annual report 2009

Gasol plcAnnual Report and Accounts 2009

bringing African gas to the worldThe Africa-focused gas independent...

Gasol plc is an Africa-focused gas independent listed on AIM (AIM:GAS).TheGroup’s primary focus is to develop projects to monetise stranded gas reservesin the Gulf of Guinea.This is to be achieved either by aggregation, liquefaction andshipment of gas as Liquefied Natural Gas (LNG) to high-value markets world-wide,or by alternative developments such as methanol, fertiliser or power generation.Wewill work closely with host governments and communities to supply the domesticmarket and align our business to local priorities.

Through a carefully considered programme of acquisitions, investments andstrategic alliances,Gasol aims to become the industry’s premier Africa-focusedgas independent, delivering value by commercialising stranded gas.

Gasol plc Annual Report and Accounts 2009

Gasol plc

Business Review01 Highlights 2007/0802 Identifying the opportunities04 Strategy06 Chairman’s Statement08 Chief Executive Officer’s Statement12 Financial Review14 Board of Directors16 Strategic Advisors

Corporate Governance17 Directors’ Report20 Corporate Governance Statement22 Report of the Remuneration Committee25 Statement of Directors’ Responsibilities26 Independent Auditors’ Report

Financial Statements27 Consolidated Income Statement28 Consolidated Statement of Changes in Equity29 Company Statement of Changes in Equity30 Consolidated Balance Sheet31 Company Balance Sheet32 Consolidated Cash Flow Statement33 Company Cash Flow Statement34 Notes to the Consolidated Financial Statements52 Notes to the Company Financial Statements

Shareholder Information60 Officers and Professional Partners

Highlights

01 Gasol plc Annual Report and Accounts 2009

� Completion of the acquisition of African LNGHoldings Ltdin June 2008

� Successfully obtained the rights to develop andmonetise theGroup’s first gas asset - the Zafiro gas project in EquatorialGuinea - following a joint venture agreement with SONAGAS,after the year end.

� Good progress in negotiations to access gas reserves in SouthEast Nigeria, including exclusive gas sale agreement negotiations.

� Successfully secured financing - £5 million in equity investmentin the period and a further £2 million sinceMarch 2009 as wellas a £10 million equity line of credit in June 2009.TheGroupcontinues to pursue sources of further funding required for boththe short and the longer term.

� Strengthened strategic alliance as the exclusive mid/downstreampartner of Afren Plc (“Afren”), who also increased their stake inthe Company to 21% (as at 28 September 2009).

� Co-operation with Electricite de France (“EdF”) to assess thefeasibility of developing, aggregating andmonetising gas assetsin the Gulf of Guinea for domestic and export purposes.

� Conducted successful initial feasibility study on bespokemidstreamliquefaction technology - Near Shore Production System(NSPS™) under the technical advice ofMustang Engineering.

� Board andmanagement team strengthened during the courseof the year including the appointment ofTheoOerlemans asnon-executive Chairman and JeanVermeire to the Advisory Board.

Business Review

Corporate Governance

Financial Statements

Identifying the opportunities –West Africa becoming a critical gas hub


Why gas? Why Africa? WhyGasol?

We believe that the global gas market willcontinue to provide value-enhancingopportunities over the long-term.

Natural gas is considered by many today as thefuel of the future.Years ago, when oil companiesdrilled for oil and found gas, their efforts weredeemed to be failures as gas consuming marketswere often at great geographical distances fromproduction and developing projects.The gas, iffound with oil, had to be re-injected or flared:standalone gas reserves were often left foranother day. As the“hunger” for gas grew inconsuming markets, LNG projects were evaluatedand, if viable, pursued. As oil prices rose andproduction costs fell, LNG became moreeconomically feasible. Consumers with long-termvision were willing to pay a premium to secureclean long-term energy supplies from diverseand reliable producers.

Until recently the growing demand for gas andthe decline in production in the main consumingregions, combined with technological advancesand commercial maturity made LNG an attractiveand economical option.The recent trend of lowerdemand and lower prices in the LNG industry,together with temporary oversupply, has flattenedthe sentiment in the short term. However, Gasol’sview is that in the longer term the fundamentalsof the LNG business remain robust.

Due to the decline of traditional reserves ofnatural gas in the US and in the North Sea, therelatively underdeveloped and gas prolificAfrican fields have become increasingly attractivefor monetisation, As large consumer nations seekto diversify secure sources of gas to avoidoverdependence on limited numbers ofproducers, African gas provides a viable, secureand strategic alternative source of supply.

