presentation sub saharan africa (march 2012) (00167794)

© 2012. Burleson LLP

Elvis Angyiembe Burleson LLP

713.358.1761

[email protected]

700 Milam Street, Suite 1100

Houston, Texas 77002

SUB-SAHARAN AFRICA (SSA):

Recent Developments in Oil & Gas

Presented at

Thurgood Marshall School of Law, Energy Symposium

March 29, 2012

© 2012. Burleson LLP 2

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EXPLORATION & PRODUCTION

OILFIELD & INDUSTRIAL SERVICES

COMPANIES / MIDSTREAM

BG US Production Company El Paso E&P Company ACTHERM Holdings, a.s.

Cabot Oil & Gas Corporation GeoResources, Inc. Air Liquide

Carrizo Oil & Gas, Inc. Penn Virginia Oil & Gas Corp. Artificial Lift Company

Challenger Minerals Inc. Range Resources Basintek LLC (Basin Capital)

Chesapeake Energy Corp. Rex Energy Corporation Castor Petroleum Ltd.

Chief Oil & Gas LLC Snyder Associated Companies Cudd Energy Services

Common Resources II Southwestern Energy Company Digital Relay Geologix

ConocoPhillips Talisman Energy USA Inc. DXP f/k/a Southern Engine & Pump Company

Constellation Energy Partners LLC Tradition Resources LLC Eagle Rock Energy

D.H. Arrington Oil & Gas XTO Energy Express Energy Services

Devon Energy Production Co. LP Frac Tech Services LLC

East Resources, Inc. (Shell) GHX Industrial LLC

Gulf Offshore Logistics

ENERGY LENDING Keystone Engineering

Petrochem Carless

Bank of America, N.A. LaSalle Bank National Association (BOA) Particle Drilling Technologies

Capitol One Bank Scotia Waterous (USA) Inc. PII Pipeline Solutions (GE)

Comerica Bank Wells Fargo Bank, N.A. Pipeline Controls

Plains All American Pipeline LP

PSI Midstream

PRIVATE EQUITY / INVESTMENT BANKING Seastream JV – SURF Solution

Tejas Engineering

Guggenheim Partners EnerVest Operating LLC Tesco Corporation

CapStreet Group LLC Eschelon Energy Partners LP Torqued-Up Energy Services

Cadent Energy Partners LLC Houston Energy Advisors LLC Upstream Energy Services

Madison Williams and Company Vetco (GE)

Wellstream International Limited


Caveat

• The Statements and Opinions set forth herein are those

of the author and not those of Burleson LLP or any other

entity

• This presentation focuses on broad generalizations and

is aimed at giving the audience a very high level

introduction into recent developments in oil and gas in

SSA


Road Map

• Africa’s role in Global Oil and Gas

• SSA Major Players; Mid-tiers oil countries; New Players

• East Africa joins the party

• Acquisitions

• Interesting cases

• Challenges

• What future holds


Africa’s Role in Global Oil & Gas

• Africa has roughly 10% of world proven oil reserves

• Africa’s proven reserve rose from 53.3 billion barrels

(bbl) in 1980 to 127.7 bbl in 2009

• Of all new sources of oil, 1/3 are in SSA

• Frequent oil discoveries have led to “second scramble

for Africa.”

• By 2015, 25% of North American Oil will be from SSA



OPEC 2010-2011 Annual Statistical Bulletin


Where Does African Oil Go? (2005)

• Today, Africa accounts for a quarter of European imports and 20%

of U.S. and Chinese imports of oil.

Oil & Gas, Atlas on Regional Integration in West Africa: Economy Series, OECD (April 2007)


Where Does African Gas Go? (2005)

Oil & Gas, Atlas on Regional Integration in West Africa: Economy Series, OECD (April 2007)


SSA Major Players: Nigeria

• Nigeria has proven oil reserves of

37.2 bbl, as well as 187 trillion

cubic feet (tcf) of gas

• Current daily oil production is over

2.5 million barrels per day (bpd)

• Oil & Gas exports account for more

than 95% of export earning and

over 80% of federal government

budget


SSA Major Players: Angola

• Angola has proven oil reserves of 9.5

bbl to 13.5 bbl and 25 tcf of gas

reserves

• In 2011, produced 1.9 million bpd of

Export of crude accounted for 50% of

GDP and 95% of exports; 72% of

government revenues

• Second largest source of oil for China

providing 790 million barrels after

Saudi Arabia (890 million barrels)

• 400 million barrels of Angolan crude

goes to the U.S.


SSA Major Players: Equatorial Guinea

• EG has proven gas reserves of 1.1 bbl

and 4.4 tcf of gas reserves; 304.4

thousand bpd in 2010

• Zafiro field is largest oil producer with

about 280,000 bbl/d as of 2008

• Second largest producer is Ceiba,

which contains roughly 300 million

barrels

• Marathon and the state national gas

company teamed up and build a $1.5

billion LNG plant in 2007

• The companies plan to build LNG trains

2 and 3


Mid-Tier Players

•Congo Republic……………………….305.5 thousand bpd

•Gabon………………………………………..246 thousand bpd

•Chad…………………………………….130 thousand bpd

•Cameroon………………………………….60.4 thousand bpd

•Ivory Coast……………………………….40.6 thousand bpd


New Kid on the Block: Ghana

•Began producing in 2010 and is expected

to raise production from 120,000 bpd to

250,000 bpd; 74.3 tbpd in 2011

•Joins mid-tier producers like Cameroon

and Congo Brazzaville

•Main field is the Jubilee discovered by

Tullow and is said to contain about 2 bbl;

recently Enyenra find in Owo-1 well

•Main players are Tullow, Anadarko, and

Kosmos.


