In accordance with the provisions of Article 15.1 of the BirAllah Exploration and Production Contract between bp and the Ministry of Petroleum, Mines and Energy of Mauritania (MPME), a collaborative examination must be carried out by the MPME and bp. The purpose of this examination is to evaluate the local natural gas (gas) outlets and the associated infrastructure for Mauritania’s possible domestic gas market.

The MPME made a formal request for phase 1 considerations of the BirAllah gas development project (the “BirAllah Project”), specifically for a supply of 105 million standard cubic feet per day (MMscfd) intended for the local market. A segment of this gas is planned to be transported to a 500 MW power plant, which is slated for construction in the Ndiago region, the same area where the onshore facilities of the BirAllah Project are proposed to be established.

K&M Advisors (“K&M”) was engaged by bp to conduct the evaluation subsequently referred to as the Joint Gas Market Study for the BirAllah Project (the “Study”). This evaluation will utilize the Mauritanian Gas Master Plan (the “Gas Master Plan”), previously conducted by EPCM, as part of the foundational framework. The primary objective of the Study is to reevaluate the local and international gas outlets in alignment with the resources made available by the BirAllah and GTA projects, before outlining a roadmap and assessing the impact of the BirAllah Project implementation.

The primary objectives of this work are to (i) provide an assessment of the feasibility and volumes of BirAllah gas that could be supplied to domestic power generation and mining demand as potential outlets, (ii) to present an assessment of other potential outlets to determine feasibility and their suitability to be supplied by BirAllah gas or otherwise, and (iii) to provide an initial overview of aspects of the global LNG market relevant for the potential to export BirAllah gas internationally. As part of the scope, K&M reviewed the following potential outlets:

• Power Sector:
  • Use Gas Master Plan and other sources to understand expected role of 500MW power plant
  • Analyze historic electricity demand and supply balance, types and costs of existing generation plants, and demand and supply forecast for the next 20 years—using data provided by the client, including size and timing of gas-fired capacity additions that are economically justified
  • Use inputs from analysis to determine dispatch and volumes (quantity) of gas needed for 500 MW power plant
  • Determine the major facilities necessary to supply gas to new gas-fired power plants for these sales, including pipelines, transmission lines, etc. This will include a high level analysis of interconnection options and cost estimates (CAPEX) for major components.
  • Estimate cost of delivered gas to the end users broken down by component (as feasible), and levelized cost of electricity. Client to provide cost of delivered and treated gas onshore (in $/MMBtu), to be treated as a key input.
  • Develop high level implementation schedule
• Gas to Mining:
  • Determine the potential demand from existing mining operations (including for power generation and substituting diesel for LNG as fuel for mining hauling trucks).
  • Identify location, fuel consumption, type of fuel used, and type of fuel-consuming equipment for a select group of the largest mines in the country—using data provided by the client
  • Identify the least-cost logistics solution to deliver gas/LNG to each mine and estimate the cost of converting to gas existing equipment and gas demand after conversion
  • Compare the cost of delivered gas to the cost of existing fuel and aggregate gas demand for those mines with a cost of gas below the cost of existing fuel.
  • Develop high level implementation schedule
• Gas for Transport:
  • Estimate existing fuel demand for different types of marine and road transport (trucks, buses, cars, etc.)—using data to be supplied by the client
  • Using CNG penetration rates in other emerging markets with indigenous gas resources, estimate the gas demand required to supply a potential CNG market in Mauritania
  • Using CNG distribution costs and the cost of converting vehicles to CNG, estimate the total cost of ownership of CNG -operated vehicles and compare to the cost with existing fuels
  • Develop high level implementation schedule
• LPG and Condensate:
  • Estimate existing LPG and condensate demand (location, volumes, types of uses)—using data provided by the client
  • Identify other fuels/products that could be displaced if LPG or condensate were more widely available in Mauritania
  • Perform high-level assessment of the infrastructure required to produce and distribute LPG and condensates
  • Estimate the delivered cost of these two products and determine if they are competitive with existing LPG and Condensate prices in Mauritania and of the displaced fuels
  • Develop high level implementation schedule

The study must consider, among the Mauritanian gas master plan outlets, those that are feasible with regard to the Bir Allah project (Gas to industries, Phosphate fertilizer, etc)