The Gulf of Guinea region of Africa, with over 200trillion cubic feet (“Tcf”) of reserves is particularlywell-positioned to supply to US and Europeanconsumers and the rapidly-growing Far Easternmarkets. Nigeria alone is estimated to have 90%of these reserves.

In addition, a large number of un-contracted gasreserves in the Gulf of Guinea do not attract theinterest of larger national and international gascompanies because these reserves are normallytoo small on a stand-alone basis to launch aprofitable gas project. However, these reservescan be aggregated to larger economic sizes tounderpin LNG and other gas monetisationprojects.

There have been recent structural changes in thegas/LNG industry: the local gas owners and thenational governments seek more stake andinvolvement in the gas monetisation process foroptimum leverage from their gas ownership;equally, the downstream gas consumers and users(including utility companies, regasification terminalsand trading houses) have realised the need toinvest in the upstream and midstream projects inthe gas chain to secure long-term access to LNG.

As an independent player, Gasol is ideally placedto develop gas projects through:(a) its focus on gas aggregation in Africa(b) strategic alliances with upstream and

downstream players(c) alignment with host governments(d) use of innovative technology(e) our expertise. Our experienced Board and

management team have long-standingrelationships in the region and experiencedeveloping gas projects in Africa.

Gasol is focussed on delivering its first LNGproject by 2014-15, utilising small-scaleliquefaction technology, which is cost competitivewith lower project execution time. Gasol is alsoreviewing other gas commercialisation projects,including domestic projects, such as methanol,fertilizer and power generation in order tobalance its portfolio of project opportunities.

Gasol is focused on developing projects to aggregate andmonetise stranded gas in the Gulf of Guinea region ofWest Africa, primarily via Liquefied Natural Gas (LNG)by utilising innovative and cost effective technologiescapable of rapid deployment.Gasol seeks to create valueby developing projects in the gas chain and by exportingLNG from strandedWest African gas fields to markets inEurope, the Far East andNorth America, while alsodeveloping domestic gas projects to add value to hostnations in Africa.

03 Gasol plc Annual Report and Accounts 2009 Business Review



35bcf/dNigeria produced 35bcf of gas per day(equivalent to 31.5million tonnes of oil)in 2008,growing from 5.1bcf 10 years ago.It represents 1.1% of the world production.

14.5mtNigeria shipped 14.5million tonnes of LNGin 2008 (equivalent to 728 bcf), 71%went toEurope and 22% to Asia.

*BP Statistical Review

39%Africa has an estimated 517.5 tcf of provengas reserves representing 8% of the totalworld reserves; 39% of these reserves are inthe Gulf of Guinea.

185tcfNigeria has an estimated proven gas reserve of185tcf at the end of 2008*. It represents 2.8% of theworld reserves and 36% of the reserves in Africa.Nigeria is endowedwith the eight largest naturalgas reserves in the world, the largest in Africa.

Strategy –monetising stranded gas reserves


Upstream Pipelines

Securing access to low-cost stranded gasreserves with nomonetisation routeGasol seeks preferential access to gas throughpartnerships with upstream players such as Afren,with whom we have exclusive right of first refusalto purchase and market its natural gas.

Building pipelines to aggregate the gas to asingle pointGasol intends to develop gas gathering,transportation and processing facilities toaggregate sufficient gas from numerous smallsites to make monetisation viable.

Gasol’s strategy to identify and develop commerciallyattractive opportunities in the gas sector is based on fourkey elements.Gasol’s experienced and seasoned board andmanagement are working to access competitively pricedgas, choose a low cost, quick to market gas monetisationsolution and negotiate gas sale and purchase agreementswith upstream and downstream partners.

Upstream Pipelines


Midstream technology Shipping Markets

Liquefaction – building innovative, cost-effective plants to export LNGGasol is focused on assessing and developingopportunities for small-scale land-based andfloating plants, in collaboration with strategicpartners, as well as supplying gas to conventionalland-based LNG plants. Alternate technologies tomonetise gas are also under evaluation.

Ships – transporting LNG to worldmarketsGasol will explore opportunities to accessshipping capacities, either by investing or bystrategic alliances.

Selling to high-value export marketsGasol’s strategy is to develop long-term LNGsales contracts with key export markets, accessregasification capacity, and seek arbitrageopportunities. Gasol will also help developlocal gas markets, selling to local industry andpower stations.

