Remarks for Energy Secretary Samuel Bodman Corporate Council on Africa Oil & Gas Forum Keynote Address Bethesda, Maryland

(EMAILWIRE.COM, December 01, 2006 ) Bethesda, Maryland -- Thank you for the opportunity to be with you this morning.I want to start by reinforcing the idea that enhanced energy and economic ties between the United States and the nations of Africa matter. They matter to me and, more importantly, they matter to the President. I want to extend my profound appreciation to those of you who have traveled a great distance to be here. Your presence is proof these meetings are an important part of what we are trying to accomplish -- the broad development of Africa’s energy sector as a key element of current and future continental and global economic growth. That development cannot be limited to one or two countries. Success in this endeavor requires as much cooperation as can be achieved between as many countries as possible -- from north to south and from east to west... and that go farther, crossing oceans and reaching every corner of the globe. America is committed to a multilateral approach to energy security, with free trade and free markets at the heart of our vision for a healthy international energy system. Experience has shown that free markets are the finest way to deliver consistently favorable outcomes to producers and consumers. We want to see more African countries engaged in programs with the U.S. under the African Growth and Opportunity Act – or AGOA – and other trade enabling mechanisms. Though the nations of Africa and the U.S. are separated by great distance, we are united by one, simple, overriding energy challenge: the need to enhance our individual and collective energy security. Energy security is essential to economic growth and prosperity. We estimate that energy consumption in the United States will increase by 24 percent by the year 2025. Guy Caruso of the U.S. Energy Information Administration will speak about this in greater detail later today but the numbers speak for themselves. On its own, African energy consumption is projected to increase by more than 75 percent, from 14 quadrillion BTUs of energy to over 24 quadrillion BTUs by 2025. The projected rise in demand, here and around the globe, puts Africa in a position of increasingly strategic importance to the United States and to global oil and gas markets. Some of the nations represented here contribute significantly to world oil production. Over the last forty years, we have seen significant energy production growth in Africa, especially in the Gulf of Guinea. Africa, as a whole, contributes more than 10 million barrels per day to total world output -- 84.5 million barrels per day. Africa accounts for almost 12 percent of world oil supply and supplies approximately 19 percent of U.S. net oil imports. Africa's nations and regions have different energy requirements and are in different stages of energy infrastructure development... but they all face the challenge of dramatically expanding infrastructure to meet huge increases in energy demand to fuel economic development. A related challenge is our obligation to reconcile energy growth with protection of the environment. Every nation in the world must protect its environment as it works to ensure a reliable, affordable energy supply. For the United States, that means the continued application of advanced technology and pollution prevention techniques at every step of the process, from production to consumption. In the final analysis, however, we must all work together. No nation can go it alone. Regional integration and energy interdependence are not options... they are fundamental to achieving energy security. The trends are encouraging. We are linked by our needs and our markets. Nigeria, Algeria and Angola are among the top 10 suppliers of oil to the U.S. We continue to believe strongly that the best and most effective way to be integrated into the global energy system and global economy is through a commitment to market principles and pricing. The Gulf of Guinea and other parts of Africa are projected to play a greater role in international energy markets and imports of African oil to the U.S. are expected to rise in the future as new fields are brought online. Continued and expanded cooperation and collaboration between producing states and investors will be important. The same is true for natural gas. U.S. dependence on natural gas and liquefied natural gas imports has increased. The U.S. uses nearly 22 trillion cubic feet of natural gas per year, with Nigeria and Algeria currently among the U.S.’s more important overseas sources. In Africa today, gas is increasingly being developed and marketed rather than flared and cross-border gas projects such as the West African Gas Pipeline (Nigeria to Benin, Togo and Ghana) will come to fruition in 2007. Equatorial Guinea is building an LNG facility that will come online in late 2007 and Angola is planning to build an LNG plant in Soyo, with first gas scheduled for 2011. Algeria, notably, was a pioneer in liquefied natural gas development, which is helping to expand the gas market, and was the first LNG exporter to the U.S. Algeria is a major natural gas supplier. U.S.AID and USTDA are providing institutional capacity building to support the development of a regional natural gas market in conjunction with the completion of the West African Gas Pipeline. In the United States, energy policy is based on a definition of energy security which assures that energy supplies represent a diverse set of energy resources