THE ADDAX & ORYX GROUP NOT AN OFFICIAL UNCTAD RECORD Using Gas for Africa s Energy Future Thierry Genthialon Chief Operating Officer of ORYX Oil & Gas 11th African Oil and Gas, Trade and Finance Conference & Exhibition 22-25 May 2007, Kenyatta International Conference Centre, Nairobi, Kenya
Table of Content 1. Addax & Oryx Group (AOG) 2. Downstream division: Oryx Oil & Gas 3. Macro-economic Data / Status of Africa 4. Focus on LP Gas 5. Using LP Gas for Africa s Energy Future
1. Addax & Oryx Group Profile An integrated petroleum and mining company - A fast-growing group
1.1 Addax & Oryx Group Mission To be a major player in the oil & gas industry in selected areas where we have a competitive edge To continuously improve our safety and environmental performance To add value in the communities in which we operate
2. Downstream Division: ORYX Oil & Gas A dynamic policy of investments in assets and networks An essential player in the establishment and expansion of the Addax & Oryx Group in Africa
2.1 ORYX Oil & Gas Portfolio Storage: 5 key terminals providing 24 hour service +300,000 m3 HC & + 6,500 m3 LPG in 2005 Dakar, Abidjan, Cotonou, Freetown, Dar Es Salaam Distribution 5 LPG cylinder filling plants (Abidjan, Cotonou, Dar Es Salaam + satellites) +600 LPG retail outlets +100 Service stations network (Tanzania, Cameroon, Nigeria, Benin, Burkina Faso) +500 industrial installations Lubricants and Specialties ISO 9000 Blending Plant, Dar Es Salaam Lubes and Bitumen network in East & West Africa
2.2 ORYX Oil & Gas Presence in Africa 45 5 36 2 3 12 55 4 4 1 3 2 2 10 10 2 Network of 10 service stations HC depot 10 000 m3 Gas terminal 2 000 m3 40 10 Gas filling center Lubricant blending plant Bunkering terminal
2.3 ORYX Oil & Gas Specific Approach Using local competencies Subsidiarity principle Tailored marketing responses Appropriate standards Synergies with AOG Trading arm
3. Macro-economic Data / Status of Africa 3.1 World Energy Consumption 3.2 Africa s Energy Consumption 3.3 Demographic data & estimates 3.4 Evolution of Gross Domestic Product
3.1 World Energy Consumption World Energy Consumption by country in 2005 Asia Pacific 32% North America 27% World Energy consumption is projected to increase by 71% from 2003 to 2030. The most rapid growth in energy demand is projected for nations outside the Organization for Economic Cooperation and Development (non-oecd nations). Africa 3% Middle East 5% Europe & Eurasia 28% South &Central America 5% 4.0 3.7 Average Annual Percent Change per Year 2003-2030 in World Marketed Energy Consumption by Country 3.5 % 3.0 2.5 2.0 1.5 1.0 2.8 2.6 2.4 1.8 1.3 1 0.7 0.5 0.0 Non-OECD Asia Central & South America Africa Middle East Non-OECD Europe & Eurasia North America Asia Europe International Energy Outlook 2006, Energy Information Administration
Quadrillion Btu 3.2 Africa s Energy Consumption by Fuel 10.0 9.0 8.0 Africa's Total Energy Consumption by fuel reference case 1990-2030 7.0 6.0 5.0 4.0 3.0 2.0 1.0 Oil Natural Gas Coal Nuclear Other 0.0 1990 2002 2003 2010 2015 2020 2025 2030 International Energy Outlook 2006, Energy Information Administration
Millions 3.3 Demographic Data and Estimates Demographic estimates Pop mid-2006 Projected Pop mid-2025 Projected Pop mid-2050 5000 4739 4000 3000 2000 1000 0 1355 717 700 Asia Africa Europe Latin America & Caribbean 387 Northern America 41 Oceania Rate of Natural Demographic Increase % 2.30% Urban Population 2006 Northern America 79% Oceania 73% 1.20% 1.50% 0.60% 1% Asia 38% Asia Africa Europe Latin -0.10% America & Caribbean Northern America Oceania Latin America & Caribbean 76% Europe 75% Africa 37% 2006 World Population Data Sheet, Population Reference Bureau
Billion 2000 Dollars 3.4 Evolution of Gross Domestic Product 70'000 60'000 50'000 40'000 30'000 20'000 10'000 0 Gross Domestic Product (GDP) by Region Using Purchasing Power Parity Reference Case 1990-2030 Middle East Africa Central and South America North America Asia Europe and Eurasia 1990 2002 2003 2010 2015 2020 2025 2030 GDP by Region Using PPP Reference Case 2010 in Billion 2000 Dollars Asia 19'639 Europe and Eurasia 35'142 North America 15'503 Central and South America 4'136 Africa 3'073 Middle East 1'946 International Energy Outlook 2006, Report #: DOE/EIA-0484(2006)