Our four key differentiating factors

Business Review



Liquefaction plant Shipping Markets

1Gas aggregationmodel toaccess low-cost reservesFollowing the recentdisintermediation within theindustry,Gasol is working withpartners such as Afren to unlockthe value in smaller gas reservesby aggregating to achieveeconomic supply volumes.

2Rapid gasmonetisationtechnologyGasol is exploring innovativetechnologies designed toexploit smaller gas fields.TheNear Shore Production Solution(“NSPS”) under development aswell as floating LNG solutionscan facilitate commercialliquefaction at a lowerthreshold of proven gasreserves than current solutions.

3Endmarket and LNGofftake partnersLong-term access to the end-market is essential, and Gasol isestablishing partnerships withdownstream players, such asEdF and leading utilitycompanies,which aside frommarket access bring technicalskills and financial strength.

4ExperiencedmanagementGasol has brought togetheramanagement teamwithsubstantial experience ofthe gas sector and LNG inparticular.Between them theyhave worked for some of theindustry’s most successfulcompanies, such as Shell,BG Group,Nigeria LNG andEgyptian LNG.

Chairman’s Statement


Overview Future demand

Introduction:After my first year as Gasol’s Chairman, I feelpleased with the achievements of the Groupsince the Reverse Take Over (“RTO”) with AfricanLNG Holdings Limited. Despite deterioratingeconomic and market conditions, the Group hasmanaged to make progress in our main areasof activity.

The economic environment:The last 18 months have radically transformedthe way gas start-up companies can do business.From 2005 to 2008, financial institutions, naturalresources and utility players were eager to getinvolved in energy projects and more specificallyLNG ventures, but we are now experiencing asignificant business change: the short-term gassupply / demand balance has reversed, debtfinancing is less available for early-stagecompanies and private equity / venturecapitalists are more cautious in makingcommitments to early projects. However, eventhough the environment is more challenging,there is still a strong interest for well-managed,risk-mitigated, innovative companies.

The gas and LNG economics:The economic downturn has led to anunprecedented fall in global energy demand andour industry has therefore moved from beingshort in LNG a year ago to being ‘LNG long’ today.Gas prices have fallen substantially and arecurrently out of line with LNG construction costs.This means that it may be difficult for someproject developers to take investment decisionson new LNG capacity in the short-term.The likelyconsequence of this is that we could be staring ata new ‘LNG short’ situation post 2014 or 2015. Gasis a long-term business, and one thing we can besure of is that gas will continue to be the fuel ofchoice: projects must be developed to meet theincrease in future demand.The industry needs toseek creative solutions within current economicconstraints.We believe that small companies canoften lead the way.The longer-term need for gasin developed countries combined with thepotential of West Africa continues to support ourbusiness plan.

The longer-term need forgas in developed countriesand the potential ofWestAfrica to supply gas forexports and to develop localgas projects have openeddoors for small companiessuch as Gasol.


Niche player Economic and finance Outlook

West Africa potential:In West Africa there are many strandedun-contracted gas fields of below 0.1-2 Tcf.Approximately 10% of these fields have a gasvolume range of 0.5-2 Tcf.These fields can formthe right resource base for projects such asmethanol, fertilizer or power generation, or withsome aggregation, can be the ideal gas resourcesize for a small LNG project.This is where smallprojects and small companies can create value.

The reduction in oil and gas revenues has causedseveral countries to take a new, strategic andrealistic look at their resource sector.West-Africancountries such as Nigeria have set out a newframework under which companies who invest inthe country have to operate, with clear domesticgas obligations of up to 30% of the new gasproduced.This represents a positive scenario forcompanies such as Gasol who will be able todevelop gas reserves for LNG and other projects.Gasol supports such Government initiatives andwe are fully prepared to dedicate a portion of gasto the domestic sector and to develop ourprojects in line with the Government’s priorities.

Funding:In the present economic conditions, funding fora small, AIM-listed company such as Gasol is noteasy. However, thanks to the continuous effortsby management, and the support of our majorshareholders, in the last 13 months we have beenable to continue to secure sufficient funding forour ongoing needs to date; however, as discussedin the CEO statement, the Group requires furtherfunding both for the immediate short-term andthe medium to long-term.We have reduced ourongoing costs substantially to match the moredifficult availability of funds. For the short andmedium term future we are pursuing variouspotential sources of funding.We cannot at thisstage guarantee the success of these efforts asobtaining the required substantial level offunding for our projects will continue to bechallenging. However, we are reasonablyconfident that with the right structure of theseprojects, our efforts will eventually be successful.This is discussed in more detail in the CEOstatement.

