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20 November 2003
Africa is Well Positioned to Capture Much of World Energy Market
Opening of African markets also helps develop national economies
Houston, Texas -- African nations are well positioned to capture a sizable portion of the ever-expanding world energy market, in which half of the oil and gas reserves the world will need by the year 2010 have not yet been discovered or developed.
Kenneth R. Evans, senior vice president for sub-Saharan Africa at ExxonMobil, made that point November 19 at the opening session of the three-day Africa Oil and Gas Forum, sponsored by the Corporate Council on Africa (CCA) and held at Houston's Wyndham Greenspoint Hotel. He also pointed out that investments in developing new oil and gas reserves on the continent were a major source of employment as well as upgrades in infrastructure, health and education.
"Today, global demand is roughly 120 million barrels per day, and we expect this demand will grow at a rate of about 2 to 3 percent [per year] until the end of the decade," Evans told his audience. "At that time, we expect that demand will be 160 million barrels per day. At the same time, we expect production from existing fields -- those that are currently online -- to decline at a rate of 4 to 5 percent per year. What that leaves us with at the end of the decade is a real gap of about 80 million barrels per day."
"Clearly, some of this growth can be accommodated by the multiple developments that are currently under way around the world, but there will also be contributions from fields that are yet to be discovered. African nations are well positioned to capture a portion of this expanding market through large discovered but undeveloped resources and totally unexplored or undiscovered potential," he said.
Evans quickly cautioned, however, that to meet this gap is "not a modest challenge." He estimated that to add 80 million barrels per day to the current world oil supply would cost about $1 trillion.
The global economy has grown at about 3 percent per year since 1970, he said, and that rate of growth is expected to continue over the next two decades, despite a somewhat slower growth rate for energy demand because of advances in energy technology and efficiency.
"How can African host nations and industry work together to meet this growing demand?" Evans asked rhetorically. In addition to what has already been discovered, he counseled, Africa has the potential for many "world class discoveries," and this is sufficient to attract international investors, providing the terms are "globally competitive."
The continent, he said, also has "tremendous upside potential as a trading partner, and is blessed with citizens who have a spirit to develop a way forward, a spirit for improving their lives and for building stronger nations."
Focusing on his own company's operations, Evans said ExxonMobil is having a "dramatic impact" on Africa -- and Africa, likewise, is having a "dramatic impact" on ExxonMobil.
"Africa's oil and gas industry," he explained, "is a mix of mature, established producing areas, rapidly developing plays [opportunities], and totally unexplored frontier basins.
"Regardless of the stage, however," Evans said, "we are facing significant challenges -- technical, economic, and societal. Fortunately, these are accompanied by tremendous opportunities."
With that in mind, Evans said, ExxonMobil believes "the balance is currently tipped in favor of major investments in the continent" and has signaled its commitment to Africa with ongoing investments totaling $30 billion.
Energy projects in Africa, he said, offer tremendous rewards, not only to shareholders but also to the nations where ExxonMobil is working: infrastructure development, jobs, educational opportunities, and social programs improve everyday living conditions for the citizens of these countries. He stressed, however, that such rewards can only be achieved through "timely, effective completion of major projects" -- and this "depends on the best efforts of industry and government to make these projects an overriding priority."
Evans noted that ExxonMobil, through its subsidiaries, has had a presence in Africa for more than 50 years and now has major, online operations in seven African countries.
"We currently participate in production totaling nearly one million barrels per day from Nigeria, Equatorial Guinea, Angola, Cameroon, and most recently Chad. We have additional discovered undeveloped resources in each of those countries. We also have discoveries in Niger and the Republic of Congo," he said.
ExxonMobil's presence in these countries, Evans said, "is an indication of the importance that we place on the future of African [oil and gas] production in the world."
Africa has about 9 percent of the world's proven oil and gas reserves, he said, and currently supplies the United States with about 15 percent of its oil imports.
As of January 2002, 16 African countries produced 10.5 million barrels of oil a day, a rate that is "considerably under their potential capacity," Evans said. Many of these countries will be looking to expand their production during the next few years, and others, such as Chad, Mauritania, and Niger, will be seeking to join their ranks, he added.
Overall, ExxonMobil is participating in 26 African exploration blocs 'totaling in excess of 16 million gross acres ... with 38 deepwater discoveries and more on the way," he said.
Evans said that ExxonMobil, in its operations worldwide, enjoys being a good corporate citizen and places particular emphasis on improving health and education programs in its host countries. The company, he said, promotes polio eradication and HIV/AIDS prevention and treatment programs, facilitates medical equipment and supply donations and health clinic upgrades, and supports infrastructure projects that build roads and bridges. In Nigeria alone, he said, ExxonMobil is providing more than 100 communities with electricity and water.
To complete construction of the Chad-Cameroon pipeline, Evans said, ExxonMobil employed 35,000 people -- 80 percent of whom were from Chad and Cameroon. ExxonMobil also spent more than $650 million with 2,200 Chadian and Cameroonian companies and trained the countries' citizens for longer-term jobs during the project's production phase -- while working to protect the environment as well.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
