Private and confidential

The Impact of LNG on Africa?

Paul Eardley-Taylor 6 April 2016

1 Contents

Section Page

1. Why Standard Bank 2

2. Global LNG Market 5

3. New Africa Producers? 11

4. New Africa Consumers? 17

5. Conclusion 27

Why Standard Bank?

Section 1:

3 Standard Bank in Africa

Distinctive Presence Distinctive People Strong Market Conditions

Largest Pan-African footprint

Increased quality deal flow in/out of

Africa

Excellent Cross-Border Connectivity

Local balance sheet

Very strong specialist teams in

Johannesburg, Lagos, London, Nairobi

and New York

Full range of expertise in-country

Improving fundamentals

Movement towards market based

economies

Increased foreign investor interest

Commodity-led economic growth

Over 150 years of experience in Africa

Largest bank in Africa by assets and headcount

Approximately 49,000 employees in 20 African countries

Headquartered in Johannesburg

Growth on the continent is a key strategic focus area

Investment banking presence across the region and in key

markets strengthened by recent acquisitions:

– IBTC Chartered Bank, Nigeria

– CFC Bank, Kenya

– Recently opened in South Sudan

– Recently opened a branch offices in Cote d’Ivoire and

Ethiopia

Ability to provide corporate and investment banking

solutions including advisory, transaction structuring and

bespoke debt funding packages in local and foreign

currencies

Standard Bank has

an unrivalled

presence in sub-

Saharan Africa with

on-the-ground

presence in 20

African countries

Operational Overview

Investment Banking in Africa

Ghana

Nigeria

South

Sudan

Kenya D.R.C

Angola

Namibia

South

Africa Lesotho

Swaziland

Mauritius Botswana

Zambia

Zimbabwe

Mozambique

Malawi

Tanzania

Uganda

Standard Bank

Stanbic Bank

Stanbic IBTC Bank

CFC Stanbic Bank

Cote

d’Ivoire

Ethiopia

Representative Office

4 Oil & Gas Client Coverage

Oil & Gas is one of Standard Bank’s six key sector focuses

A dedicated Oil & Gas team provides:

– The full corporate and investment banking product range to clients active in the industry

– Oil & Gas expertise

– Local industry knowledge and connections

– Strong client relationships

– Team of 11 in London, with offices in Johannesburg, Beijing, New York, Dubai, Johannesburg, Nairobi, Accra and Lagos

Oladele Kuti

Oil & Gas, Nigeria

+234 803 555 5777

oladele.kuti@

stanbic.com

Dinis Mendes

Oil & Gas, Angola

+244 226 432 538

Dinis.Mendes@

standardbank.co.ao

Fernando Docters

Oil & Gas, Americas

+1 212 407-5165

fernando.docters@

standardny.com

Jonathan Ross

Oil & Gas, London

+44 20 3167 5173

jonathan.ross@

standardsbg.com

Power &

Infrastructure

Oil & Gas

Mining & Metals

Telecoms & Media

Key Industry Sectors

Neill Farney

Chief Petroleum Engineer

+44 20 3167 5194

neil.fairnie@

standardsbg.com

Charlie Houston

Oil & Gas, London

+44 20 3167 5175

charlie.houston@

standardsbg.com

Damien Mauvais

Oil & Gas, London

+44 20 3167 5205

damien.mauvais@

standardsbg.com

+27 11 721 7829

paul.eardley-taylor@

standardbank.co.za

Paul Eardley-Taylor

O&G, SA & Southern Africa

+44 20 3167 5202

simon.ashby-rudd@

standardsbg.com

Simon Ashby-Rudd

Global Head, Oil & Gas

+27 11 344 5168

khwezi.tiya@

standardbank.co.za

Khwezi Tiya

Oil & Gas, South Africa

Strong technical

understanding

through reservoir

and production

engineer

Fan Bing Business Origination & Cross Border

Debt Advisory

+86 10 6649 6700

Bing.Fan@

standardbank.com.cn

Oscar Kang’oro

Coverage, East Africa

+254 20 326 8400

Oscar.kang’oro@

standardbank.com

Simon Reeves

Coverage, Middle East

+971 4302 1104

simon.reeves@

standardbank.com

Nii Okyne

Oil & Gas, Ghana

+233 302 610690

OkyneN@

stanbic.com.gh

Financial

Institutions

Consumer

Section 2:

Global LNG Market

6

Global LNG Market

Overview

Over the last 30 years, the demand for gas as a substitute for coal and oil as an energy source has increased, supplemented by the

growth of indigenous gas. In recent years, there has been a particular increase in the demand for LNG from Asian countries - which

account for 75% of global demand - as a result of continued growth and Japan’s move away from nuclear power following the

Tohoku Earthquake.

