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

2.

27August 1859 Drakes 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

Historical evolution 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?

Africas 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. Whos who of African oil

First comers

• Gulf Oil

• Shell

• BP

• TotalFinaElf

• Exxon Mobil

• Marathon Petroleum

• ...

14. Whos 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 Chinas 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 [email_address] 22.