Promoting Clean Cooking

Promoting Clean Cooking:Rainoil's World-Class LPG Terminal Investment in Nigeria

29th April 2021

by EMMANUEL OMUOJINE– Head Strategy & Business Development, Rainoil Limited

Supply Chain Storage & Distribution Investments

Outline

1. Economic Overview

2. LPG Sector Analysis

3. Rainoil Investment in LPG

2

Promoting Clean Cooking: Rainoil's World-Class LPG Terminal Investment in Nigeria

Economic Overview

3

▪ Nigeria exited recession in Q4 2020. However, the economy contracted by -1.92% y-o-y in 2020

▪ Oil sector contributed 8.16% to total 2020 GDP, while Non-oil sector contributed 91.84%

▪ Nigeria trade volume for 2020 declined to ₦32.42tn (from ₦36.15tn in 2019)

▪ Unemployment rate increased to 33.3% in Q4 2020 (23.2 million people), from 27.1% recorded Q2 2020

▪ In 2021, a 2.5% growth rebound is forecasted (IMF)

▪ Inflation rate increased to 17.33% in February 2021 y-o-y (from 16.47% in Jan 2021)

▪ The naira has devalued to N409.29/$ on the I&E FX Window (from ₦380/$1). Up to N482/$ in the parallel market.


Source: NBS, Proshare, Nairametrics

LPG Sector Analysis


Industry Analysis

5

▪ Nigeria has the largest proven gas reserves in Africa, over 200 tcf (9th largest in the world) but imports 70% of its Liquefied Petroleum Gas (LPG) requirement.

▪ Nigeria has the fastest growing LPG Sector in the world with a projected LPG market size of $10 billion.

▪ Nigeria’s annual per capita consumption of LPG has risen from 1.8 kg in 2015 to 5kg in 2020

▪ Nigeria’s domestic demand for LPG increased from 600,000MT to 1 million MT in 2020.

▪ Domestic LPG storage capacity is over 60,000 MT.

Source: PPPRA, NLGPA, WLGPA, EIA, DPR, Rainoil Analysis


Industry Analysis (cont’d)

6

▪ About 90 – 95% of the LPG consumed in Nigeria is for cooking (butane)…rising demand for Propane, for power generation and Autogas

▪ The FG’s priority objective is to attain 5 million MT of LPG consumption by 2022

▪ NLNG the major domestic supplier of LPG aims to increase its supply to the domestic market from 350,000MT to 450,000MT in 2021

▪ Also, the recently commissioned Nigerian Petroleum Development Company Limited (NPDC), Oredo gas handling facility, has an estimated annual LPG capacity of 120,000 MT



Nigeria LPG Demand Growth (5 year)

7 Source: PPPRA, NLGPA, WLGPA, EIA, DPR, Rainoil Analysis

2016 2017 2018 2019 2020

Demand (MT) 400 000 500 000 600 000 840 000 1 000 000

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

LP

G D

em

an

d (

MT

)


5kg

Consumption / capita (kg)

4.4kg

3.1kg2.6kg

2.2kg

Domestic LPG Bulk Storage Capacity (Operational)

8

Facility State Capacity (MT)

Navgas Lagos 8,000 MT

NIPCO Lagos 11,000 MT

PPMC Lagos 7,000 MT

Ardova Lagos 5,000 MT

Rainoil Lagos 8,000 MT

Techno Lagos 8,400 MT

Dozzy Oil Cross River 5,000 MT

Stockgap Rivers 8,000 MT

Prudent Delta 6,000 MT

Matrix Delta 5,000 MT


Key Challenges to LPG Utilization and Adoption

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▪ Affordability: high switching cost for low-income households i.e. cost of gas cooker and cylinder cost from using firewood / kerosene.

▪ Awareness: inadequate awareness about the benefits of using LPG (health, environment and cost), particularly in the rural areas. Skepticism about the safety of LPG.

▪ Safety: accidents in recent years resulting from poor safety compliance at filling plants, substandard or dilapidated LPG cylinders, unsafe product handling practices.

▪ Inadequate Infrastructure: significant infrastructure deficit in gas processing, transportation and distribution (pipelines), retail and domestic equipment manufacturing.



Government’s Policy Drive for Energy Transition

10

The FG’s Sustainable National Energy Plan seeks to:

1. Deliver and maintain 5 million new off-grid solar connections under a “Solar Power Strategy”. Around 77 million Nigerians are either underserved by, or completely lack access to, the national electricity grid.