New Players: Niger

•Current daily production of 20,000 bbl/d

•Niger is landlocked, so it is currently

negotiating with Chad and Cameroon

to use Cameroon-Chad Pipeline

•Chinese National Petroleum Company

(CNPC) is major operator

•IMF approves $121 million to help oil

and resources reform


New Players: Liberia & Sierra Leone

•African Petroleum and Anadarko

made potentially commercial

discoveries in Liberia and Sierra

Leone

•These New Players have to

build Oil & Gas sector to avoid

resource curse


New Players: South vs. North Sudan

•South Sudan gained independence

July 9, 2011

•Roughly 115,000 bpd has to pass

through pipeline in North Sudan

•North wants South to pay transit fee

of $32 per barrel; going international

rate is $1 per barrel

•Lots of violence in border region;

George Clooney arrested in DC to

bring issue to limelight


New Players: South vs. North Sudan

Build pipeline through Ethiopia or Kenya


New Frontiers: East meets West Gas Bonanza

•According to BP, SSA has 41 tcf of gas reserves at

the end of 2010

•ENI SpA and Anadarko announced major gas

discoveries offshore Mozambique; circa 22 tcf. of

reserves

•Total planning to drill offshore and onshore Kenya,

Mozambique, and Uganda by end of 2012


•Exxon Mobil and Statoil find an estimated 5 tcf in

Mafia Deep basin in Tanzania

•Anadarko planning to build LNG plant export terminal

in Mozambique worth $1.8 billion

•International Oil Companies (IOCs) expected to invest

$50 billion in Mozambique alone



•Kenya closer to dishing out exploration licenses; Total

focusing on Lamu Basin; about 17 blocks available

•Sudan launched bidding for 6 blocks: current

production is 115 bpd.

•This is where the action is; all major IOCs trying to get

a slice



New Frontiers: Shale Gas; Oil Sands

•Currently focused in South Africa

•There is evidence of coaled methane deposits in W.

Africa

•ENI planned 2012 projects in Republic of Congo is

clearest sign of unconventional projects; deal is for $3

billion

•Estimated at between 500 million and 2.5 bbl of

recoverable oil sands in the DRC


Acquisitions Battle for Cove Energy

•Shell submitted £1 billion

($1.6 billion) bid for Cove

Energy

•Thailand’s PTTEP submitted

£1.2 billion bid for Cove Energy

•India’s Oil and Natural gas

Corp. also submitted a £1.25

billion bid


Acquisitions

•BP possible tie-up with Ophir

Energy which has made

discovery in Tanzania

•Total considering making an

offer to buy Wessex

Exploration: involved in French

Guiana, Mozambique, and

Madagascar

•Tullow considering making a

bid for Bowleven for £1.80 per

share


Cases

•Kiobel v. Royal Dutch Petroleum Co.

Issue: Can Corporations be sued under

the Alien Tort Statute?

•Suit is for$1 billion. U.S. Supreme

Court to weigh in soon

•Two fresh suits: $767 million for 2009

oil spill in Niger delta

•Suit filed in UK for unknown amount on

behalf of bodo community


Cases

•Shell proposed to sell $1 billion of its Ugandan assets

•Employees argue the proposed sale is illegal; case heard

March 16, 2012


Cases

•Dr. John Abebe: “Mr. Statoil”

•Suing for 1.5% net profit from all Statoil’s Oil and Gas

assets


Challenges

• Fuel Subsidies costing governments a lot of money

• Nigeria spending close to $8 billion a year

•IMF advising countries to stop subsidies

•Recent riots in Nigeria to protest removal of fuel

subsidies


Challenges

•Insecurity: Shell director says Shell losing appetite

for Nigerian exploration over attacks on pipeline

•Piracy in 2011: 21 attacks on ships off Benin coast;

14 attacks off Nigeria, 7 off Togo, 2 off Ghana, 1 off

Ivory Coast

•Piracy costing $2 billion a year (Susan Rice, US

Ambassador)

•Corruption: FCPA and UK Anti-Bribery Act


Money vs. Security

•Nigeria best place in the world for expats: Some oil

managers earn £290,000 ($465,305)

•Other hot spots include: Ghana (35% premium)

Uganda (30% premium)

•These jobs usually require a lot of industry

experience


What the Future Holds

•Africa is likely to be an untapped resource for oil &

gas companies

•As energy consumption grows, so will global

dependence on African oil & gas

•African countries are ramping up production to meet

these needs



•Political unrest is a problem in the area; threats of

nationalization

•Major oil & gas discoveries, increased proved

reserve amounts for the area

•Major producers in Africa are passing laws to

incentivize foreign investment in oil & gas



• “Africa is the great frontier for the future.” Dr.

Duncan Clarke, chairperson and CEO of Global

Pacific & Partners

• “Africa could be on the brink of an economic

takeoff, much like China was 30 years ago and

India was 20 years ago.” The World Bank

• “The best time to plant a tree is 20 years ago. The

second best time is now.” African Proverb


Thank You

Questions?


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presentation sub saharan africa (march 2012) (00167794)

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