Titled "The African Perspective" this was the first plenary of the 18th World Petroleum Congress (WPC), held in Sandton, Johannesburg, on 26 September 2005
Your Excellencies; the Ministers of many countries; President of the World Petroleum Council, Dr Eivald Røren; Chairmen and CEOs of companies; distinguished delegates, good morning and welcome to Africa. Welcome to the largest WPC ever.
I trust that any effects of the good food and drinks enjoyed at last night's wonderful function has now left us. The great expectations set for all of us by those important speakers require clear minds. We had better get down to business.
My name is Pat Davies. I am the CE of the Sasol group of private companies. It is my honour and privilege to chair this first plenary session at the first WPC in Africa.
Our distinguished panel members are:
- Tarek Hassan Beck of NOC of Libya
- Funsho Kupolokun, Group MD of NNPC in Nigeria
- Sipho Mkhize, president and CEO of PetroSA in SA
- Mthozami Xiphu, acting CE of Petroleum Agency SA
- Syanga Abilio, vice president of Sonangol Angola
- Mohamed Meziane, president of Sonatrach in Algeria
I will introduce them more formally just prior to each one speaking.
First, a few remarks to contextualise their presentations. It is very fitting that the congress is being held on African soil, not only because of the continent's growing influence on the world's energy industry, but also because of Africa's increasing prominence on a number of multilateral agendas - among the most significant being the recent UN General Assembly which reviewed the progress on the Millennium Development Goals; the G8 Summit in Gleneagles; and many others. It is clear that our African leaders are vigorously perusing the continent's socio-economic renewal agenda.
The key words in the title to this session are obviously African energy, partnerships and sustainability and these will be covered in the presentations.
With Africa being the focus, we won't attempt to tackle the entire planet's energy challenges and opportunities in the next two hours. We'll merely dispense with those facing this continent.
Africa currently holds roughly 9% of the world's remaining oil and gas reserves (and 5% of coal reserves). These figures may appear low in comparison to Africa's high profile in the upstream industry. However, they disguise the importance of the continent regarding the proportion of new discoveries in the last 20 years. Of new oil reserve additions in the world in the last five years, Africa contributed nearly a third.
The sustainable growth of Africa is a key issue. The continent is rich in resources but suffers great poverty. Africa is still investing too little in developing its own industry. We need to increase its economic growth rate to more than 7% for the next decade if it is to halve the number of people living on less than US$1 per day. To achieve higher rates of growth, international and domestic investments must increase, as well as skills transfer and capacity building to ensure sustainability into the future.
Looking at the downstream sector, currently 70% of Africa's oil production and nearly all its gas are exported in crude form. No other continent does this. There is clearly a large potential for added value in the downstream sector, as well as an opportunity for employment and other benefits.
As a continent, we need to ensure that our people enjoy more of the benefits of the Africa energy wealth.
When I was asked to chair this session, I recalled the oil and gas reserves by national oil companies. National oil companies own about 7.5 times the amount of oil reserves, and a staggering 15 times the amount of gas when compared with the reserves of the super-majors. This indicates that national oil companies are very important and, as the scramble for reserves intensifies, they will become ever more prominent as players in the international oil industry. In order to have sustainable businesses, every player in the oil industry with growth ambitions will appreciate how truly pivotal partnerships the national oil companies are.
The same applies to the august panel that I have the privilege to chair today. They have at their disposal reserves of staggering proportions. I look forward to hearing their thoughts on partnerships that can truly shape sustainable solutions. As a South African, born and bred, I have had the privilege to witness the growth of an African oil industry, from the deserts of Libya and Algeria, down the tropical coasts of west Africa through Nigeria, to our neighbour Angola and then in South Africa, where we have a unique synthetic fuels industry. An industry which has produced well over 1,5 billion of barrels of oil equivalent (boe) from both coal and gas in the past few decades, I am confident that an African oil industry has the potential to unlock a new growth trajectory for our continent and alleviate poverty as we move forward to capture the value of our resources.
I am sure that you join me in looking forward to their insights that will give you a truly African perspective.
(Presentations from the panel )
Concluding remarks
Ladies and gentlemen, that concludes the presentations. I would like to thank our speakers this morning for sharing their time and their views. Though not without serious challenges, from an African perspective we feel that we have a very bright energy future and I hope you are leaving this session with a clear idea of our optimism and enthusiasm for that future.
To summarise the presentations:
- The Libyan speaker opened up the session, highlighting that his country has just come through an era of sanctions and that exciting new investment opportunities are opening up. Of particular importance are the regional opportunities, such as between Libya and Tunisia;
- Nigeria's speaker highlighted that 20% of the African population lives in his country. Nigeria also plans to have a US$67 billion investment in oil and gas by 2008 - a formidable challenge. South Africa's GTL technology is being applied as part of these plans;
- From PetroSA we heard how they are pursuing upstream opportunities in Africa and of their operating experience in gas-to-liquids (GTL);
- Petroleum Agency SA's speaker sketched exploration and investment opportunities, as well as those for the empowerment of historically disadvantaged South Africans - a lesson that we can cascade into the rest of Africa;
- Sanangol highlighted the wonderful resources and opportunities in Angola; and
- Sonatrach of Algeria spoke about the importance of Nepad and the opportunity for regional cooperation.
What we have heard and learnt from the discussions is that the upstream supply side will dominate. However, many African countries are not blessed with resources like some of the countries represented by the speakers here today. We therefore need to look at broader development opportunities for the economies of these countries. This was highlighted by South African President Thabo Mbeki last night, when he stated that the poor suffer from high energy prices twice as much as the highest income group. Our State President called for hope and not to fall victim of the "blues.
We have also learnt that Africa is rapidly growing in significance globally. This creates wonderful opportunities for investment outside and inside Africa, as well as for regional cooperation. South African Minerals and Energy Minister Lindiwe Hendricks stated at last night's opening session that gas-to-liquids (GTL) is a world leading South African technology. This creates new opportunities.
We have heard about regulatory frameworks. We also heard words such as reform, transparency, poverty alleviation, local capacity and Nepad. These words are important, if we are to improve the quality of life for all on this continent. I am sure all of our investors from other continents are committed to invest in a manner that will alleviate the rich-poor divide, which is not sustainable. This creates both challenges and opportunities.