2. Transition from traditional fuels for cooking to cleaner Liquefied Petroleum Gas (LPG) fuel in its “National LPG Expansion Plan”

3. Eliminate gas flaring through the Nigeria Gas Flare Commercialization Programme

Source: NBS, NNPC, NGEP, Proshare, Nairametrics, IEA

▪ With over 300 billion cu ft of gas flared annually, Nigeria is the 7th largest gas flaring nation in the world.

▪ Nigeria lost N300bn to gas flaring in 7 months of 2020.

▪ Objective of reaching zero flaring by 2030.


Government’s Policy on the Global Drive for Energy Transition (cont’d)

11

4. Promote Compressed Natural Gas (CNG) as an alternative cheaper fuel:

▪ Deepening of Autogas as alternative to Petrol – CNG

▪ Providing kits for pilot conversion of 1 million cars

▪ Target of over 2,000 CNG filling stations within 6 months

▪ Establishment of a N200 billion infrastructure fund by the CBN to support Autogas facility roll-out by Marketers

The current reserve estimate of Natural gas is over 60 trillion cu ft

About 63% of the Associated Gas produced during the production of crude oil is currently being flared.

Proposed establishment of a Midstream Gas Infrastructure Fund. A specialized intervention mechanism to deepen gas usage in the country, by making equity investments of government-owned participating or shareholder interests in infrastructure related to midstream gas operations… projects financed in part by private investment.

Source: NBS, Proshare, Nairametrics, IEA, NAPIMS


Market Opportunities

12

▪ Nigeria requires about $750 million investment in LPG transport and retailing infrastructure across the country to achieve the 2022 targets.

▪ Marketers can leverage in this opportunity by investing in gas adoption and utilization (e.g. LPG bulk storage, LPG trucks, LPG filling plants, LPG skids, Gas cylinder manufacturing, LNG plants, CNG/LNG Trucks, LNG Regassification / Compression stations, CNG Filling Stations)

▪ An estimate of over $27 million will be generated by switching 50% of kerosene and firewood users to LPG.

▪ Proper channeling of flared gas could impact the country’s gross domestic product by up to $1 billion per year.

▪ Potential to create over 1 million jobs, 600,000 MT of LPG per year and generate 2.5 gigawatts of power

Source: NBS, Proshare, Nairametrics, IEA


Rainoil Investment in LPG


Accounts for up to 10% of petroleum product distribution in the country

Established in 1997…a major player in the downstream industry:

✓ Over 100 Retail stations

✓ a 50 million litre storage depot at Ijegun-Egba, Lagos State

✓ a 50 million litre storage depot at Oghara, Delta State

✓ a 50 million litre storage depot at Calabar, Cross-River State

14

✓ a fleet of over 130 trucks for product distribution

✓ an 8,000 MT LPG storage depot at Ijegun-Egba, Lagos State


Our LPG Value Chain

15

Local Suppliers

Retail

Foreign Suppliers

StorageProduct Sourcing

▪Geogas

▪Vitol

Transportation Distribution

▪NLNG

▪NNPC


Project Overview: 8,000MT LPG Terminal in Ijegun Egba, Lagos

▪ Land area - 2.738 ha

▪ 2 nos 4,000 MT Spheres

▪ A Jetty with 2 nos dolphins and 4 nos Bollards

▪ 4 nos Loading arms with weighbridges

▪ 1 nos Odorization Unit

▪ Gas & Flame Detection Equipment

▪ A Fire water tank, Fire hydrant pipelines, foam ballast tank, pumps and fire truck

▪ Administrative buildings

▪ Generator House / Switchgear Room

▪ Service roads (driveway) round the tank farm

▪ Adjoining Truck Park16


Construction Pictures

17


Construction Pictures (cont’d)

18


Completed Facility Pictures

19


Completed Facility Pictures (cont’d)

20


21

Investment in the LPG Value Chain (cont’d)

▪ Fleet of 42 LPG Trucks


22

1

Filling Plant: 6 (4 States)

Retail Skids: 20 (11 States)

1

2

3

1

1

6

1

2

1

1

1

2

2

1


Proposed Retail Rollout

Project Benefits

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1. Diversification of product offering base

2. Support the FG policy on deepening LPG penetration nationwide…target of 5 million MT by 2022

3. Contribute to private sector investment in the LPG supply and distribution chain

4. Environmental protection benefits by use of cleaner fuels and reducing gas flaring

5. Socio-economic benefits (national and local community)

Over 50% of the facility staff are from Ijegun-Egba community.

Source: NBS, Proshare, Nairametrics, IEA


In closing…

24 Source: NBS, Proshare, Nairametrics, IEA


“The secret of change is to focus all of your energy not on fighting the old, but on building the new”

- Socrates

Thank You


Date post:	10-Feb-2022
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Promoting Clean Cooking

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