Midstream Oil and

Gas
Industry Report
 Midstream Oil & Gas industry 2017

About Us

Agusto & Co. is a foremost research house and an expert voice on the major economies,
industries and businesses operating in Sub-Saharan Africa. We pride ourselves on gathering
and contextualising often elusive information and data, which our competent analysts interpret
and articulate in an objective and factual manner. Our database on Sub-Saharan African
economies spans more than 25 years and across the high-level macroeconomic information to
the granular individual company ratios.

For over 25 years, we have employed our unique research methodology and wealth of
experience in Sub-Saharan Africa to deliver considered perspectives on more than 50 industries
including Banking, Oil & Gas, Real Estate, Food & Beverage, Construction, Building Materials
and Telecommunications. Our unique propositions include assigning each industry a risk rating,
taking into cognisance the host country’s risk profile, the market size and potential of each
industry, the key players and the Industry financial condition.

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 Midstream Oil & Gas industry 2017

Table of contents

OBJECTIVES OF THE REPORT ------------------------------------------------------------------------------------ 10

COVERAGE OF THE REPORT ------------------------------------------------------------------------------------- 10

SOURCES AND LIMITATIONS OF DATA ------------------------------------------------------------------------- 10

SECTION ONE: INDUSTRY OVERVIEW --------------------------------------------------------------------------- 12

Background of the Nigerian Oil & Gas industry ......................................................................................................13

Global Midstream Oil & Gas industry .........................................................................................................................15
The role of the midstream Oil & Gas industry in the Nigerian economy .......................................................17

SECTION TWO: INDUSTRY STRUCTURE ------------------------------------------------------------------------ 20

Structure of the Midstream Oil & Gas industry .......................................................................................................21

SECTION THREE: OPERATIONAL DYNAMICS ------------------------------------------------------------------- 26

Background...........................................................................................................................................................................27
Pipeline system ...................................................................................................................................................................27
Road truck system ..............................................................................................................................................................29
Pipelines and Trucking combination system ............................................................................................................30
Storage systems ..................................................................................................................................................................31
Gas Processing ....................................................................................................................................................................32

SECTION FOUR: COMPETITIVE ENVIRONMENT AND KEY PLAYERS ----------------------------------------- 34

Competitive Environment ...............................................................................................................................................35

Trucking operations/market ...........................................................................................................................................35
Pipeline operations/market ............................................................................................................................................36
Market for Storage of Petroleum products ................................................................................................................38
Gas Processing market .....................................................................................................................................................39
Key Players ...........................................................................................................................................................................40

SECTION FIVE: REGULATORY STRUCTURE OF NIGERIAN MIDSTREAM OIL & GAS INDUSTRY ---------- 44

Background...........................................................................................................................................................................45
The Petroleum Act .............................................................................................................................................................45
Oil Pipelines Act and the Oil and Gas Pipelines Regulations .............................................................................45
Petroleum Profits Tax Act (PPTA) .................................................................................................................................45
National Domestic Gas Supply and Pricing Policy ..................................................................................................46
Nigeria Gas Master Plan...................................................................................................................................................46
Petroleum Industry Governance Bill (PIGB) ..............................................................................................................47
The Department of Petroleum Resources (DPR) .....................................................................................................49
Regulatory Outlook ...........................................................................................................................................................50

SECTION SIX: INDUSTRY ECONOMICS -------------------------------------------------------------------------- 52

Industry Economics ...........................................................................................................................................................53

SECTION SEVEN: SWOT ANALYSIS ------------------------------------------------------------------------------ 57

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 Midstream Oil & Gas industry 2017

SWOT Analysis.....................................................................................................................................................................58

SECTION EIGHT: KEY SUCCESS FACTORS & KEY RISK AREAS ----------------------------------------------- 61

Key Success Factors ..........................................................................................................................................................62

Infrastructural development...........................................................................................................................................62
The need for more Private Sector participation ......................................................................................................62
Diversifying the products, markets and types of transportation modes .........................................................63

KEY RISK AREAS --------------------------------------------------------------------------------------------------- 63

Pipeline Vandalism ............................................................................................................................................................63

Government underfunding ..............................................................................................................................................64
Infrastructure .......................................................................................................................................................................64
Amendment of the NLNG Act .........................................................................................................................................65
Trucking Arrangements and Haulage Delays ...........................................................................................................66
Health and Safety...............................................................................................................................................................66

SUMMARY AND OUTLOOK --------------------------------------------------------------------------------------- 68

APPENDIX 1: RATINGS DEFINITIONS --------------------------------------------------------------------------- 71

APPENDIX II: MAJOR CRUDE TERMINALS IN NIGERIA -------------------------------------------------------- 72

APPENDIX III: EXPORTING OIL TERMINALS AND STORAGE FACILITIES ------------------------------------ 73

APPENDIX IV: SPILL VOLUMES DUE TO PIPELINE VANDALISM IN 2016 ----------------------------------- 74

APPENDIX V: NIGERIA’S GAS OUTPUT/SUPPLY (2016 DATA) ----------------------------------------------- 75

APPENDIX VI: NIGERIA’S GAS OUTPUT/SUPPLY (2016 DATA) ----------------------------------------------- 77

APPENDIX VII: DEPOT STORAGE CAPACITY IN NIGERIA ------------------------------------------------------ 78

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 Midstream Oil & Gas industry 2017

LIST OF FIGURES
Figure 1: Characteristics of the Global Midstream Oil & Gas industry ............................................... 16
Figure 2: Segmentation of the Oil & Gas industry .................................................................................... 17
Figure 3: Structure of the Midstream Oil & Gas industry........................................................................ 21
Figure 4: Phases of Pipelines in Nigeria........................................................................................................ 27
Figure 5: Physical flow of petroleum products: the retail route used by major and independent
companies ................................................................................................................................................................ 31
Figure 6: Storage Locations in Nigeria .......................................................................................................... 32
Figure 7: Operational dynamics for Gas projects ...................................................................................... 32
Figure 8 : Oil terminals and their operators in Nigeria ............................................................................ 37
Figure 9: Depot Ownership Distribution by Operators ............................................................................. 38
Figure 10: The Nigerian Oil & Gas industry - Institutional Regulatory Structure .......................... 49
Figure 11: Cost structure of midstream operations-pipeline activities .............................................. 54

LIST OF TABLES
Table 1: Top 10 Global Midstream Companies ........................................................................................... 15
Table 2: Volumes produced by oil terminals in Nigeria in 2016 .......................................................... 18
Table 3: Nigeria - Tank Farm Capacity of Petroleum Products ............................................................. 22
Table 4: Gas processing plants in Nigeria .................................................................................................... 24
Table 5: Major Gas pipeline networks in Nigeria ....................................................................................... 28
Table 6 : Capacity of the Largest Depots in Nigeria ................................................................................. 39