However, supply is growing too. North America (USA/Canada), Australia, Asia Pacific brownfield projects, Russia and East Africa

have all been identified as possible LNG suppliers in the future with import terminals being converted to export terminals in the US

post the shale boom. The EIA predicts the US to be the third largest LNG exporter by 2019.

Various LNG projects are planned to meet LNG demand but factors such as: permitting and technical issues (resulting in costs) and

competing demand will also inhibit project development and execution

Source: Standard Bank Analysis, IEA (2015), BG (2015), BP (2015) Wood Mackenzie (2014), Exxon Mobil (2014)

Various LNG

projects have been

planned globally but

the development of

these will be

determined by the

level of global LNG

market demand after

2020.

Not all planned LNG plants will be built. Securing sales contracts and low cost construction

and / or upstream costs needs to be a priority for all potential greenfield projects

0

200

400

600

800

1000

1200

Current Supply IEA 2019 BG 2025 BP 2030 Wood Mackenzie2030

Exxon Mobil 2040

Operational Construction Planned Selected Global Demand Predictions

MT

PA

7

2012 – 2016

– 67 MTPA under construction in Australia (new projects, e.g. Angola and PNG now online/being refurbished)

– Lead US regas conversions will come online (e.g. Sabine Pass)

– Four projects took FID in 2015 representing over 19 MTPA capacity, divided between Corpus Christi, Freeport and Sabine

Pass (all USA) along with Cameroon FLNG

2019 onwards

– Potential LNG from USA, Canada, Russia and East Africa, supplying potential Asian upside demand of 100 MTPA

Global LNG Market

Market Opportunity

What supply will meet growing long-term demand?

Source: BG Group, Multiple

New LNG supply

capacity is expected

from Australia and

US regas

conversions (fuelled

by shale gas), with

newer projects from

Canada and

Cameroon also

planned

Global demand is

relatively flat (due to

weak demand fro

European and

China) prices have

fallen as a result of

low oil prices as well

as both structural

and seasonal

factors (weakening

demand from Asia)

New markets like the

Baltics, Egypt,

Poland, Bahrain,

Finland and Jordan

are buying LNG

8

0

2

4

6

8

10

12

2015 2016 2017 2018 2019 2020

IMF - NG, Europe

IMF - NG, LNG Japan

IMF, NG, Henry Hub

World Bank - NG, Europe

World Bank - NG, LNG Japan

World Bank - NG, Henry Hub

Global LNG Market

LNG Demand & Supply Commentary

November 2015 -

Cheniere has sold

19.75 MTPA through

long term contracts

with 4 MTPA

planned for spot

markets

Asian Buyers

increasingly

focusing on cost as

JCC and Henry Hub

price differentials

remains large

Global demand is likely to remain flat with supply expected to grow significantly as new projects currently under construction and US

LNG start coming online

Traditionally LNG contracts priced on oil indexation basis (e.g. Japanese Crude Cocktail – “JCC’’), Asian buyers now used US gas

glut to negotiate contracts indexed to Henry Hub (“HH”) prices. Japan, Korea and Singapore recently concluded long-term contracts

solely gas indexed

Asian energy policy uncertainty (e.g. nuclear build) is creating LNG demand uncertainty and Asian buyers want increased

flexibility in contract volumes and pricing, raising challenges for greenfield LNG plants

Source: World Bank; IMF (2016)

Gas and LNG prices 2015 - 2020

BG expect global LNG demand to increase @ 4.2% - 5.7% CAGR to 2025 (driven by Asia)

meaning a 150 MTPA supply gap with market conditions inhibiting long-term contracts

US Regas conversions are expected to supply some but not all demand, leaving an

opportunity for – inter alia - Mozambique LNG

9 Global LNG Market

Australian - Projects Under Construction

Australia’s position

as lead exporter in

the Asia-Pacific

region is being

threatened by the

low oil price (due to

perceived higher

cost projects)

