Director-General of Minerals and Energy, Adv Sandile Nogxina
22 March 2006
Conference Chairman: Mr Steve Hrabar
Programme Director
Distinguished Delegates
Ladies and Gentlemen;
It is an honour to deliver this address to you on the Oil for Africa
Conference 2006. I wish to add my voice in extending a warm welcome to
delegates from other countries that have graced this country with their
presence. I am confident that the wealth of information that will be exchanged
during the conference will make a significant contribution to the oil, gas and
petrochemicals sectors in Africa.
Indeed, we meet at a time when energy resources of this continent are being
relied-on for a more secure supply of energy throughout the world. There is a
growing demand for oil and gas, as has been witnessed by the increase in demand
from amongst others the Peopleâs Republic of China. There is also evidence of
supply constraints from certain areas, which present opportunities for this
Continent of ours.
The first Oil for Africa Conference in 2004 predicted that West Africa would
be the new frontier for exploration and development of hydrocarbons resources.
These predictions are materialising and many of the West African states are
benefiting from this international shift and relatively high price of oil.
This, however, has to yield benefits for the overall populace of our continent
in the form of poverty alleviation, job creation and sustained economic growth.
It is therefore appropriate that the theme of the Oil for Africa Conference
2006 is âunlocking the African Valueâ, which is aimed at unlocking value for
the masses of ours continent.
As this is the second Africa Oil, Gas and Petrochemical conference in
Sub-Saharan Africa, I hope we will have an opportunity to determine how much
progress we have made since the first conference and more importantly set
milestones that will be achieved before the next conference. There is a lot of
investment in this sector and we believe that the level of investment offers
opportunities for our countries.
The oil industry is unique in that there is strong presence of Governments
and state-owned national oil companies involved in the sector, and across the
world it is a rigorously regulated industry. We, however, believe that there
must be close alignment of Government, State-Owned Enterprises (SOEs) and the
private sector to maximise benefit for each country, region and the continent
as a whole.
In South Africa, the strategic importance of energy as an engine for
economic growth and development of countries also contributes to Government
taking a strong interest in this sector. Government views the energy sector as
a trigger and stimulus to the Accelerated and Shared Growth Initiative of South
Africa (AsgiSA); therefore it is important to increase collaborative efforts of
Government, the SOEs and the private sector of investment in the sector. This
will unlock the full potential for the economic growth of the country, which is
currently experiencing significant levels of economic growth.
The key to unlocking the value of energy in Africa is increased investments
in the sector. As individual countries, it may not be possible to amass the
required critical mass of capital and technological investments. It is
therefore necessary for African countries to find ways of collaborating on
strategies to attract private sector partners both domestic and international
to invest more in the energy sector for the benefit of the continent.
The world energy market is going through a period of substantial changes,
with new challenges confronting both consumers and producers. We as countries
involved in the petroleum industry have the potential to make an impact. The
issues confronting the petroleum industry in general are those of security of
supply and volatility of prices; and as I have mentioned earlier, in Africa we
have the additional imperative of ensuring that our petroleum and energy
industries are able to contribute to poverty reduction and economic growth.
Indeed, given the size and significant financial resources involved in this
industry, it has the potential to achieve these objectives.
We have different institutions in the continent that can collectively
further the interest of Africa. Such institutions as the African Petroleum
Producers Association (APPA), the African Energy Commission (AFREC) and New
Partnership for Africaâs Development (NEPAD) have a mandate to promote the
interests of the continent. We need to examine to what extent these
institutions can assist in unlocking the value for Africa.
Programme Director, Energy security is no longer an individual country
responsibility, it is a shared responsibility; and the issue of security of
supply will remain high on the agenda. We are informed of a recent
International Energy Agency (IEA) study that projects that global primary
energy demand will increase by two-thirds over the next three decades, oil and
gas are expected to meet more than 70% of that increase. Colleagues, these
challenges are going to increase, and will become more demanding on African
countries as our economies expand and require more energy. We have most of the
energy resources that we need in Africa petroleum and gas, hydroelectricity,
coal, nuclear, potential for solar energy and environmentally friendly
bio-fuels.
The time to invest in this sector is now. This is the most opportune time as
demand for energy outstrips supply and the returns to investment in the sector
are on their all time high. Africa has 7% of the world oil resources to date,
we produce 10% of total world output, but we only consume 4% of the worldâs
total annual consumption. I have been made to understand that the discovery of
new oil reserves is on the increase in our continent and this makes Africa one
of the preferred investment destinations.
Our continent has enough oil and gas resources to trade among its member
countries, and for us to export the remainder. This position allows African
countries to develop trade strategies that are inward looking in order to
ensure security of supply as we embark on our strategies to grow the economies
of Africa, through the New Partnership for Africaâs Development (NEPAD) and
other programmes. We need to explore possibilities of developing an African
energy market that focuses on our developmental needs first. This is an issue
that we can explore through African energy institutions and perhaps time has
come for us to seriously pursue the formation of major intra-African trading
companies specialising in energy products.
Ladies and gentlemen, it is also an imperative that we come up with
innovative solutions to address the challenges of energy poverty in Africa.
Energy and poverty are linked and there is a growing consensus that energy is
central to reducing poverty and hunger. Sustainable development will only
happen when the poverty is tackled and the environment is protected. Crucial to
both is the expansion of clean, sustainable, affordable and renewable energy. I
hope that the conference will address this issue and that we as policy makers
can tap into the ideas of experts and come up with policy strategies for the
continent that target the alleviation of energy poverty.
The time for cheap oil is over. The absence of modern energy at affordable
prices is the most serious challenge and a constraint for economic development.
Africa needs to invest more in the energy sector to secure oil and gas
resources for present and future demand. I hope that this conference will begin
to address some of these issues and give pointers to the way we can begin to
unlock the economic value of this continent.
I would like to take this opportunity to thank the conference organisers for
inviting me to share these views with you. I also thank the participants and
all the people who have worked so hard in preparation for the conference. To
our visitors, Cape Town is one of the jewels of South Africa. As you work and
after the conference, spare some time to enjoy the hospitality of this
city.
Thank you.
Issued by: Department of Minerals and Energy
22 March 2006
