Nigeria Gas Opportunity

Balancing Risk and Reward

May 2, 2012

Tolu Ewherido
Panel Session:
ANPPA PETAN Joint OTC Forum
May 2, 2012 at the Crowne Plaza Hotel, Reliant Centre, Houston Texas

This presentation includes forward-looking statements. Actual future conditions (including economic conditions, energy demand, and energy supply) could differ materially due to
changes in technology, the development of new supply sources, political events, demographic changes, and other factors discussed herein (and in Item 1A of ExxonMobils latest
report on Form 10-K or information set forth under "factors affecting future results" on the "investors" page of our website at www.exxonmobil.com). This material is not to be
reproduced without the permission of Exxon Mobil Corporation.
 Nigeria Gas Resource Dominance in West Africa
0 10E 20E

Gas reserve of 150Tcf (Trillion

cubic feet) is the largest in West Nigeria
Population

10N

10N
Africa 2011 = 162 m
2030 = 227 m
CTE D'IVOIRE

GHANA NIGERIA
Available resource has the GP
NLNG
Cameroon
Population
2011 = 20.4 m
WA Brass LNG
potential to diversify the countrys Cte D'Ivoire
Population
Ghana
Population
Planned
Eq. Guinea
EG LNG
CAMEROON
2030 = 28.6 m

oil revenue and power an 2011 = 22.1 m

2030 = 32.6 m
2011 = 24.8 m
2030 = 34.9 m
Population
2011 = 0.7 m
2030 = 1.1 m
EQ. GUINEA

economic renaissance GABON

0
Atlantic Ocean Congo
Gabon Population

Potential to become the leading Population

2011 = 1.5 m
CONGO 2011 = 3.8 m
2030 = 5.5 m
2030 = 2.0 m

player in gas supply from Sub- Angola LNG

Under construction
Saharan Africa to regional and Commercial gas reserves

100 tcf
global markets
10S

10S
Angola
Population ANGOLA
Technical gas reserves
2011 = 19.5 m
2011 Production mmcfd 2030 = 30.4 m
50 tcf
Robust local market dynamics 1,000 - 5,000

500 - 1,000
indicative of a sustainable gas 10 tcf
50 - 500

demand growth for the long term 0 250 500

km
1,000
< 50

0
Source: Wood Mackenzie

0 10E 20E

Source: Wood Mackenzie

2
Nigeria Gas Resource Overview
4E 6E 8E
Total Recoverable Gas Reserves
Escravos Lagos
Onshore - (83 tcf)
Pipeline System (ELPS)
Benin City
OK LNG Gas pipeline to Ajaokuta 16
planned
Onitsha
67
6N

6N
CHEVRON JV
PARABE Oben NIGERIA
Sapele Shallow Water - (46 tcf)
MEREN AGIP JV (16 tcf)
Kwale
Warri
10
OKAN
Escravos 36
ERHA-BOSI
Obiafu-Obrikom
FORCADOS YOKRI Utorogu Pro
po
SHELL JV (38 tcf) se
dE Obite TOTAL JV
as Deepwater - (21 tcf)
t/W
es
t L in Aba 7
5N

5N
k
AGGE Gbaran-Ubie 14
AMATU Obigbo

Port Harcourt CAMEROON

Okoloma
Fields/Field Groupings Soku Alakiri
Non-associated ERIBI
NORTH CHIOMA Cawthorne ORON
Associated Channel USARI UBIT
NLNG BONNY Oso
BRASS LNG
> 5 tcf OKUBIE planned

1 tcf - 5 tcf OGGS

4N

4N
HI EDOP
Gulf of Guinea
600 - 1,000 bcf 400
1,5 m
0 0m
Gas pipeline
NGOLO EBITEMI EQUATORIAL
Planned gas pipeline
GUINEA
LNG
NNWA
Gas processing plant
BOLIA-CHOTA
GTL
DORO
3N

3N
km
0 50 100 Source: Wood Mackenzie

4E 6E 8E

Significant resource; increasingly challenged to commercialize new discoveries

Source: Wood Mackenzie
3
 Typical Gas Value Chain
Per cent of total upstream cost of supply

Each component of the

value chain must be
economically viable on
its own merit

Source: Platts; Oil & Gas Journal 26 May 2008, ODS Petrodata, RigLogix, press clippings, Nigeria Gas Master Plan website & Presentations

4
Balancing the Economic Risks & Reward
Technology improvements
Cycle-Time reduction

Cost of Supply

Price

Fiscal and commercial incentives

Challenge:
Average cost per boe (barrel oil equivalent) of most deep water (DW) and non-associated gas (NAG) projects is
higher than the current realized domestic gas market price
Investment is necessary across the gas value chain to enable new sources of supply to enter the market
Opportunity:
Market-based pricing in combination with appropriate fiscal and commercial incentives are required to assure a
reasonable rate of return and spur further development of gas resources

5
Global Gas Development Costs
30
Onshore Shallow water Deep water

Higher cost to capture

25
resources will require
higher market price and
Unit capex, US$/boe (nominal terms)

20 unique fiscal and

commercial terms to
assure reasonable return
15
on investments

10

5
Bubble size represents commercial reserves in mmboe

0
0 5,000 10,000 15,000 20,000

Total Capex, US$mln (nominal terms)

Source: Wood Mackenzie

Future developments only i.e. production not yet started
Wood Mackenzie definition: shallow water 0 400 metres, deep water > 400 metres

6
Levers to Unlock High-Cost Gas Development

Commercial
Profit Share
Lease Term
Fiscal Stability Provision
Technical
Tax Holidays Market Technology

Gas Production Credits Improvement

Reduced Royalty Reduced cycle time

Consolidation Integrated execution

across value chain

7
 Conclusion
For the Nigerian Gas Market to attract investors, there has to be full Value Chain
Viability

A balanced combination of fiscal incentives, improved price structures and a

lower cost environment is required to spur investment in infrastructure and
facilitate market and supply growth

FGN's current initiatives in Gas are strategic and unprecedented as

mitigation is being developed to address return and payment risks for domestic
gas development and is beginning to facilitate development of Shallow and
Near shore gas

ExxonMobil fully supports FGN's domestic Gas and Electricity sector

reform; our JV is actively progressing domestic supply and a 500 MW gas-fired
IPP

Specific and unique Fiscal, Commercial and Technical incentives are

required to fast-track further, DW and NAG gas development.