This is my first time to Africa Oil Week in my official capacity. I last attended about a decade ago while sitting where many of you are, as an executive of a U.S. oil company. It is striking to see how this conference has grown in that time, but then again it is not entirely surprising. It is an exciting time to be here on the continent. Africa has some of the world’s fastest growing countries and more than one billion consumers. The African economy is expected to quadruple in size over the next 20 years. This incredible growth will require energy.
Some analysts expect Africa’s energy demand to increase 80% over the next 20 years, and worldwide, according to the International Energy Agency, energy demand is simultaneously expected to grow by 50% by 2040. I lead the Bureau of Energy Resources at the U.S. Department of State. We view energy issues not as a technical matter, but as a proxy for broader foreign policy issues. Energy is more than just an issue of technical recovery. Energy is foundational to economic development, to growing human capacity, and capital, and is often a pre-condition to political stability.
Africa’s considerable resource endowment offers some of the ingredients to improve all of these conditions. The continent boasts proven gas reserves representing over 7% of global reserves an estimated oil of approximately 125 billion barrels. Recent natural gas discoveries off the coast of Mozambique, Nigeria, and South Africa open new potential for these countries to be global suppliers of LNG. The question before us, before all of us, friends, excellencies, is how do we ensure that the wealth under the ground transforms into prosperity for people living above the ground? This is a complex question and one that requires a holistic plan, which I seek to address in three parts.
First the U.S. commitment, the choice and an invitation to partnership. It is important to recognize the United States’ commitment to Africa. In fact, last year, the U.S. provided sub-Saharan Africa with $12 billion dollars in foreign assistance. Since 2015, we have spent $54 billion dollars in assistance programs here. These programs are intended to help create jobs, save lives, alleviate energy poverty, and support women’s economic empowerment. The United States recently launched a new initiative called Prosper Africa, which is designed to boost two-way trade between the United States and the continent. It has three primary activities — partnering with African governments to foster business climates, supporting transactions by facilitating and expediting trade deals, and creating a virtual platform and trade investment centers both on the African continent and in the United States to support companies and governments in terms of bilateral agreements. Power Africa is another program which works to align and mobilize all the tools of the United States government to create the conditions for long-term sustainable development in sub-Saharan Africa. Power Africa team includes 12 U.S. government agencies, 16 bilateral and multilateral development partners, and more than 140 private companies. They are all working together to advance on-grid and off-grid connections. Bringing more power to more than 57 million people in sub-Saharan Africa.
All countries all around the world face a choice on their own development path. Do they support transparency, openness and international best practices or do they fall under the spell of opaque forces that provide short-term money and long-term debt and eventually dependency? The choice is fundamentally about the self determination of each country.
When a country chooses to do business with a U.S. company, they know that they’re securing the best technology, the best health, safety, and environmental performance. And importantly, that they respect the sovereignty of their host nations. We have all heard the saying, “if it sounds too good to be true then it probably is,” — be careful. Fast and loose money often comes with high interest rates, unclear terms, and lack of respect for domestic populations and the environment.
Today’s quick deal can, over time, turn into a debt trap that slowly erodes a proud nation’s sovereignty. Rather, no one wants this to take place. All governments, they want the best for their people. I have a global remit and every official I meet with around the world, ministers, heads of state, all have one thing in common. They all want more U.S. investment. They all describe their significant geological potential, their endowments. And want U.S. companies there to help develop them. However, as I explained to them, it is not just about the rocks, however good they may below the ground, but the conditions above that often influence investment decisions.
Governments must ensure that they have the appropriate business climate, and transparent operating conditions to attract world class companies. Companies have choices too. They weigh the full packet of risks and awards when considering whether to invest in a given country or region. The United States government has no say in these private sector decisions. I cannot direct a company to invest. That is a private sector decision. And that is as it should be. That way, governments know that a company is investing because it sees real commercial value to create a true win-win. U.S. companies apply the same high standards globally, no matter where they are doing business — whether in Texas, or Louisiana, or on the continent. U.S. companies, regardless of where they are operating, must be responsive to their shareholders. They take their role as global citizens seriously and strive to do better every day.
As you can probably tell, I am passionate about this industry and the good it can do. I have seen first-hand how the industry can spur new business, empower local workers, and catalyze economies. I have also seen how past practices can despoil environments, disregard safety, and use foreign workers rather than improve the capacity of local communities.
The United States has developed a partnership-based model, working with countries around the world. We work with governments to better understand their self-determined energy ambition. We spend time listening to where they want to go and when, based on their own self-determined path, regardless of energy type.
The State Department represents the entirety of the U.S. government overseas, in matters of foreign affairs. As such, in my role I can convene respective technical experts, from technical agencies across the U.S. government to support partner countries to help them to achieve their ambition. We are actioning this partnership model today. Like Africa, the Indo-Pacific region is experiencing unprecedented growth demand for energy. In the Philippines, we are helping the government to establish legal and regulatory frameworks to import liquified natural gas. This work has led to great interests from a variety of qualified investors, including U.S. companies. Similarly, in Vietnam, we supported the development of the wholesale electric power markets, the gas market, and LNG imports to meet growing energy demand and strengthen energy source diversification. Our work with Vietnam is helping to attract the nearly seven billion dollars in energy sector investment that they need every year to meet their double-digit demand growth in energy. Further, in India we worked with the government to ensure their electricity system can successfully integrate renewable power to achieve the prime minister’s ambitions over the next decade. Fundamentally, this is all about creating the right conditions and making the needed reforms.
And African nations have headed the same calls. Angola imposed a series of energy sector reforms, and last month an international consortium working with state company Sonangol, announced major new investments in Angola’s natural gas sector. The Chevron-led consortium aims to invest over two billion dollars to explore and produce both new offshore natural gas fields and increase production in existing fields. Over the course of the last decade, Uganda passed petroleum sector reform legislation, including fiscal reform, stood up an independent petroleum authority, and built institutional capacity to oversee their energy sector. Uganda has now attracted a U.S. consortium to help develop the biggest refinery in East Africa, capable of meeting not just their demands but also to support the region. These are positive developments, and we can do so much more together.
The United States’ government stands ready to work with your countries, so that you are in the best position to attract foreign investment in the years ahead. Also, regardless of who is investing in your countries, I encourage you to demand best practices from all investors. You have every right to expect and demand safe operating conditions for your workers, transparent terms, open communication and adherence to your country’s environmental standards. Africa has a tremendous opportunity and faces a choice, by pursuing liberalized markets, open competition and robust and transparent enable environments, African nations can attract what they need to develop their resources to the greatest benefit of their countries and their people. The United States is here to work in partnership with African leaders as you pave your own future.