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INTERNATIONAL GAS UNIONWOC 10

G AS M ARKET DEVELO PM ENT INTRANSITIO N C O UNTRIESNigerias Pipelines Vs LNGC om petition or C ooperation

M ourad BelguedjThe W orld Bank

TOKYOJune 6, 2003

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General Principles

Do pipelines compete with LNG or are theycomplementary to LNG

LNG extends pipelines reach, delivering gas

where they still cannot Developing countries are committed to export gas

by pipelines and LNG

Nigeria is a unique SSA LNG and gas exporter toremote markets and soon to neighboring countries

This is the case we intend to study here

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Policy Framework

Nigerias target of eliminating gas flaring by 2008has attracted a broad range of private investment

proposals in LNG and Natural Gas pipelines

National, regional, and international markets haveshown interest in Nigerias gas export options

For instance, gas and LNG have been competingfor the Ghana power and industrial market

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Nigeria Gas Option

Nigerias gas is yet to develop in a way commensuratewith its resource base

Concerns over damage to health and environment as Niger

delta oil production could increase flaring

Nigerias Gas pipeline infrastructure is non-existent,

domestic and regional gas markets are undeveloped

Power trade is growing exponentially in Gulf of Guinea:

CI and Nigeria to Chad, Niger, Ghana, Benin Lack of financial resources and enabling environment

have hindered gas exports

New Vision & Gas Strategy will forward development

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Gas Is Nigerias Fastest GrowingPrimary Energy Source

Gas is Nigerias fastest growing energy source over thenext 30 years. Reserves stand at 150 Tcf and could last 108

years at current production rates

Gas demand is expected to more than double itsconsumption level to 42 BCM by the year 2020 with

export capacity reaching 60-70BCM/y in 2010 for LNG

Two green field pipeline projects ( WAGP, NAGP) will

lead development with NLNG and new LNG projects

Most of Nigerias growth is expected to occur in exports

directed to advanced and emerging regional markets

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Onshore and Offshore LNG

Although there are no precedents, floating LNG nearoffshore gas fields could materialize during the presentdecade, based on FPSOs recent success in oil and gas fiels( Nkossa, Girassol, in West Africa)

Nigeria is expanding the existing 5 trains of NLNG fromBony to 16.7 Mt/y in 2007

Greenfield proposals which include 9Mt/y Chevron-

Texaco West Niger delta at Escravos, Statoil, ExxonMobil5/6 Mty

both floating LNG will add to 25Mt/y expected to developover the next 1015 years

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Combination of Pipelines and LNG

Technology advances in gas transport improve gaseconomics as new deep-sea pipeline technology isalso bringing to markets stranded gas.

Progress in power market reforms are expandingin greenfield power projects. Diversification of supply for buyers and of

markets for exporters, mean increased security forbuyers and sellers alike.

The traditional divide of LNG Vs Gas Pipelines isshifting towards complementarity.

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Gas to PowerAn Attractive Option

Technology & efficiency of gas turbine favor gas as Capex,Apext, & modularity make suitable to even the smallest

markets

Peak shaving & base load LNG are viable everywhere

CO2 emissions for gas are 80% lower than from coal,

making gas more health friendly, especially if this gas

originates from associated gas otherwise flared

Gas helps LDCs develop industrial parks near gas fields,extracting LPG, LNG projects, GTL, GTW Petrochemical

and Fertilizer Industries

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Complementarity

Decreasing cost, higher efficiency of new LNG plants andGas Carriers make LNG economical & affordable by the

smallest markets

Trading Gas or LNG is another commodity exchanged

"over-the-counter" by energy service providers

Forward trading in BTUs/electrons, is making swap deals

part and parcel of market flexibility

The gas chain is now more flexible & complementary Gas-to-power convergence, technological advances in

higher efficiency turbines and CC technology is the option

for the future.

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GAS, LNG, and Power

The Power sector can play a leading role in securingfinancing and getting projects off-the-ground, paving theway for further economic development and access toglobal products, including to Information Technology.

An appropriate, clear Institutional and Regulatoryframework is the first step to attract FDI and ensure lastingdevelopment

Gas using technologies will ensure access to modern fuelsfor the poor and would monetize stranded, undevelopedgas or associated flared gas benefiting the environment

Collaboration between Governments, Industry, and

Financial Institutions would ensure its success

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Options for Nigeria

Nigeria, a developing but now a well establishedLNG producing and exporting country, will also

become a major regional and international pipeline

gas exporter, Cooperation rather than competition, will be the

trademark of international gas business in the

years to come and that both LNG and piped gas,

will be part of the energy mix of importing

countries and of exporter's options alike.

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International Pipeline Opportunities:WAGP.NAGP

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Location of the ProposedMajor Export Projects

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Nigeria to Algeria Pipeline in

Relation to other European Supply

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