Business Review



FLARE

FLARE

Gas flaring is the burning of unwanted gas or flammable gas.According to research,worldwide 168 billion cubic metres ofnatural gas is flared yearly.About 13 per cent of global flaringoriginates fromNigeria.Gas flaring not only wastes a valuableresource,but is also amajor cause of environmental pollution.Nigeria’s and Equatorial Guinea’s governments have beenamongst the first to aim to eliminate unnecessary gas flaring.

Gasol’s performance and outlook:Gasol managed to make progress despite havingto operate in such a difficult environment.We canbe particularly pleased with the progress inEquatorial Guinea and Nigeria.This is largely dueto the continuous efforts and dedication of ourmanagement and staff and the assistance wereceived from our advisors and board members.As a small company we are dependent on ourpartners and host governments to continue theirpositive cooperation and support. On this basis Iam confident that we can continue to implementour business plan.

TheoW.OerlemansChairman

Chief Executive Officer’s StatementBusiness Review


StrategyLNG industry

I am pleased to report that during the year Gasolprogressed in the development of the Group’slong-term growth opportunities. Our unique anddistinctive strategy has enabled us to secure ourfirst access to gas (announced after year end), todevelop an innovative, cost efficient midstreamtechnology concept and to establish strategicalliances and joint ventures with major players inthe gas chain and national gas companies.

Themacro environment:Despite a sharp downturn in the global economy,natural gas will remain one of the world’s mostimportant commodities, central to long-termenergy needs. For a growing number of countries,the importance of gas within the broader energymix is magnified further by security concerns andclimate change. Even though we may see adecline in energy needs in the short-term, there isclear evidence that the demand for energy willcontinue to grow in the long-run, particularlydriven by developing markets.Whilst the globalLNG market remains relatively immature,accounting for the delivery of around 7% of gasvolumes worldwide, it is expected to expandrapidly once the current flattening due to theprevalent economic conditions has passed.

Overview:Shareholders will by now be familiar with ourcore strategy: a focus on monetising strandedgas assets in the Gulf of Guinea, either byaggregation, liquefaction and shipment of LNGto high-value markets worldwide, or by domesticcommercialisation projects to supply methanol,fertiliser or power plants. It is a strategy thatGasol is particularly well-placed to deliver: wecombine a deep understanding and experienceof the global gas market and the operatingenvironment in Africa, and we have developedstrong relationships with partners along thevalue chain, technology providers, and nationalgas companies and host Governments.We intendto deliver small scale gas projects, which can bequicker and cost effective. Alignment with hostnations and communities is also a key priority. Insummary, our strategy is designed to delivervalue to our shareholders over the long-term byunlocking the strategic value of stranded gas.

2008-09 has been a central and strategic year forGasol.We have made progress on the fourcornerstones of our strategy:

• Access to low cost gas: successfully negotiated(signed and announced post year end) our firstright to gas in Equatorial Guinea and madeimportant progress in negotiations to procuregas in South East Nigeria

• Continued development of a cost-effectivetechnology concept: we have conducted initialsuccessful feasibility studies on the Near ShoreProduction Solution (NSPS) which can bedeployed in our projects to monetise strandedgas assets in Gulf of Guinea

• Creating partnership along the gas valuechain: we have strengthened and expandedour relationships with upstream, technologyand downstream companies

• Strengthening our Board and Managementteam: several key members have joined ourBoard and our management team

• Raise sufficient funding to meet our shortand longer term project and corporateexpense requirements

• Acquire gas assets in the Gulf of Guinea

• Start of the Front End Engineering Design andConceptual Engineering in our projects inNigeria and Equatorial Guinea

• Sign binding project development agreementswith partners

• Explore domestic gas monetisation projectswith shorter lead times

• June 2008: Reverse Takeover of African LNG

• September 2008:MOU signed with Electricity deFrance (EDF) to jointly develop LNG project

• February 2009: Initial successful feasibility studyon bespoke midstream liquefaction solution –Near Shore Production System (NSPS™)

• March 2009: Strengthening of exclusive alliancewith Afren plc

• April 2009:Gasol in direct joint venture withSONAGAS in Equatorial Guinea

• May 2009:Access to gas in Equatorial Guinea

• May 2009:£10million equity line of credit in place

• Well-defined strategy to monetise value instranded gas

• Progress in portfolio of opportunities

• Strengthened Board andManagement Team

• Progress in negotiations to procure gasin Nigeria

• Development of strategic alliances withplayers in the gas chain

• £7 million raised fromMarch 2008 to August2009: £5 million during the period and afurther £2 million post year end

2008-2009 highlights 2009-2010 key objectives

Our unique and distinctive strategy hasenabled us to secure our first access to gas,to develop an innovative, cost efficient technologysolution and to work closely with major upstream anddownstream partners as well as national gas companies.


