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LPG: THE FORGOTTEN ENERGY

NOT AN OFFICIAL UNCTAD RECORD

Mr. Vaughan GIBSON


Managing Director, Oryx Oil Company Ltd, Tanzania
9th Africa Oil & Gas, Trade & Finance Conference
Maputo, 2nd June 2005

PART I
AOG AN EXAMPLE OF LOCAL
INTEGRATION

OUR PROFILE (1)


An integrated mining and petroleum company in
rapid growth
A solid African presence: > 15 countries
> 1000 persons and more than 30 nationalities
3 brand names: ORYX, ASCOT and ADDAX
Turnover: > USD 5 billions
4 strategic divisions

OUR PROFILE (2)

DOWNSTREAM FOCUS (1)


A growing infrastructure for ORYX OIL & GAS
Senegal:

1 terminal

Ivory Coast:

1 export/bunkering jetty
2 LPG storage and filling plants
1 terminal

Sierra Leone:
Benin:

1 terminal
1 storage and filling plant

Tanzania:

2 terminals
3 inland depots
1 Lube blending plant
3 LPG storage and filling plants

Service stations Mauritania, Senegal, Ivory Coast,


network in:
Nigeria and Tanzania

DOWNSTREAM FOCUS (2)

DOWNSTREAM FOCUS (3)


A unique approach
Betting on Africa
we move in when others move out
Betting on African
500 employees: only 2 non African expatriates
Local integration Local partners
Moving down the value chain Full service envelope
LPG:

strategic emphasis / growth potential

PART II

LPG: THE ENERGY FOR AFRICA

THE BENEFIT OF LPG (1)


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 ?

Table 1: the weight of LPG in world energy consumption

THE BENEFIT OF LPG (2)

Table 2: Africa versus rest of the world

THE BENEFIT OF LPG (3)


Main benefits
environment friendly
portable and powerful
versatile

THE BENEFIT OF LPG (4)


Tailored for Africa
Desertification
Lack of infrastructure
Rural
Employment and growth

PART III
CONDITIONS FOR SUCCESS

BARRIERS TO DEVELOPMENT (1)


The structural barriers:
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)

BARRIERS TO DEVELOPMENT (2)


Limited access to poorer classes
- cost of cylinder and appliances
- cost of gas itself
Inappropriate taxation
- import taxes
- indirect subsidies to traditional fuels
Lack of awareness
- from government authorities
- from the public in general

LIFTING THE BARRIERS (1)


Supply and infrastructure
role of private sector
support from international institutions
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

LIFTING THE BARRIERS (2)


Access to 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)
Awareness
education campaigns (schools, associations, role
of village heads)
- safety
- applications
advertising campaigns by marketers
government focus

PART IV
ORYXS APPROACH: MAKING IT WORK

MAKING IT WORK (1)


The case of ORYX BENIN:
3200 m3 terminal and filling plant in 2001
Regional role ( Burkina, Niger, Mali )
Creation of 700 sales point network
Lobbying for subsidies to put LPG prices in line
with wood, charcoal and kerosene
Market grew from 1,000 mT to 9,000 mT in 2005
Giving access to low and middle classes
minigaz campaign
Credit sales through companies

MAKING IT WORK (2)


The case of ORYX TANZANIA:
2200 m3 import terminal
3 filling plants (Dar Es Salaam, Moshi and Mwanza)
lobbying campaign for new standards and
elimination of taxes
blending into the culture: TV advertising

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