World’s first floating

LNG plant being

build in Australia

Commentary

Australia has six (6) LNG developments under construction

Projects that came online in 2015 include Australia-Pacific

Train 1, Gladstone Train 1 and Queensland LNG

At the current oil price these projects are expected to struggle

to break even though they will make Australia the leading

LNG exporter by 2018

Australia has sales contracts in place with Japan, China and

South Korea

Location Total Capacity (MTPA) Sponsors Shipping Date

Gladstone LNG T2 Queensland 3.9 Total Q2 2016

Australia-Pacific LNG T2 Curtis Island 4.5 Origin/ConocoPhillips/Sinopec Q2 2016

Gorgon T2 Barrow Island 5.2 Chevron Q4 2016

Prelude Broome 5.3 Shell TBA 2017

Wheatstone Onslow 8.9 Chevron Q4 2016

Ichthys Darwin 8.9 Total Q3 2017

Total 36.7

Currently, Australia is the third largest exporter in the Asia-

Pacific region and the fourth largest in the world

Australia exports 18.9 MTPA since 2011 with a value of

around $11.1 billion

Gorgon and Wheatstone are seen as large and challenging

mega-projects

Prelude is the world’s first floating LNG project to come online

in 2017

The Gorgon project

which was

supposed to come

online in 2015 has

been subject to

cost increases Source: Gas Strategies

Australian projects are under pressure from perceived high capital cost and falling oil prices

Gorgon LNG has hit

technical difficulties,

resulting in a

temporary

suspension of

exports

10 Global LNG Market

USA - Recent Project Approvals

January 2015 - US

Congress passed

bill HR 351 which

requires DOE to

process LNG export

permits within 30

days and US Senate

passed legislation

S33 which sets a

45-day approval

window for DOE

FTA countries

(South Korea)

require minimal

approval, non-FTA

countries (Europe

and Japan) require

DoE approval

Completion of

Panama Canal

widening in 2015 will

shorten journey for

large LNG carriers

from the Gulf Coast

to Asia by over

10,000km, saving $3

million in transport

costs per delivery

Increase in pace of non-FTA approvals by US DoE, driven by

US Congress (30 day timeframe) and Senate legislation (45

day timeframe)

US lawmakers debate the use of US shale gas as geopolitical

tool in light of deteriorating relations with Russia. Balancing

against US domestic supply concerns

Location Total Capacity (MTPA) non-FTA Allowance (MTPA) Sponsors FID 2016

Cameron LNG T4 & 5 Louisiana 13 13 Sempra Energy

Lake Charles Louisiana 15.3 15.3 Southern Union Comp.

Sabine Pass T6 Louisiana 17 17 Cheniere Energy

Corpus Christi Train 3 Texas 10 10 Cheniere Energy

Magnolia Trains 1-4 Louisiana 8 8 Liquefied Natural Gas

Elba Island Georgia 2.5 2.5 Kinder Morgan/Shell

Total 65.8 65.8

Total capacity of pending approvals for export to non-FTA

countries is 11tcf/year (231 MTPA) across 24 proposed

facilities – roughly the size of the entire global LNG

market in 2013

Most facilities require conversion only (brownfield sites) –

average capital spend $2 - $5 billion.

Sabine Pass construction began August 2012, first unit

completed late 2015, units 3 and 4 online 2016/7

Source: Gas Strategies

Commentary

Many projects will not ultimately be built. Why? local opposition; developer expertise;

expected returns or no off take market, as seen with Jordan Cove’s application by FERC

Major future Henry Hub price increases could make landed US LNG less competitive in Asia, if

LT Asian LNG prices $10-11 and Henry Hub $5

Africa Producers?

Section 3:

12

75 Tcf of

commercially

recoverable gas

announced so far

Area 1 (Anadarko Operated)

A Developing Mega Project

Area 1 has discovered 75+ Tcf Recoverable

Reserves and 100 Tcf of expected Gas In

Place

These discoveries rank among the world’s

largest over the last 20 years and have the

potential to elevate Mozambique to the third-

largest exporter of LNG in future years

Prosperidade

– 17-30+ Tcf and Reserve Certification

achieved

Golfinho / Atum complex

– 16-26 Tcf and completed Initial Appraisal

drilling

The first 2 trains will each produce 6 MTPA of

gas from the Golfinho/ Atum fields which will

be developed solely by Area 1

Area 1 awarded the onshore EPC contract to

CB&I/Chiyoda/Saipem consortium in May

2015

Anadarko have secured non-binding HOAs for

purchase of LNG with reported buyers from

Japan, Thailand, Indonesia, Singapore and

China

Anadarko has a 26.5% interest and co-owners

include Mitsui E&P (20%), BPRL Ventures

(10%), ONGC/Oil India (20%) , PTT

Exploration & Production (8.5%) and ENH

(15%)