Niche gas assets Technology

Access to gas:Whilst for a long time, gas was seen as a hurdle inthe process of extracting oil, gas is now extremelyvaluable. In West Africa, most of the gas has beenregarded as“stranded”as the fields are either toosmall or isolated to justify development on astand-alone basis or the fields are owned bysmaller local companies which lack technicaland/or financial resources to developmonetisation projects independently. By workingdirectly with upstream partners with access tothese proven gas resources such as Afren andSONAGAS, Gasol is well positioned to secureaccess to enough gas to develop a competitiveand quick to market LNG project.Variouscommercial structures are under consideration -Gasol can either directly acquire gas with one ofits upstream partners or enter into gas purchaseagreements while its upstream partner owns/farms into the gas asset.The gas fielddevelopment is planned to be undertaken byupstream partners or gas asset owners, withGasol negotiating access to gas at a competitiveprice at the well-head. Gasol’s strategic objectiveis to minimize exposure to exploration risk.

Rapid gasmonetisation solution:Gasol has been contemplating severalmonetisation solutions for its various projectopportunities: in particular smaller scaleliquefaction technologies that would make theaggregation of stranded and marginal gas fieldseconomically viable. Gasol has continued todevelop the concept of a barge based modularNear-Shore LNG Production System (NSPS) withtechnical advice from Mustang (a leading USbased engineering company).The NSPS utilisesexisting technologies in storage, liquefactionand transfer systems and achieves a highlycompetitive cost per tonne. By virtue of itssimplicity it can be delivered and madeoperational in a relatively short time framecompared to conventional liquefactiontechnologies: Gasol expects that the commissionand construction phase will be 3-4 years afterconclusion of the front end engineering designstudy. Deploying the NSPS provides potential fora high degree of local content using localmanpower, suppliers and service providers.Delivering local content is often a high prioritywith host nations in Africa. NSPS has the addedadvantage of being scalable from 1 milliontonnes to 6 million tonnes per annum, with theprovision for an integrated gas to power solution.The simple topside and storage design of theNSPS is ideal for the benign sea conditions ofWest Africa.

Business Review



Gasol is also exploring technologies (other thanLNG) to be applied for monetising stranded gas,considered too small or remote for LNGaggregation play.

The next step is to agree with our partners thetechnology deployment in our projects andproceed to the pre-front end engineering anddesign stage. Gasol’s objective is to adoptwhichever technology works best for eachproject, whether it be NSPS or floating LNG orother alternate solutions.

Being a project developer,Gasol providesmonetisationsolutions to gas assets ownersby developing projects whichprovide a route to domesticand export markets.

Chief Executive Officer’s StatementBusiness Review


TEAMGasol’s board andmanagement team are key insuccessfully executing Gasol’s business strategy.The company has brought together a teamwithsubstantial experience in the gas sector,particularlyin LNG in Africa.

StrongmanagementPartners

Strategic alliances:As a project developer, Gasol plays a crucialrole in the gas value chain: we are focusing ondeveloping projects to connect competitivelypriced gas from upstream owners to endcustomers served by downstream companiessuch as utilities, regasification terminals, tradingcompanies... or directly to local industry such aspower, methanol and fertilizer.

On the upstream, Gasol has identified severalopportunities to work in partnerships with gasasset owners. Gasol has a strategic alliance withAfren plc (the leading Africa-focused independentoil and gas company) to pool complementary skillsto develop gas assets for monetisation in Africa. Asthe exclusive mid-downstream partner of Afren,Gasol has the right of first refusal to gas supplyfrom Afren’s portfolio. In addition, Gasol has signeda joint venture agreement with SONAGAS todevelop gas monetisation projects in EquatorialGuinea after the year end. Gasol is also exploringfurther strategic tie-ups with upstream entities inareas outside the scope of its current alliances.

On the mid – downstream side, Gasol has enteredinto a cooperation agreement with Electricite deFrance to pursue opportunities in the Gulf ofGuinea. Gasol is also in negotiations with severalother strategic partners and LNG off-takers todevelop additional opportunities in the portfolio.

