THE DEPARTMENT OF PETROLEUM RESOURCES (DPR) - PowerPoint Presentation

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THE DEPARTMENT OF PETROLEUM RESOURCES (DPR)

February 17, 2020

OVERVIEW THE NIGERIAN GAS FLARE COMMERCIALISATION PROGRAMME (NGFCP)

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Outline

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Highlight of the Nigerian Gas Sector

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Nigerian Oil and Gas Regulatory Framework

Evolution of Gas Flaring

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Nigerian Gas Flare Commercialisation Programme (NGFCP)

Conclusions

The Department of Petroleum Resources (DPR)

Responsible for the administration of laws and regulations as well as implementation of policies on oil and gas issues in Nigeria

Saddled with the supervision and monitoring of all petroleum industry operations carried out under licenses and leases in the country

DPR

Optimize government take from the Hydrocarbon Resources

Enforce compliance with the Legal framework to ensure Efficiency, Transparency & Fairness

Administer & Manage All Industry data e.g. reserves, production & exports

Conservation of & Sustainable Development of the Nation’s Hydrocarbon Resources

Administer Standard HSE Practices in the O&G industry

Administer & Manage O&G Acreages & Concessions in Nigeria

To Be A Leading Regulator in the Oil and Gas Sector

To ensure the sustainable development of Nigeria’s Oil and Gas resources across the value chain for our stakeholders through effective regulation, while entrenching world class professionalism, accountability and transparency

Highlight of the Nigerian Gas Sector

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Regulatory & Governance Structure

Nigerian Gas Sector – A Dashboard

Flare

Flare Gas

Export Market

LNG/ WAGP

Text Here

Field/ Plant Use

Fuel, Gas Lift, Re-Injection

Domestic Market

Power, Industry Commercial

Gas Production

11%

17%

41%

31%

Gas Reserves

200.7

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199.0

9

198.74

TCF

BSCFD

8.32

8.06

7.43

2019

2017

2018

Key: Annual Performance

Data Source:

DPR Annual Gas Reserves, Production and Flare Report

Flare Sites are

spread across the Niger Delta - Onshore

and

Offshore

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Highlight of the Nigerian Gas Sector

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Flare Sites Spread for the Niger Delta

Next 25

Although we are recordin decline, the Scale of Gas Flaring is still worrisome

320 BCF OF GAS

FLARED

IN 201953 Million BOE$ Millions lost revenue

~22 Million Tons CO

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emissions

~3300 MW electricity generation

~$385 Million carbon credit value

2 -3 LNG trains

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BCF

Untapped Flare Potentials

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Evolution of Gas Flaring

Commencement of Crude Oil and AG Production

Production 5100 BOPD; 5 MMSCFD

Gas treated as nuisance by-product of Oil

1958

Petroleum Act

Petroleum (Drilling & Production) Regulations

Oil-centric legislations

1969

Associated Gas Re-Injection Act Enacted

Associated Gas Re-Injection Regulations,1985

1979

Fiscal Incentives for AG codified into law

Incentives on AG extended to NAG in 1999

NLNG commenced operations in 1999

1998

Nigerian Gas Master Plan

National Domestic Gas Supply and Pricing Policy and Regulations Introduced

2008

FLARE GAS

2018

A – ‘IN THE BEGIINNING’

PRODUCED GAS

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Act

Regulations

Guidelines

Nigerian Oil and Gas Regulatory Framework

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Legal and Regulatory Framework of NGFCP

Paragraph 35b of the First Schedule of the Petroleum Act, 1969

Flare Gas( Prevention of Waste and Pollution ) Regulations, 2018

1. Guidelines for Grant of Permit to Access Flare Gas

2. Guidelines for Flare Gas Measurement, Data Management & Reporting Obligations

3. Guidelines for Flare Payments

4. Guidelines for Producers’ Associated Gas Utilisation Project

Producers to submit AG utilization plan

Gas Utilisation Plan approval as part of FDP

Right of Govt to take AG at flare invoked

Third party access to Flare Gas introduced

Producers to re-inject AG where utilization scheme is not feasible

Introduction of Flare Payment

Nigerian Oil and Gas Regulatory Framework

Legal and Regulatory Framework of NGFCP (2)