Source: Anadarko

HoA’s for over 8

MTPA have been

signed with Asian

buyers. SPA

negotiations

ongoing

50 MMSCFD

domestic gas

available from each

of first two trains,

with MoU agreed

with ENH

13 Area 4 (ENI Operated)

A Developing Megaproject

Exploration Activities

11 wells drilled so far

– 85 GIP discovered

– 32 - 34 Tcf exclusively in Area 4

– 100% success rate

Development Activities

Straddling resources

– Unitisation & Unit Operating Agreement signed with

Anadarko Dec 2015 for first 24 Tcf (12 Tcf each)

– Initial onshore development of 2 LNG trains, likely to

follow FID of Area 1’s Trains 1&2

Non straddling resources

– Initial FLNG ship in Coral field in Area 4, to be potentially

followed by a second

– Field Development Plan approved for 6 wells for 15 Tcf

of gas in place

– This FLNG plant is envisaged to deliver [3.4] MTPA at a

USD [10] bn cost

– Shortlisted FLNG EPC Consortia are (1) KBR, Daewoo

and KBM; (2) Chiyoda, Hyundai and Saipem; (3) JGC,

Samsung, Technip

ENI East Africa has a 70% interest (of which Petrochina owns

28.57%, so ENI has net 50%of Area 4 and Petrochina 20%)

and co-owners include KOGAS (10%), GALP (10%) and ENH

(10%)

Source: Eni

As Area 4 Operator,

Eni has quoted GIP

of 85 Tcf

China National

Petroleum Corp

(CNPC) completed

purchase of 28.57%

of ENI East Africa

(equivalent to 20%

of Area 4 for $4.2bn

on July 28th 2013

Area 4 is now owned

ENI (50%), CNPC

(20%), GALP (10%),

KOGAS (10%) and

ENH (10%)

BP has been

disclosed as

offtaker for [3.4]

MMTPA

14 Tanzania: Blocks 1, 2 & 4

LNG is currently considered the primary route to market for the recent discovered gas reserves (up to 50 Tcf is cited), given the

currently small domestic gas sector and the potentially high cost of developing offshore fields

Joint LNG facility highly likely and - we understand - is favoured by Government of Tanzania (GoT)

– Operators of each of the blocks - BG and Statoil, have established commercial parameters around the LNG facility and have

established an integrated project team led by BG

– Individual trains may be operated by respective offshore block operators although facility will most likely be jointly owned.

Likely run on a tolling basis

– Preferred site is at Lindi, but there have been major delays in gaining access to site which has impacted schedule

– Pre-FEED contracts awarded, FID not expected before 2019/2020 (Based on no site access at January 2016)

– Based on current commercial reserves, a two to three (2 - 3) train facility of [5] MTPA per train, will be possible, with potential

of up to six (6) trains at the site

TPDC has the option to exercise back-in rights of the licensed blocks and take ownership in the facility

Given discoveries to date there may be competing claims on the gas in place between LNG exports and supply to the domestic

market

– Addressing these issues is critical to determine the impact of LNG on the Tanzanian economy

Overview

LNG likely route to

market given

multiple gas

resource

discoveries since

2010

Gas resource

enough in time for

as much as six 5

MTPA trains, may

grow as exploration

activities continue

Several

legislative/contractu

al developments still

pending (e.g. Host

Government

Agreement)

15 West Africa: FLNG?

Overview

Cote d’Ivoire/

Ghana/Togo/Benin Recent discoveries show future FLNG

potential however domestic gas is

currently a priority

Nigeria The gas master emphasizes

domestic gas use for power.

However numerous existing

large and small stranded gas

opportunities that could be

monetised by FLNG are

available. Brass and OK LNG

greenfields are still being

worked on

Cameroon Government has been

backing an aggregated,

land based LNG project

(CLNG) - potential exists

for an FLNG bridging

project.

GoFLNG reached FID in

2015

Equatorial

Guinea Two, credible, mid-

scale FLNG projects

under consideration

Gabon Pre-salt gas potential,

exhibited by recent Damian

& Nyonie Deep discoveries-

current drilling activity is

targeting oil – some fiscal &

regulatory issues to be

resolved

Congo The Congo-B Government

and NewAge are pushing

for a small scale, near-

shore FLNG solution for

marine XII gas

monetisation

Angola Angola LNG is expected to

come back online in Q1

2016.