Experienced and focused:Gasol’s board and management teams are keyin making Gasol’s business strategy a success.The company has brought together a team withsubstantial experience of the gas sector and inparticular in LNG.There were a number ofchanges to the Board and the management teamthrough 2008. Following his appointment asPetroleum Minister of Nigeria, Dr Lukman steppeddown as strategic advisor to Gasol in December2008. Charles Osezua stepped down in June 2009to take over as the Chairman of the steeringcommittee of the Equatorial Guinea project.Rachel English resigned late 2008 to pursue otherprofessional opportunities.They leave with ourthanks and best wishes for the future. Pursuant tothe reverse takeover of African LNG in June 2008,Theo Oerlemans joined as the Non – executiveChairman and Bert Cooper as strategic advisor tothe Board.We are also pleased to welcome JeanVermeire who joined as a special advisor inDecember 2008. Mr Vermeire is currently theNon-Executive Chairman of Distrigas, a leadingBelgium-based natural gas company; previouslyJean worked in senior management assignmentsover 17 years with Chevron.

During the year under review,the managementteam has been reinforced by senior,talented andexperienced people,mostly from leading energycompanies and consultancies.


We are actively developingkey relationships andalliances with companiesalong the value chain inorder to progress ourbusiness developmentactivities.

Business Review



Project opportunities

Our portfolio:Gasol is currently working on projectopportunities in four countries (Nigeria,Equatorial Guinea, Ghana and, Ivory Coast). Ofthese, SENCO (South East Nigeria Project) andEquatorial Guinea projects are relativelyadvanced (though still early stage), with Ghanaand Ivory Coast being in the earlier opportunityscreening stage. Other gas monetisationopportunities in Cameroon, Gabon and CongoBrazzaville are under consideration.

SENCO is developing an integrated LNG anddomestic gas supply project with the objective ofmonetising gas from identified core gas fields inSouth East Nigeria. Currently negotiations areongoing with the multiple gas asset owners; onceprocured and developed by upstream partners,gas produced from these fields is planned to beaggregated and processed, before distribution toboth a near shore liquefaction facility (for LNGexport) and large-scale domestic gas consumers.The core gas fields have 2P reserves totalingapproximately 2.5Tcf, with potential to tie- innearby fields to increase gas supply to 3.5 tcf.As per current project plans, the base caseliquefaction project is likely to have a capacityof 2 million tons of LNG per annum, with acompetitive project cost and timeline due to theapplication of small scale- near shore liquefactionfacilities. Gasol’s share in this project is undernegotiation with equity partners to develop thisproject; negotiations are also ongoing withupstream partners and potential LNG off-takers.The project is expected to meet the variouscriteria set out in the Gas Master Plan announcedby the Nigerian Government, includingobligations to allocate part of the supply todomestic industry. One of the key objectives forGasol and our partners is to secure the necessaryfinancing to continue progress with this projectuntil the final investment decision.

11 Gasol plc Annual Report and Accounts 2009 Business Review



In April 2009, African Gas DevelopmentCorporation (Afgas) assigned its 50% share inSONAF, a joint venture with SONAGAS G.E., toGasol.The company is now a direct equity holderin the joint venture, which has been establishedto develop gas commercialization projects andassociated infrastructure in Equatorial Guinea,primarily to combat and monetise flared gaswith particular emphasis on Block B in the ZafiroDevelopment Area (“ZDA”). SONAF aims tocapture and commercialise gas currently beingflared in the ZDA. In June, the companyannounced rights to first associated gas fromZDA, estimated at 500- 750 bcf as per WoodMackenzie. Currently a study is being conductedto establish an accurate estimate of the gasreserves.Various project options are underevaluation, including stripping out liquids fromthe wet gas to generate additional revenuestreams. In the coming months, the joint venturewill be focusing on negotiations with gassuppliers, off-takers, infrastructure providersand technology partners with the objective toachieve an economically viable project, whichshould generate revenue from LiquifiedPetroleum Gas (LPG), LNG and Natural GasLiquid (NGL).

Chief Executive Officer’s StatementFinancial Review


Investing for the future

In order to advance our portfolio of opportunitiesover the last 13 months, we have committedfunds mainly to business development activities.Cash expenditures from operating activitiesamounted to £4.4 million (£0.5 million in 2008).The increase represents additional investments intechnology and project development,progressing the joint venture with SONAGASand, SENCO. Also, Gasol’s team has grown withimportant additions in the business developmentteam. During the year, there has also beenexpenditure on completing the reverse takeoverand integration of African LNG. Gasol willcontinue to carefully manage its costs andcash expenditure.

