TRANS-SAHARAN GAS PIPELINE PROJECT BRIEF PRESENTED TO EXPERT GROUP MEETING TO REVIEW STUDY ON RISKS IN FINANCING TRANSBOUNDARY INFRASTRUCTURE IN AFRICA (FIRST TOPICAL ISSUE ON REGIONAL INTEGRATION) 13 - 16 JULY 2018 - NAIROBI, KENYA

Aminu Diko DIRECTOR GENERAL INFRASTRUCTURE CONCESSION REGULATORY COMMISSION July 2017

Outline • • • • •

Background of TSGP Current Status of TSGP Challenges to TNGP Nigeria – Morocco Pipeline Project Next Steps

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Background of TSGP • MOU to jointly develop the TSGP project signed during the inaugural session of the bi-national commission between Nigeria and Algeria on 14 January 2002 • Niger republic was admitted as project co-sponsor in February, 2008 at Abuja • Inter-Governmental Agreement (IGA) between sponsor governments was executed in July 2009, at Abuja

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Background of TSGP • Ratification of the IGA by sponsor governments has been carried out by Niger and Algeria in 2009 • The resolution of SONATRACH’S (SH) participation in Nigeria's upstream activities is on hold • Review of unincorporated joint venture agreement (UJVA) is also on hold. • The TNGP section of the TSGP pipeline is ongoing.

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Background of TSGP Subsea

• The border between Algeria & Spain = 220km

Algeria • Gas Infrastructure pipeline route within Algeria = 2303km

Niger

• Nigerian border with Niger, which extends/continues to the Nigerien border with Algeria = 841km

Nigeria • Calabar-Kano-Nigerian border with Niger Republic = 1037km

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Background of TSGP Map view

Phases

 261 km x 20/36 inches pipeline from QIT-Ikot AbasiUkanafun-Obigbo-Ob/Ob

Early Gas Phase

 Artery to connect gas supply to feed the Ajaokuta-Kano line and the ELPS via OB3 pipeline  Delivers 590mmscf/d and adds about 2.2GW of Power  Completed early 2016  Cost estimate of $1,210Mn (including 1 compressor station)

 418 km x 36 inches pipeline from Obigbo-Umuahia Phase One

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Enugu-Ajaokuta; 683 km x 40 inches pipeline from Ajaokuta – Abuja – Kaduna – Kano Connects gas supply from SPDC/CNL’s Assa North development via the Eastern axis through AKK, further reinforcing supply to the East and to AKK Delivers 510mmscf/d and adds about 2.0GW of Power Completed by 2018 Cost estimate of $3,450Mn (including 2 compressor stations)

 174 km x 24 inches pipeline from QIT axis, traversing Calabar-Ikot-Ekpene-Umuahia

Phase Two

SOURCE: Concept Optimization Study, Final Results, ILF, June 2013

 Provides additional 1.22bcf/d of gas post 2020 from QIT terminal  Will add 4.9GW of Power  Cost estimate of $1,270m

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Current Status of TSGP • Development of the 1st Section of Phase 2: 683 km x 40 inches pipeline from Ajaokuta– Kaduna – Kano (AKK) is in progress • Preferred project development model - Build and Transfer option • The procurement of EPC contractors: – Advertisement for EPC contractors - July 2013; – Shortlist and technical evaluation of tenders - April 2016; – Physical verification of the capacity of tenders to deliver project - September/October 2016; – Commercial Bids Evaluation - December 2016;

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Current Status of TSGP • The project is awaiting the announcement by NNPC of winning tenders and commencement of negotiations for the Nigeria’s segment of the project • Financial close follows thereafter – Last quarter 2017 • Construction expected to commence within 6 months. • Development Phase 2 – 2nd Section: 418 km x 36 inches pipeline from Obigbo-UmuahiaEnugu-Ajaokuta will follow. 8

Current Status of TSGP AKK PROJECT FINANCING & GOVERNANCE STRUCTURE Project Cash-flows EPC Contract

Principal. + Interest Repayment

FGN/NNPC

Contract

Finance

EPC Contractor

Project Financier

Contract

Guarantee

Guarantee

AjoakutaKaduna-Kano Gas Transmission Pipeline Project (AKK)

SINOSURE/MIGA

Supervision 9

Challenges of TSGP • Ratification of the IGA by Nigeria • Participation of Algeria in Nigeria’s Petroleum Upstream Activities – Resolution on modalities for participation – Precondition by Algeria to Progress Further on the Project

• Execution Of The UJVA – Decision on Equity Participation to be taken by Parties – Agreement On Gas Marketing (Plan And Participants)

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Challenges of TSGP • Delay in commencing the Definitional Phase • Possibility of Traversing Hostile/Terroristinfested Terrain • Likely gas supply for project is deep off-shore which might increase CAPEX and cost of supply of gas. • Threat of a likely lower gas price 11

Nigeria-Morocco Pipeline • The West African Gas Pipeline (WAGP)project Links Nigeria with Ghana with all onshore and offshore pipelines and gas transfer facilities completed and commissioned in 2011. • Metering stations in Cotonou, Benin; Lome, Togo; and Tema and Takoradi in Ghana are completed • Nigeria and Morocco sovereign wealth funds will jointly develop the pipeline to run about 4,000 kilometers (2,500 miles) along the West African coast on a route yet to be finalized. • West African coastal countries include Benin, Togo, Ghana, Ivory Coast, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal and Mauritania. Note: From Telquel.ma website

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Nigerian Morocco Pipeline • Has the potential to: – Boost energy production across West Africa Improve access to energy across West Africa – Strengthen energy exports to Europe, linking Nigerian gas to the European energy market through Morocco. – Create industrial hubs to attract foreign investment – Encourage the emergence of enterprises to ginger socio-economic developments in the coastal countries 13

Nigerian Morocco Pipeline • Has the potential to: – Attractive to private investors because of the market size that are in dear need of natural gas to propel socio-economic activities. – Obviate the risk of traversing hostile and terrorist-invested terrain

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Nigerian Morocco Pipeline

Note: From www.questconnect.org

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Next Steps • • • • •

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Announcement of winning tenders Commencement of negotiations Financial close follows thereafter Mobilization to site and commencement Construction expected to commence within 6 months. Commence Development Phase 2 – 2nd Section: 418 km x 36 inches pipeline from ObigboUmuahia-Enugu-Ajaokuta. 16

Infrastructure Concession Regulatory Commission Plot 1270 Ayangba Street, Close to FCDA Headquarters, Area 11, Garki, Abuja – Federal Capital Territory. Phone: +234 94604900 E-mail: [email protected] Website: www.icrc.gov.ng

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