West Africa offers stranded gas and benign sea conditions

that favour FLNG, while smaller scale solutions that have less

than 3 MTPA are suited to both producers and buyers in a

low price and oversupplied market

Cameroon’s GoFLNG became the first African FLNG project

when it was sanctioned in 2015. The Golar vessel size is 1.2

MTPA. Offtake agreements have been finalised and

Gazprom is the buyer at an oil indexed FOB price

Fortuna FLNG in Equatorial Guinea with a capacity of 2.2

MTPA is anticipated to reach FID in 2016 after securing

offtake agreements with several buyers (according to

Woodmac)

Two more FLNG projects in West Africa may be announced:

one using Golar's second vessel (which is currently

unassigned to a project), in Equatorial Guinea, and one

utilising an Exmar-built boat in Benin

According to Woodmac the West African FLNG projects have

a potential breakeven price of below US$8/MMBTU (nominal,

discounted 12%). As a result West African FLNG is

apparently competitive with brownfield US LNG

Angola LNG is expected to restart in Q2 of 2016, rejoining

Equatorial Guinea and Nigeria’s Bonny LNG as African

LNG exporters Source: Woodmac;Standard Bank

West Africa has

stranded gas and

benign sea

conditions that may

suit FLNG

The lead project is

in Cameroon with

another front-runner

in Equatorial Guinea

16 North Africa: Egypt and Mauritania

Algeria was the first country in the world to export LNG in 1964 and is

currently Africa’s largest exporter of LNG. Despite recently adding capacity

Algeria’s LNG output was down by 4.6% in 2015. Most of Algeria’s LNG

exports are destined for France, Spain and Turkey.

Egypt stopped exporting LNG in 2014 as a result of a domestic gas crisis

caused by a supply crunch due to a decline in gas exploration and

production, as the gas price ceiling imposed by the government did not

incentivise production.

The discovery of approximately 17 tcf of gas by Kosmos Energy is in the

Greater Tortue Complex which includes discoveries in Ahmeyim,

Guembeul -1 and Tortue 1. A gas discovery of this scale has the potential

to transform the upstream landscape of Mauritania.

Securing a unitisation agreement between the Senegalese and

Mauritanian governments is the next step in the development of Tortue

West (Ahmeyim discovery). A Memorandum of Understanding (MOU) has

been signed, setting the basis for negotiations on a cross-border

development. The Zohr field was discovered by Eni in August 2015, it is in

the Shorouk Offshore Block in the Nile Delta and adjacent to the Cyprus

boarder. Initial estimates suggest the discovery could hold as much as 30

tcf of lean gas in place. The Idku and Damietta plants did not export any

cargoes during the year due to feedgas shortage as priority has been

given to domestic demand. Zohr could free up gas for export.

Eni plans to fast track the development of Zohr, utilising existing

infrastructure with plateau production of 2.7 bcf per day expected. Phase

one of the development could utilise spare capacity in Eni's El Gamil

facilities, 190 kilometres away. However, gas from the field is understood

to contain H2S and as such, the existing facilities will require modification.

Phase two of the development would require a new dedicated processing

facility.

Overview

1 Guembeul 1 in Senegal

Ahmeyim in Mauritania 2

3 Tortue 1 in Mauritania

4

Zohr in Egypt

1

2

3

6

The discovery is of

huge importance to

Egypt. Declining gas

output since 2011

has led to a

shortage of supply

and the country

began importing

LNG in 2015 to help

meet rising demand

In December 2015,

Eni concluded a gas

price agreement

with EGAS. It is

understood that gas

from Zohr will

receive a Brent

linked price of

between

US$4/MMBTU and

US$5.88/MMBTU

According to

WoodMac under

Mauritanian fiscal

terms, exporting 2.5

tcf of gas as LNG to

European markets

would generate

US$500 million

Mauritania

Egypt

Senegal

4

5 Idku and Damietta in Egypt

5

Skikda and Arzew - Bethioua in Algeria

6

Algeria

Africa Consumers?

Section 4:

18 18

On 19th of May 2015, the Department of Energy (“DoE”) in South Africa released the Gas to Power Request

for Information (“RFI”). The DoE intends to use the responses received to design a procurement programme

for 3,126 MW of generation capacity.

Through the Gas to Power programme the DoE envisages creating a market where the demand for gas and

its supply becomes available simultaneously, this creates an opportunity for the development of the SA gas

industry to supply the demand created by the Gas IPP. In the absence of indigenous gas, gas will have to be

imported.