Financial results

The financial statements for this year reflecttwo major elements. First of all, Gasol changedits reporting year end from 28th February to31st March 2009.The financial statements aretherefore prepared for the 13 months to 31 March2009. Secondly, the financial statements reflectthe“Reverse Acquisition”accounting rulesfollowing the exercise of the 80% option toacquire African LNG in June 2008.Taking intoconsideration these elements, the Grouprecorded a loss for the 13 months to 31st March2009 of £5.05 million (2008: £0.43 million loss)or a loss per share of 0.67 p (2008: 0.09p loss).The Group had cash balances of £0.8 million(2008: £0.1 million) and no debt at 31 March 2009.Since 31 March 2009, Gasol has raised additional£2 million equity in May and August 2009.

Due to slower than anticipated progress in adifficult external environment and uncertaintiesin valuation given the early stage ofdevelopment of African LNG, Afgas Nigeria andAfgas Infrastructure Limited, provisions havebeen made against the carrying value of Gasol’sinvestment in these companies, amounting to£32.2 million for African LNG and £0.4 million forAfgas Nigeria and Afgas Infrastructure Limited.These charges affect the company accounts ofGasol only and do not impact the consolidatedresult and position of the Group.

At the heart of Gasol’sbusiness is our ability toattract partners of thehighest calibre, whetherthey be indigenouspartners, national energycompanies or majorutilities.

Whilst the economic environment and the energy/LNGsector have been challenging over the last year and theshort-term gas economics are relatively weak, the longerterm gas fundamentals are robust andGasol expects toshow further progress in the coming year.


Financing Outlook and Challenges

During February 2008 to March 2009, we haveraised £5 million equity (£4 million in May 2008and £1 million in February 2009). Since March2009, we have also raised £2 million equity fromour major shareholders: African Gas Corporationand Afren plc.The continued support from ourmajor shareholders reflects their confidence inGasol’s progress. In June 2009, we put in place a£10 million equity line of credit with GEM GlobalYield Fund.The ability to draw on the £10 millionfacility is dependent upon certain conditionsoutside of the control of the Group, includingshare price and share trading volumes. It is notviewed as likely that the full £10 million could bedrawn in one tranche given historical share pricesand volumes. Given these conditions, the Grouprequires and is continuing to seek further sourcesof funding for its short term and longer termneeds. Further details of this are set out in note 1to the financial statements. For Gasol to realise itsstrategy, significant amounts of funds will beneeded to progress our projects to finalinvestment decision stage and beyond; gasprojects, and LNG in particular, are capitalintensive; while banks would normally finance alarge portion of the investment costs post finalinvestment decision, the challenge for Gasol is tofund our share of equity in the early stages of theprojects, which include costs for acquisition of

gas, development of technology, feasibilitystudies and front end engineering design.The company is considering different financingstructures and sources, including funding fromstrategic and financial investors.The longer termsuccess of Gasol will - to a large extent - dependon our ability to mobilise the required fundingfor our projects and our corporate developmentexpenditure. Gasol is currently in the process ofraising additional funding to meet its short-termworking capital requirements.Through 2009 and2010, we expect to report how we progress infund raising activities.

Whilst the economic environment and theenergy/LNG sector has been challenging over thelast year and the short-term gas economics arerelatively weak, the longer term fundamentalswill continue to support the development ofstrategic gas and LNG projects. Under thesecircumstances, Gasol is making steady but slowerthan anticipated progress: negotiating access togas, developing a blue print of a small scale, quickto market gas monetisation solution andprogressing alliances with downstream/upstreampartners.We hope to accelerate progress in thecoming year, however much will depend on thesuccess of our fund raising efforts, both for theprojects and for corporate business developmentactivities – and the way we manage the earlystage risks normally associated with gas projects.

We have a focused strategy and a strong team -these should stand us in good stead to face thesechallenges and to deliver long term value to ourshareholders.

Soumo BoseChief Executive Officer

Business Review



VALUEWe have a focused strategy and a strong team -these would stand us in good stead to face currentchallenges and to deliver long term value toour shareholders.

Board of Directors


Theo Oerlemans (71) ChairmanTheo Oerlemans has over 40 years’ experience ingas and LNG.

He had a long and distinguished career at Shell,mostly in the development and management ofShell’s international gas and LNG business. As aDirector of Shell International Gas Ltd he wasinvolved in the development of Shell LNGProjects such as Sakhalin, Oman, Brunei andMalaysia. From 1993 to 1997 he was ManagingDirector and Chief Executive of Nigeria LNGLimited.