4. Focus on LP Gas 4.1 What is LP Gas? 4.2 World LP Gas Production & Consumption 4.3 Incremental LP Gas Supply & Demand Growth 4.4 LP Gas in Africa
4.1 What is LPG? What is LPG? A mixture of gaseous hydrocarbons, very rich in energy content, easy to store in liquid form at low pressure (contrary to natural gas) It originates from the refining process of crude oil or comes as associated gas in natural gas or crude oil wells Why is it so little known? World Energy Consumption 2005 Other 35.60% Natural gas 23.50% LPG 3.10% Oil 36.40% Table 1: the weight of LPG in world energy consumption in million Tonnes oil equivalent
Million tonnes Million tonnes 4.3 Incremental LP Gas Supply & Demand Growth Worldwide 40 35 31.1 33.5 38.9 35.2 30 25 20 23.3 17.9 Supply Demand 15 10 5 0 1995-2000 2000-2005 2005-2010 Africa 7.0 6.0 6.8 6 5.0 4.0 3.0 2.0 1.7 3.5 1.7 2.1 Supply Demand 1.0 0.0 1995-2000 2000-2005 2005-2010 Sousce: Purvin & Gertz presentation World LP Gas Forum Chicago, October 18, 2006
5. Using LP Gas for Africa s Energy Future 5.1 Benefits of LPG 5.2 LPG: tailored for Africa 5.3 Structural Barriers to LPG Development 5.4 Making it work
5.1 Benefits of LPG Main benefits Portable and powerful: high calorific value for the same volume Practical: 6kg cylinders for domestic use, right at the heart of the family Economical: non-perishable, non-degradable
5.2 LPG: Tailored for Africa Clean : non-toxic Environmentally-friendly an alternative to wood an efficient way of fighting deforestation Democratic beneficial for areas with weak energy infrastructure labour intensive making life easier for women
5.3 Structural Barriers to LPG Development Lack of supply and/or infrastructure terminals and plants Inadequate regulations Cylinder property right Cylinder exchanges and cross-filling practices Lack of standards (cylinders, appliances and filling plants)
5.3 Structural Barriers to LPG Development Limited access for poorer classes cost of cylinder and appliances cost of gas itself Inappropriate taxation import taxes indirect LPG subsidies to traditional fuels subsidies: a curse in disguise Lack of awareness from government authorities from the public in general
5.4 Making it work Supply and infrastructure Role of private sector Full involvement of investors & distribution companies Capital intensive industry Slow but steady returns Involvement in the whole supply chain Consumer education Support from international institutions Commitment from international institutions Financing collective infrastructures Support for micro-credits Exchange of good practices
5.4 Making it work Regulations developing adequate framework using experience from well established and structured market opting for a cylinder deposit system banning cross-filling establishing a licensing system Access for poorer classes and implication of taxes developing an efficient network financing solutions such as micro-credit eliminate taxation of LPG and cylinders (import duties and VAT) harmonizing the tax system (in case partial taxation is maintained) Support from governments Stability of the political and legal systems Rules governing trade and investment Regulations concerning industry operating and safety standards Involvement in fair tax / duty treatment
5.4 Making it work Awareness & Consumer s Adherence Openness to change education campaigns (schools, associations, role of village heads) - safety - applications advertising campaigns by marketers
Conclusion Access to modern energy is a pre-requisite to economic and social development. Africa with its increasing production of LPG and weak infrastructure has a solution within easy reach. It is only by combining the efforts of all stakeholders (private sector, government bodies, international institutions and public in general) that we will be able to grasp this historic opportunity. L.P.G. = Long-term Progress Generator