The RFI explains that the Gas to Power programme can be commissioned in either of the two ways:

– Bundled Project: a project for all the elements, where elements describes the different participants from gas supplier,

regasification facility, power generation facility and early power generation facility.

– Unbundled Project: a project for some, but not, all elements

Depending on the type of project chosen, these are the options available to the respondents

South Africa

The Department of

Energy is in the

process of finalising

the Gas Utilisation

Master Plan for

South Africa

Eskom will be the

sole Power Buyer of

Power Capacity

given their current

capacity as the

single buyer of

electrical energy

Subsequently, 170

RFI’s were received

in July 2015

(publicly announced

at the Gas Options

Conference in

September 2015)

Introduction to Gas to Power RFI

Bundled Project

Option 1 Single Project Company, made up of one or more related or unrelated entities as a

consortium, responding to provide a Bundled Project

Option 2 Not yet a member of a consortium but wishes to form/ join a consortium to

provide a Bundled Project

Unbundled Project Option 3 Responding to provide one or more Elements

Gas has been defined as any natural gas which occurs naturally underground or

unconventional gas such as shale or CBM

The other gasses include: syngas, underground coal gasification (“UCG”) or conventional coal

gasification as part of integrated gasification and combined cycle (“IGCC”), LNG, CNG or LPG

19 19

On 15th February 2016, Karen Breytenbach of the IPP Office presented to Africa Gas Forum on the 3,126 MW Gas to Power (”GTP”)

programme. Standard Bank’s summary of the speech is as follows:

GTP has resulted in the re-drafting of the Integrated Energy Plan and Integrated Resources Plan;

One of the main objectives of GTP is to unlock the opportunities which are presented by SA O&G upstream developments

(both offshore and shale), as the importation of LNG for GTP is potentially expensive;

Government will backstop the credit risks of Eskom’s PPA;

Developing a domestic gas market is very important, Department of Trade Industry has established a team to unpack

downstream industrialization and take forward developments;

A State Owned Company may be tasked with developing new domestic pipelines;

Government is currently conducting ESIA’s at all three ports (Saldanha, Richards Bay and Coega) as well analyzing

necessary servitudes and pipelines. The State will allocate a common IPP site for all bidders but if a bidder has its own site a

better site then they may use their own;

FSRU to be used initially (land-based terminals may be constructed at a later stage if the country never finds indigenous gas)

A bundled procurement approach will be taken, with enforced third party access to the FSRU and pipelines. The different

elements will not be permitted to cross-subsidise each other in a Bundled Project

Future IPP programs at the initial site (with the FSRU) will use the same FSRU as the initial IPP (as only one FSRU is

permitted per port)

Request for Qualification targeted to be issued in April / May 2016

Africa Gas Forum – IPP Office Speech

Overview

The IPP Office

made a speech

on 15th

February 2016

to the Africa

Gas Forum

DoE Minister

made a

Parliament

speech dated

17th February

2016, that

disclosed a

new

determination

for 1500 MW of

gas-fired power

relating to

Ankerlig,

Gourkiwa and a

new plant

20 20

Third party access to Pipelines and FSRUs

How will this be technically achieved? There are potential LNG carrier scheduling constraints and challenges if

the IPP is not operated at base load

How will this be commercially tendered? How will capacity be allocated to local gas market suppliers?

A consequence is the Bundled/Integrated group will be required to be unpacked into individual separate elements

(i.e. LNG purchaser, FSRU operator, Pipeline Operator, Gas Seller, IPP). Will NERSA have capacity to regulate

up to five separate entities in each Project?

Gas market development risk

Will the IPP Group also be allowed to sell gas locally (to other IPPs or industrial users)? It appears so. If there

were no other future gas supply bidders, the IPP Group could become the regulated gas seller/ marketer for the

geographic region

A State Owned Company is being targeted to develop new local gas pipelines for “delivering the gas to the

people”. Which State Owned Company will be responsible? How will this role interface with the allocation of future

capacity?

Necessarily, Day 1 FSRU and Pipeline capacity will be more than the capacity used to generate kWhs. Who will

pay for this excess capacity? Will the market take a risk on it? Or the State? How will the enabling regulations

and projects be developed?