Mr Oerlemans holds an MSc in Engineering fromthe University of Delft.

Soumo Bose (46) Chief Executive OfficerSoumo Bose has had an extensive internationalcareer. He brings substantial global experience ofthe gas sector, having lived and worked in Egypt,China, India, UK, France and Netherlands. At BGGroup, he was Chief Financial Officer and BG’ssenior representative at Egyptian LNG. At SHVGas, he held a variety of senior managementpositions, including reporting directly to theGlobal CEO.

Mr Bose is a member of the Institute of CharteredAccountants of India and a graduate of theUniversity of Calcutta.

Soumo Bose Chief Executive OfficerTheo Oerlemans Chairman


Osman Shahenshah (47) Non-ExecutiveDirectorOsman Shahenshah has 20 years’ experience inoil and gas finance, developing andimplementing projects worldwide, working withthe Major and National Oil Companies.

He is the Chief Executive Officer of Afren plc, theAfrica-focused oil independent. His career hasincluded senior positions at the InternationalFinance Corporation, Dresdner KleinwortWasserstein and Medicredito Centrale.

Charles Osezua (56) Non-Executive DirectorDr. Charles Osezua is an authority on theemerging West African gas market, with oil andgas industry experience spanning 20 years.

Dr. Osezua is Chairman of the Owel-Linkso Groupin Nigeria, a services company providingsolutions to the oil and gas sector. Formerly, hewas Special Assistant on Petroleum Matters tothe Head of State, Federal Republic of Nigeria anda member of the Technical Advisory Committeeof Nigeria LNG Limited.

Paul Biggs (43) Non-Executive DirectorPaul Biggs, a project finance specialist with afocus on emerging markets, is a Senior Partner ofthe specialised law firm Trinity International LLP.

Prior to joining Trinity, Mr Biggs was head of theProject Finance Group at Cadwalader,Wickersham & Taft LLP, and before that a partnerat CMS Cameron McKenna. Mr Biggs also spentfive years at the Commonwealth DevelopmentCorporation.

Haresh Kanabar (51) Non-Executive DirectorHaresh Kanabar has 20 years’ experience in seniormanagement of various companies andindustries, including many AIM –listedcompanies. He is currently a director of AurumMining plc, Blue Star Capital plc, IndianRestaurants Group plc, Silentpoint plc, SilentpointProperty Limited, India Star Energy plc andVenteco plc. Prior to this Mr. Kanabar held anumber of management and senior financepositions in five companies since 1997.

Osman Shahenshah Non-Executive Director Charles Osezua Non-Executive Director

Paul Biggs Non-Executive Director Haresh Kanabar Non-Executive Director

Business Review



Strategic Advisors


JeanVermeire (65)Strategic Advisor to the Board

Ethelbert J L Cooper (55)Strategic Advisor to the Board

Jean Vermeire is currently the Non-ExecutiveChairman of Distrigas NV (“Distrigas”), the €4.5billon Belgian-based natural gas company, andone of the largest in Europe. In his earlier careerwith Distrigas, he held positions of GeneralDirector and Commercial Director of the naturalgas business.

Prior to Distrigas, Jean worked for the ChevronCorporation for 17 years and was involved invarious senior managerial assignments incommercial, finance and planning in the oil andgas activities of the corporation, withinternational positions in Belgium, Italy, UK, USAand Australia.

Among his other appointments, Jean is currentlya member of the supervisory board ofNederlandse Gasunie and is President of theParis-based International Group of LNGImporters. He holds a degree in Engineering fromthe State University of Ghent (Belgium) and anMBA from the University of Berkeley (California).

Mr Cooper has been active in the African naturalresources sector for over 25 years.

During the 1980s he devised and led an initiativeto restructure what, at the time, was Liberia’sbiggest industrial project – an iron ore miningcompany with capital investment of over $600m.Mr Cooper also formed Liberia’s miningparastatal, whose management, marketing andfinancing requirements were contracted to MrCooper’s companies.

Mr Cooper is a founding member and Chairmanof the Liberian International DevelopmentFoundation and a Founder and Director of theAfrican’s African American Foundation.Mr Cooper is also a member of the NationalAdvisory Board of WEB Du Bois Institute ofAfrican Studies at Harvard University.

annual report 2009

Documents

electricite

shore production

executive

joint venture

liquefied

afgas infrastructure

south east

national gas