Main Project Finance Mechanisms In The Upstream Oil & Gas Industry And The Risk And Project Life Cycle Effects Of Using Venture Capital Finance

Investment Structure Of The Upstream Oil And Gas Operations In Angola, Nigeria And Ghana And Key Drivers In Their Upstream ContractsTOPIC:Presentation By: John K. Arthur Theophilus Tawia11Presentation OutlineIntroductionInvestment Structure of Upstream O&G Operations in AngolaInvestment Structure of Upstream O&G Operations in NigeriaInvestment Structure of Upstream O&G Operations in GhanaConclusionReferences2INTRODUCTIONSome of the main investment structures used in the upstream oil and gas operations in Angola, Nigeria and Ghana are; bank loans, equity, hedging, leverage acquisition, joint venture, etc.

Also, the following key drivers are used in their upstream contracts: Joint Operating Agreement, Farm-in/Farm-out, Licensing Agreement, Production Sharing Contract and Engineering, Procurement and Construction (EPC).

3Investment Structure of Upstream O&G Operations in AngolaThe upstream sector is of fixed nature as resources are immobile. Most of the crude in Angola has been produced offshore (deepwater) operates licence and production equity.Sonangol Sinopec International (SSI joint-venture company between Sonangol and Sinopec)Foreign Direct Investment (FDI)

4Investment Structure of Upstream O&G Operations in NIGERIAJoint Venture Arrangement Production Sharing ContractNNPC and IOCsConcessionary Arrangement Joint Venture Arrangement or Memorandum of UnderstandingRoyaltyTaxation + Government major participation interest

5Investment Structure of Upstream O&G Operations in GhanaGNPC + IOCsJoint Venture ArragementProduction Sharing ArrangementHybridLicenseConcessional

6CONCLUSIONThe experience of successful foreign operators in Angola, Nigeria and Ghana shows that with the correct investment structure, planning, strategy and due diligence, it can prove to be a very profitable venture. It was seen that most of the West African Countries are into the joint venture arrangement and production sharing contracts with the IOCs. Also, the main drivers in the upstream contracts are service contracts, EPC, etc.7REFERENCESFrimpong, S.K., et. al, 2013, Research on Strategies to Attract and Retain Foreign Direct Investment (FDI) in Oil and Gas Industry in Ghana, European Journal of Business and Management, Vol.5, No.18GOA, 2003, Law on the Promotion of the Angolan Private Business Community, Angola: Sonangol.Hodges, T., 2004, African Issues, Angola: Anatomy of an Oil State, 2nd ed. Oxford: James Curry/Bloomington and Indianapolis: Indiana Univ. Press.KMPG, 2008, Evaluation of Angolan Petroleum Sector, Angola: Ministry of Finance.

8REFERENCES (CONT.)Mkandawire, T. 2001, Thinking about developmental states in Africa. Cambridge Journal of Economics. 25.WB, 2007, Angola: Oil, Broad-based Growth, and Equity, World Bank Country Study, New York: WB.

9THANK YOU10