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ZERO routine gas flaring in Nigeria by 2020

Ensure positive impact to communities in the Niger Delta

Elimination of flared gas is a win for all parties across Nigeria

Promote collaboration between private, public, and social sectors

Commercially viable investments with positive returns

Minimise Government action to streamline implementation

Targets

Guiding principles

National Gas Flare Commercialisation Programme

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Nigeria Gas Flare Commercialization Program - Key Milestones

March 2016

May 2016

October 2016

December 2016

2017 - 2018

October 2018

July 2019

July 2018

January 2020

January 2020

February 2020

February 2020

12Synopsis of the NGFCP

Eliminate Gas Flaring through market - driven transaction and commercial structures that enables Flare Gas to Market

Objective

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Present a market driven Solution that benefit Niger delta communities.

Structures that ensure Bankability for Investors and Lenders

Protect Upstream Operator and address Safety concerns

Key principles

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Attract credible third-party investors that will deploy proven technologies to capture Flare Gas-To-Market

Resources

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Designed to enhance the potential of Investors to raise equity and debt by providing limited protection

Structure

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NGFCP Implementation

Midstream Company under the NGFCP

Federal Government of Nigeria

Gas Sales Agreement

Flare Gas supply on an “as is where is” basis

Midstream Company will have to commit to a minimum Take-or-Pay (ToP)

Producer A

Deliver-or-Pay Agreement

Producer guarantees certain gas supply volumes.

Midstream Company pays Producer a Deliver or Pay Fee.

Producer pays Midstream Company a Deliver or Pay Payment in

event that it is unable to meet its obligations to supply an agreed quantity of Contracted Guaranteed Flare Gas

Producer A and / or another Producer(s)

“Make-Up”, “Top-Up” and/or “Extension” Gas AgreementEach Bidder may see whether he can negotiate “Make-Up”, “Top-Up” and/or a Gas “Extension” Agreement with the Producer that operates the corresponding Flare site and/or with other Producers

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Flare Gas De-risking Mechanism

- The Products

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6.

Data remains a critical component of the Programme and the NDR is positioned to continue to deliver on it’s mandate through robust Data Access Protocol.

The following tools shall be provided for the Program:

NDR ArcGIS Solution

Secure channel for bidders to access flare data online. Relevant data include flare sites, flare volume, profiles, associated infrastructure, geographic and socio-economic information etc

Programme Portal:

Critical tool for the implementation of the program milestones. The Portal is the platform for Information dissemination and bidders' transactions with NGFCP to entrench transparency and accountability.

Electronic Evaluation Tool (EET)

:

State-of-the-art tool designed and deployed for the SOQ and RFP evaluation, providing a transparent, efficient and credible evaluation tool for the NGFCP in line with global best practices.

Online Data Prying/ Leasing Platform

NGFCP Portal

Electronic Evaluation Tool

IT & Data Infrastructure - National Data Repository

Key Outcomes of the NGFCP

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Government, at the highest level, is committed to accelerated implementation of the NGFCP which would excite Investors and enhance your appetite in the ProgramThe DPR, working with Stakeholders, is committed to ensure successful implementation of the NGFCP and enforcement of extant Laws and Regulations to achieve flares-outThe DPR has employed mechanisms to guarantee the credibility of Flare Data to Investment-Grade.

Robust IT infrastructure has been deployed at the National Data Repository to manage the bid process and ensure hitch-free Access to Data by InvestorsWe invite you to submit credible proposals for creation of sustainable value from Gas flare, through viable commercial and technical channels.

Conclusions

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Thank

You