from a diverse set of energy suppliers. In working to advance enhanced energy security, diversity of supply and increased trade, the United States government is engaged in multilateral partnerships. These partnerships include the Extractive Industries Transparency Initiative, the African Growth and Opportunity Act, the World Trade Organization and other trade mechanisms. Also, through bilateral and multilateral consultations and relationships, we seek to increase institutional and human capacity building and to create trade and investment opportunities through increased energy development and energy services. Energy is an ingredient for growth and job creation. The DOE is also a participant and encourages other countries to participate in the Joint Oil Data initiative, an international effort involving nearly 100 countries. DOE also supports the wider efforts of the African Energy Commission and the International Energy Agency in encouraging African countries to strengthen their energy data collection, reporting, and forecasting capabilities in order to improve the quality of their energy data. This information will assist in policy-making decisions and marketing to attract foreign direct investment. U.S. energy investment is heavily focused in several regions in Africa: In the Gulf of Guinea, U.S. energy investment is predominant in the oil and gas sector of Equatorial Guinea - over $11 billion and growing - in Nigeria, and in Angola. In northern Africa, U.S. Anadarko is the largest foreign oil producer in Algeria and there is also significant U.S. oil and gas sector investment in Egypt. U.S. oil companies in the Oasis Group (ConocoPhillips, Marathon, and Hess) have returned to Libya for the first time since 1986. The lifting of sanctions there has also encouraged other U.S. companies to seek investment and be awarded oil blocks there (Occidental, Hess, Chevron, and ExxonMobil). U.S. oil companies also predominate in oil production in Chad and in the $4 billion investment that was made in the Chad-Cameroon pipeline project. And there are U.S. independents producing and looking for oil and gas in South Africa. As far as up and coming possibilities for new investment, U.S. companies are interested in new areas, including in frontier regions such as Madagascar, Benin, Sao Tome and Principe and Guinea-Bissau. Other frontier countries possibly on the horizon include Liberia and Sierra Leone. In close proximity to various markets, including the Atlantic Basin, Africa is positioned to play a greater role in U.S. and global energy trade and investment. Our ties are getting closer and stronger. DOE is supportive of the Millennium Challenge Corporation, which President Bush established in 2002. The MCC was designed to be a special development assistance program to help spur economic growth in developing nations that are taking greater responsibility for their own development. Although the MCC is a global initiative, approximately half of the eligible countries are in Africa and a number of MCC countries are represented at this Forum. I urge you to incorporate an energy component in the MCC compacts, as Ghana has done, since it is such an important aspect of long-term economic growth and prosperity. There are increasing concerns about infrastructure development and security issues as more projects are located offshore and in deepwater. Deepwater carries its own risks and technical complexities, including remoteness and related security issues. But, more important than any particular project, are the market-based principles I mentioned earlier as being the heart of a successful vision of a healthy international energy system. Free and fair markets are the best vehicles for developing and allocating resources, the best vehicles for generating wealth, the best vehicles for empowering the populations and nations they serve, and, in the case of energy, the best vehicles for a nation to foster a sustainable energy sector. To my fellow energy ministers, I encourage you to continue to harness the power of the marketplace to develop natural resources, efficiently deliver them to customers and generate economic growth. I encourage you to take the steps that will attract and, more importantly, maintain private investment and expertise in a highly competitive environment. These steps include: a commitment to intellectual property protections; a fundamental commitment to private property rights; use of commercial arrangements rather than market-distorting preferential arrangements; honoring the sanctity of contracts; market transparency and; dedication to regulatory certainty and the rule of law. When these concepts take root in society, when the rule of law and respect for contracts and property rights are the order of the day, as Frederich Hayek, Hernando de Soto and others have shown through their work, the private sector will respond with investment on the scale necessary to help fully develop the abundant resources found in so many African nations. While we have witnessed growing natural resource nationalism in other regions, many parts of Africa remain attractive. I would encourage you all to continue working at the highest levels of government to expand cooperation and development. For the United States, stronger relations with African countries is an integral part of our national energy policy... and with private companies invested in the success of a developing Africa … I am certain that we will succeed.-DOE- CONTACT: Craig StevensTel: (202) 586-4940

The Corporate Council on Africa
Joseph Nchor

idiffley@Africacncl.org