Nigeria+Natural+Gas

=Addax Likely To Remain A Stable Investor Of Nigerian Natural Gas Over The Next Five Years=

Executive Summary:
China, most notably Addax, a subsidiary of China Petroleum & Chemical Corporation (Sinopec),is likely to remain a stable investor of Nigerian natural gas and to increase in the next five years. Nigeria is looking to expand the growth of its natural gas sector by implementing zero gas flaring policies and by developing new infrastructure However, most of Nigeria's natural gas lies untapped, which is predominantly owing to the lack of investments. Currently, recent discoveries of natural gas in Mozambique have had a competitive edge over Nigeria because the location of Mozambique makes it more appealing to Chinese investors.

Discussion:
The natural gas sector of Nigeria is heading for exponential growth due to the development of new infrastructure and the government implementing zero gas flaring policies. In Jan. 2013, Nigeria was ranked the largest gas reserves of Sub-Saharan Africa and ninth in the world. According to the 2008 BP Statistical Energy Survey, Nigeria has proven natural gas reserves of 186 trillion cubic meters, and holds 82 percent of Sub-Saharan's natural gas reserves. Nigeria has emphasized that the country is eager to capitalize on this key asset after years of wasteful flaring from oil fields. Nigeria's Master Plan for Gas aims at helping the country to reap the rewards of a global ‘dash for gas’, while new projects coming online will enable Nigeria’s gas to benefit domestic consumers as well as international buyers.

CBO Capital Partners Oil and Gas Monitor states,"Nigeria maintains one of the most developed upstream oil and gas sector in Africa, but has not truly reached its potential. Development is hampered by low investment, poor legislation, and corruption”. Wumi Iledare, director of Energy Information and Data Division, Center for Energy Studies at the Louisiana State University, stated, “The biggest challenge to gas investment in Nigeria is the lack of coherent gas fiscal regime and tested gas pricing framework. There is no doubt on gas availability, the only doubt is the institutional framework to harness it”. While much of the natural gas in Nigeria remains untapped owing to lack of investments, Mozambique has a more competitive advantage against Nigeria as it is now attracting significant interest from international investors to fund its gas sector.

Addax currently has licenses and 100 percent working interest for offshore OML 123 and OML 137 blocks. OML 123 has a 8,600 acre undeveloped gas discovery in Oron East, and several exploration prospects. OML 137 was surveyed in 2006 and contains several potential commercial natural gas discoveries in Shokololo, Toriye, Odum, Asanga, and Ofrima. Nigeria Natural Gas Industry report of 2013 listed Addax as one of the industries major operators.



** Analytic Confidence: **
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, did not use a structured analytic method worked alone and collaborated with a team. The subject is moderately complex and the deadline was moderately difficult to meet.
 * Analyst:** RoseAnna Wright