Africa Gas Forum – IPP Office Speech

Implications

Several issues

arise from what

was a very

positive speech

by the IPP

Office, for

example

21 21 Our Schematic Understanding of the ‘’Bundled Group’’ @ Financial Close

Paul Group

Paul A Paul B Paul C Paul D [and Third

Parties post tender]

Paul E

LNG

Purchaser FSRU Pipeline Gas Sale IPP

Regional Gas Market

We understand the Bundled Group will be responsible for the separate ring-fenced companies

that perform the individual activities falling under the Project scope

TPA TPA

22 22 Our Schematic Understanding of the Bundled Group Post Indigenous Gas

Paul Group

Paul A Paul B Paul C Paul E

LNG

Purchaser FSRU Pipeline Gas Sale IPP

We understand the long term policy intention is to be able to replace imported LNG with

indigenous gas (shale or offshore) as and when it is available in sufficient quantities

Shale?

Offshore Gas? TPA

Paul D [and Third

Parties post tender]

Regional Gas Market

23 23

Multiple Scenarios (SBSA illustration)

The Potential Endgame?

Non-Shale Prospects

Shale Gas Prospects

Offshore O&G Prospects

Eskom’s fleet

Gourikwa

Mossel Bay GTL

Durban

?

Kudu IPP?

Ibhubesi IPP?

CBM potential being evaluated in the Region

– Botswana estimates a reported 60Tcf

– Zimbabwean potential est. 40Tcf

– SA est. approx. 15-40Tcf

Port Elizabeth Ankerlig

Pipeline to Area 1/4?

SA Gas Infrastructure Requirements:

– LNG import terminals

– OCGT plants

(fuel switching/CCGT)

– New CCGT plants

– Pipeline network

Key centres

Fuel Switch Peaker

New Gas

Potential New IPP Peaker

Gas-to-Liquids

Potential New Transmission

Gas Pipeline

Pande/Temane

Maputo ?

Secunda Johanneburg

Pretoria Potential Gas Pipeline

Coal-to-Liquids

Refined Product Pipeline

?

? ?

? ?

? ?

?

?

Richards Bay

Saldanha

Potential FSRU

?

Key

24

Namibia

NamPower’s open 200 MW power tender was awarded to Xaris Energy, including a FSRU at Walvis Bay.

More than 60% of Namibia’s power is imported from South Africa, Zimbabwe, Mozambique and Zambia

Southern Africa is experiencing escalating power problems and key supply contracts expire in June 2016

The Xaris project will therefore reduce Namibia’s reliance on electricity imports from the SAPP

Fuel sourcing will be from global markets with worldwide spot price linkages

The project will have the following components, for which Standard Bank is acting as MLA:

– FSRU (supplied by Excelerate Energy);

– Port;

– Gas pipeline;

– IPP; and

– Grid Connection.

Gas to Power Option

Namibia imports

more than 70% of its

power from

Southern Africa

A LNG to power

tender has already

been conditionally

awarded in Namibia

The Walvis Bay LNG/FSRU to Power Project remains at preferred bidder stage

25 North & East Africa

Overview

Algeria’s Sonatrach supplies 640mcm of gas to Morocco

through the Algerian pipeline that passes through Northern

Morocco under a 10-year contract which started in 2011.

Morocco plans to import 2 MTPA of LNG starting in 2020 as

part of the phase one of its LNG import plan with the second

phase expected to be imports of 3.5 to 4 mtpa by 2025.

Egypt began importing LNG in April 2015 in order to ease its

chronic natural gas feedstock shortages (for power

generation) and has gradually increased LNG imports to a

monthly high of 540m Bcm in November 2015. Egypt’s

power sector is the largest consumer of gas and accounts for

57% of national gas consumption. At year-end 2015, Egypt

had two FSRUs located at Ain Sokhna. In a bid to free up gas

for consumption in other sectors (chiefly residential and

fertilizer), Egypt is expected to issue a tender for a third

FSRU in Q1 2016 (also at port Ain Sokhna)

Kenya plans to build a 700MW gas-to-power plant at Dongo

Kundu. Before the discovery of 1.8 Tcf of gas in onshore

block 9 by Africa Oil Corp, Kenya was floating an idea to

import 1 mtpa of LNG from Qatar Gas off the port of

Mombasa. As it stands, Kenya is expected to complement

gas from block 9 with imports of LNG into Mombasa.

Mauritius is also looking to import LNG and the Mauritius

Ports Authority has hired Royal HaskoningDHV to look into

possibilities for Port Louis to import LNG.

