B Sonjica: Corporate Council on Africa Oil and Gas Forum 2006

30 November 2006

Your Excellency, Mr Samuel Bodman, The United States Secretary of
Energy
Honourable African Ministers
Chairman and President of the Corporate Council on Africa
Members of the Corporate Council on Africa
Excellencies
Colleagues
Ladies and gentlemen

I am particularly pleased to share with you our view of the many
opportunities in the oil and gas industry on the African continent. Africa is
gaining importance as an oil-producing region. From 1990 to 2005, oil
production rose from 6,5 to 9,3 million barrels per day, representing an
increase from 9,9% to 11,2% of world production.

The sustained high oil price in recent years has highlighted Africa's
potential as a supplier of oil, and the continent has become the focus of
attention of some major oil importing countries, most notably China. This new
interest is shared by other countries like the United States (US), which
currently sources 18% of its oil and gas from Africa and is intending to
increase this figure to at least 25%.

These statistics paint a very encouraging picture representing our
expectations and some of the realities in the oil and gas sectors. African
countries know the high incomes that can be derived from the oil and gas
sector, representing the realities factor, but we are expecting a new kind of
business ethic to arise in Africa. Indeed we think that this is possible given
the stability that Africa is beginning to enjoy.

Oil and gas sectors have remained the main sources for the supply of global
energy requirements. Based on the International Energy Agency 2006 Energy
Statistics, in 1973 oil and gas contribution to global energy supply totalled
74,9%, whilst in 2004 it was 71,8%. With the drive towards cleaner air, the
role played by gas in the global energy space has improved from 18,2% in 1973
to 19,5% in 2004. As more oil and gas resources are found on the African
continent, we are expecting to increasingly benefit from this trend.

From a South African point of view, our people's expectations are
essentially economic. The attainment of political freedom in 1994 raised our
people's developmental expectations. The South African government has increased
its efforts to create an environment conducive for investment economic growth
and development. The people of South Africa and indeed of Africa who have, for
years stood by and watched developments happening around them, now expect to
participate in their economic emancipation.

African states which are largely resource-based economies, are expecting
benefits from the current high resource prices to accrue to their people. On
the oil and gas front, consumer countries like South Africa, who are the ones
most impacted upon by the high crude oil prices, are expecting the prices to go
back to levels which can sustain economic growth. It is clear that without
investments, these current high prices will persist, to the detriment of the
people of the consumer countries and invariably from producer countries.

Africa, with its largely untapped resources, is in the future expected to
play a significant role in the provision of energy to the world. To be able to
fulfil that role, investments will however need to be made into the exploration
and development of Africa's resources and her peoples. With the investments,
the people of Africa are expecting meaningful participation in the exploitation
of her resources. Without meaningful participation, stability in the producing
environments cannot be guaranteed, which will in turn result in low levels of
investment, disruptive productive environments and volatile prices. Local
participation is no longer a luxury but a key requirement for stability.

Energy poverty remains a grim reality to many of our people who are still
trapped in poverty and underdevelopment. However, the approach has been to deal
with the African continent as a homogeneous entity. Africa requires regional
and country-specific peculiarities and tailor-made solutions with regard to the
development, supply, demand and utilisation of oil and gas resources in Africa.
A few countries in Africa have substantial oil and gas reserves, while a
majority of them still rely on imports. Even to those countries with
substantial reserves, the challenge remains achievement of meaningful local
participation and local resource beneficiation. African ownership and
partnership should be emphasised. The issue of infrastructure development is
also critical.

High crude oil prices are threatening development in most countries in
Africa. Although some countries have realised some level of investment, these
investments have been sporadic and limited to a few countries. The reality is
that African people still do not participate in most of their economies, and
hence the instability in some areas. Africa is locked in this vicious cycle of
low levels of investments resulting in low employment rate which in turn
results in increased security risks and therefore low investments.

The emphasis on building and maintenance of partnerships between the United
States and African countries is encouraged by South Africa as an approach that
would ensure mutually beneficial, sustainable and inclusive development of the
economies involved as well as their citizenries. We can only hope that it would
result in benefits that will accrue to the poor and the downtrodden. In this
regard, we advocate for adequate social responsibility and local empowerment in
respect of multi-national companies doing business in Africa.

We hope that such partnerships will be marked by mutual respect, taking due
cognisance of the strategic imperatives of the countries involved and
acknowledging that it cannot be business as usual when the majority of our
people are still living in dire poverty and remain unskilled.

With these few words ladies and gentlemen, thank you for affording me the
opportunity to address you, and thank you for listening to me.

I thank you

Issued by: Department of Minerals and Energy
30 December 2006
Source: Department of Minerals and Energy (http://www.dme.gov.za)