, nuclear• Export gas for foreign revenues• Grow petrochemical sector• Flare less than 50 Bcf/y.

18

Gas is Future Driver• Incentives for major investors

• Optimize gas export and petrochemical gas

• Low Capex for methanol and derivatives

• C2 and C3 feedstock for ethylene and propylene

• Natural gas liquids for PMS

• Plastics, paints, polymers,

• Pharmaceuticals, consumer products

• Economic development

• Jobs creation

• Increase in foreign reserves

19

Methanol Production Process• Natural gas, H/Cs, CO2, biomass

• Methane via SMR to syngas and methanol

Feed Pretreatment

Steam Reforming and Heat Recovery

Cooling and Compression

Methanol Distillation

Methanol Synthesis

Methanol Product

Methanol and Biofuels Industries

• High growth demand for methanol

• Methanol in PMS, 3 % in Europe

• Alcohol flex fuels vehicles (AFFVs)

• MTBE, DME, Marine fuels, MTO

• Methanol generators

• Palm and ground nuts as renewable feeds

• Biodiesel for diesel generators

• Biodiesel for diesel cars and trucks

• Expanded industrial base Jobs creation

• Reduce imports and increase foreign reservesv

21

GTL for Clean Fuels

22

GTL, Fischer Tropsch synthesis 33 MBPD EGTL Diesel, Kerosene, LPG, Naphtha

Qatar 33 MBPD Oryx GTL Plant

Summary• High priority electrical power, strong defense, debt

reduction and revenue growth

• Bolster investor confidence

• Revamp Nigeria’s oil E&P sector and protect the environment

• Meet energy demands and export refined products

• Balance gas export and power generation

• Grow petrochemical business on gas

• Establish energy, chemical and consumer products business sectors on gas

23

Acknowledgements

Prof. Godwin Igwe, Chair 4th Conference on Gas Utilization

Prof. Mabolaji E. Aluko, Sunday Musings Notes, June 7, 2015

Dr. Ngozi Okonjo-Iweala, Clarifying Nigeria’s Debt Position

US EIA Reports on Nigeria

24

25

Thank you for your time