17 April 2009

1. African petroleum resources: The Chinese challenge and what to do about it Ricardo Silva 17 April 2009

2. Historical evolution • 27 August 1859 – Drake’s well • Titusville, Pennsylvania • 69 feet • 25 bpd • World population 1850: • 1,262,000,000 • Africa: 111,000,000 • Asia: 809,000,000 • Europe: 276,000,000 • North America: 26,000,000

3. Historical evolution World population (millions)

4. Historical evolution Life expectancy

5. Historical evolution • Contribution from oil & gas • Energy: • Machinery: consumables, food production; • Heating, cooling, lighting; • Raw materials for production of: • Plastic; • Fertilizers; • Pesticides; • Synthetic fibers; • Etc.

6. Post-War years • Growth in the importance of oil: • Reconstruction; • Modernization; • Expansion of automobile use; • Luxuries; • Etc. • Developing nations: • China, India, Brazil...

7. Post-War years • Statistics: • 1000 barrels / second; • Consumption is 3 times higher than discovery; • Peak in discoveries = 1960; • Production peak? • Most populous nations:

8. Post-War years • World energy use

9. Why Africa? • USA • 2007: 21% of US petroleum imports; • January 2009: 54,242,000 barrels of oil; • LNG Projects. • World • 12% of World oil supply; • 10 million bpd; • Potentially 30% share; • Gulf of Guinea producing more than Saudi Arabia in 10-years’ time? • 8% of World gas reserves; • Algeria supplies 25% of European consumption;

10. Why Africa?

11. Why Africa? • Oil and gas nations • Algeria; • Egypt; • Libya; • Chad; • Sudan; • Nigeria; • Cameroon; • Equatorial Guinea; • Gabon; • Ghana; • Angola; • ...

12. Why Africa? • Africa’s advantages • Open acreage; • Increased security of offshore oilfields; • Lower level of resource nationalism; • Relative stability; • Lower transport costs and risk of disruption; • High quality oil; • Huge unexplored resource deposits; • ...

13. Who’s who of African oil • First comers • Gulf Oil • Shell • BP • TotalFinaElf • Exxon Mobil • Marathon Petroleum • ...

14. Who’s who of African oil • New comers • Petrobras • CNPC • Gazprom • Sinopec • Tullow Oil • Petronas • ONGC Videsh • RocOil • StatoilHydro • Woodside Petroleum • ...

15. US presence • What the US offers: • Around 1/3 of: • The USD 20 billion invested in African E&P since 1990; • The USD 50 billion estimated to be invested until 2010. • AFRICOM; • Western-style democracy and institutions; • Disease control programs; • ...

16. US presence • What the US expects: • Oil… • 25% of US imports • Commitment to Western ideals and principles; • FCPA compliance; • Liberalized access to reserves; • ...

17. Chinese connection • What China offers: • Low interest loans and debt relief; • High bonuses; • Technology; • Commitment to infrastructure (railroads, roads, refineries, pipelines, etc.); • China-Africa Cooperation Forum; • USD 32 billion in trade, growing at an annual rate of 50% since 2002; • Health assistance; • Cheap commodities; • Joint ventures; • Military assistance (peacekeeping); • ...

18. Chinese connection • What China expects: • Hydrocarbons (16% from Angola in February 2009); • Increased political influence; • Export market for Chinese goods and equipment; • Export market for Chinese labor; • ...

19. Chinese connection • How strong is China’s influence? • Low production by Chinese NOC; • Low interest of most acreage held by Chinese companies; • Low return on high “government investment”; • Lower level of high-tech E&P knowledge; • Infrastructure quality issues; • Human resources problem; • ...

20. How to deal with China • Increase political, economic and military involvement; • Promotion of energy cooperation; • Greater contribution to “local content”; • Increase added value; • Increase technology transfer; • Cultural awareness; • Cross-sector approach; • Western-Chinese dialogue to improve African institutions; • ...

21. Thank You Ricardo Silva Ricardo.Silva@Mirandalawfirm.com