Mozambique may also attempt to import LNG from Matola

as a feedstock for gas-to-power while it awaits for domestic

gas from the Rovuma Basin to be transported by either

pipeline or FSRU

Mauritius is

contemplating

setting up a 135-150

MW thermal power

plant based on

CCGT technology at

Les Grandes Salines

in the Port Louis

harbor vicinity

Morocco is

understood to be

looking to build 6.3

GW of combined-

cycle gas turbine

(CCGT) power

plants and related

gas industries, all of

which would be

fuelled by LNG

imports at Jorf

Lasfar 2 FSRU at Ain Sokhna

Proposed Qatar LNG FSRU at Mombasa 3

4 Proposed FSRU at Matola

5 Proposed FSRU at Port Loius

Proposed FSRU at Jorf Lasfar

Kenya D.R.C

Angola

Mauritius Mozambique

Egypt

2

3

4 5

1

1

North Africa

East Africa

Morocco

26 West Africa

Overview

In Cote D’Ivoire, Endeavor Energy has partnered local

company Starenergie2073 for the 375 MW LNG-to-power

Songon IPP. Located close to Abidjan, it will include the

development of purpose-built LNG import infrastructure and

an FSRU. Why? Domestic gas production is declining.

While there is potential to develop more offshore reserves,

supply is insufficient to keep pace with power demand

In Senegal, state-owned utility Senelec has signed a

preliminary deal with Japan’s Mitsui and Qatar’s Nebras

Power to build an FSRU and 400 MW power station.

Senegal’s proposed LNG-to-power project is less advanced.

Senegal’s objective is to boost the country’s growth through a

steady power supply at a competitive cost (the country is

presently dependent on HFO and diesel to largely fuel its

power plants)

Ghana was the first country in sub-Saharan Africa to turn to

LNG to meet its gas shortage. Three FSRU projects are

proposed along its coast at two separate sites. Quantum

Power and WAGL (Sahara/NNPC) have proposed separate

developments at Tema (each involving Golar), whereas

Endeavour Energy/GE are leading a development at

Takoradi (also involving Shell and Excelerate Energy)

Similarly, in Benin, London-listed Gasol which has signed a

long-term cross-border agreement to supply 2.8 million cubic

metres of gas per day to Ghana’s Volta River Authority from

an FSRU, which it plans to install in Cotonou harbour in

adjacent Benin

1 Proposed Gasol LNG FSRU

Proposed Quantum Power FSRU or WAGL FSRU 2

3 Proposed Endeavor Energy, General Electric and Finagestion FSRU

4 Proposed Endeavor Energy and Starenergies FSRU

5 Proposed Senelec, Mitsui and Nebras Power FSRU

West Africa Gas Pipeline

4

5

3 2

1

Senegal

Ivory Coast

Ghana

Nigeria

Benin

Togo

Source: Interfax; Woodmac; Petroci;Senelec; Standard Bank

Ghana is presently

the front runner in

developing LNG

import projects in

West Africa

Several projects are

under development

across the region

Quantum Power and

Ghana National

Petroleum

Corporation

(“GNPC”) have

signed Heads of

Terms for Tema LNG

which will have a

capacity of 3.4

MTPA

Conclusion

Section 5:

28 Conclusion

The 18 month – and continuing - trend of declining oil prices does not have a uniform impact on global LNG

developments. Whilst increased LNG supply (e.g. USA, Australia) and falling prices (e.g. Brent-linked or JCC) make it

hard for new greenfield LNG export projects, there is a market window for new LNG import projects

Southern Africa (SA & Namibia) have identified LNG imports as a means to relieve the regional electricity shortage and

are developing import projects. There may also be one FSRU project in Mozambique

Within East Africa (Mozambique & Tanzania), the combination of LNG demand increasing less slowly than expected

and LNG prices falling with oil prices have created challenges for achieving FID for LNG exports on the back of major

gas discoveries. Mozambique continues to have market advantages and is expected to achieve FID well before

Tanzania

Interestingly, West Africa may offer a combination of onshore, FLNG and FSRU projects spread across multiple

countries:

– Nigeria, Equatorial Guinea and Angola (more or less) are existing onshore LNG producers

– Cameroon declared FID on FLNG in 2015 and may soon be joined by Equatorial Guinea

– FSRU developments may occur in Benin, Cote D’Ivoire, Ghana and Senegal

Overview

2016 may define

Africa’s position in

the future LNG

market

There are multiple

ongoing export and

import

developments

across the region

with low oil prices

helping as many

projects as hinder

them

19 countries in

Africa exploring

opportunities to

import or export

LNG (including

existing players)

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