1. AFRICAN PETROLEUM PRODUCERS ASSOCIATION (APPA) MEETING THE CHALLENGES OF THE AFRICAN OIL AND GAS SECTOR THROUGH JOINT INITIATIVES AND POLICY HARMONISATION _____________________________________ By Dave LAFIAJI Executive Secretary-APPA 4 April 2006 1 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS NOT AN OFFICIAL UNCTAD RECORD

2. The objective of this presentation is to show how joint initiatives and policy harmonisation using an institutional platform such as the one provided by APPA can contribute to meeting the challenges of the African oil and gas sector. 2 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Objective of the presentation

3. The institutional platform Vision, missions and fundamental objectives Characteristics of the African oil and gas sector The key challenges of the African oil and gas sector Some of our initiatives 3 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Outline of the presentation

4. Expected results Institutional support Conclusions 4 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Outline of the presentation

5. By its creation in 1987, APPA became the first institutional initiative in Africa to promote cooperation and joint policy initiatives in the area of oil and gas development. 5 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS The institutional platform

6. [We shall define oil and gas development for the purpose of this presentation, as the sustained evolution of the hydrocarbon sector towards the discovery and efficient exploitation of the full potentialities of a country’s hydrocarbon resources and the deepening of the sector’s impact on the totality of the country’s economic systems ]. 6 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS The institutional platform

7. The vision statement encapsulates the collective aspirations of the Members of APPA and this is: …to be the world’s most powerful engine of regional integration, coordination and harmonisation of Member Countries’ efforts in the development of their oil and gas industry. 7 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS APPA’s Vision Statement

8. APPA defines its missions as follows: Promote the pooling, exchange and sharing of human, scientific,technological and financial resources necessary for the development of the oil and gas industry of of its Member Countries Contribute actively to the efforts of Member Countries to maximise the socio-economic benefits of the exploitation of their hydrocarbon resources while being mindful of the current environmental standards Contribute actively to the energy security and development of the economies of Member Countries in particular and African countries in general, with a view to improving the well-being of our populations. 8 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Mission Statements

9. The Association’s vision et missions as enunciated, are driven by the following fundamental objectives: to promote co-operation among Member Countries in the areas of hydrocarbon exploration, production, refining, petrochemicals, human resources, acquisition and adaptation of technology and legal matters 9 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Fundamental Objectives

10. to promote technical assistance among Member Countries in specialised areas in which individual members have acquired experience to promote the co-ordination of marketing policies and strategies of Member Countries through the exchange of information with the aim of safeguarding their non renewable resources and realising optimum revenue from exports 10 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Fundamental Objectives….

11. to increase the understanding of energy policies and situations in Member Countries through consultations with a view to meeting their domestic energy needs and to study ways and means of assisting net oil importing African countries in meeting theirenergy requirements (this particular objective bears clear relevance to the question of the supply of petroleum products in Africa which has assumed urgency in the context of the prevailing oil market situation ) 11 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Fundamental Objectives….

12. 8-9% of the world’s proven reserves More than 80% concentrated in 4 or 5 countries-all APPA Members alongside smaller producers of oil and or gas Risk capital still invested principally by the international oil companies Know-how developed, held and supplied by the same companies Independents and new-generation oil companies (including private nationals) now increasingly present 12 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Characteristics of the African oil and gas sector

13. Cross section of same companies operate in the oil producing countries where they pioneered oil and gas activities Generally « low levels » of linkage with the national economic sectors-industry, construction, services (low local content) Some national oil companies are however, now moving to the « next level » in their corporate development: internationalisation 13 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Characteristics of the African oil and gas sector

14. Geo-politically advantageous location and reliable supply source Strong potentialities to add to the world’s reserves Oil and gas sector still the largest channel for foreign direct investments (FDI) Fragmented mid/downstream (refining & petrochemicals) infrastructure and market 14 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Characteristics of the African oil and gas sector

15. Considerable amounts of financial resources required for development Harmonisation of aspects of the (diverse) fiscal frameworks for exploration/production Operating environment considered as challenging for investors in general aspects Scientific and technological thresholds to reach the desired levels of local participation Dealing with the geo-strategic calculations that oil and gas resources evoke 15 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS The key challenges of the African oil and gas sector

16. 16 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Some of our initiatives Action/Project TitleMajor Thrusts Strategies for enhancing local content in oil exploration and development (seminar, studies) Give specific mandate to the NOCs to organise and lead the process Promote partnerships between private nationas and small/medium-sized foreign companies with the required know-how

17. 17 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Some of our initiatives Action/Project TitleMajor Thrusts Harmonization of the fiscal framework for petroleum exploration & production in APPA member-countries Complete review and reconstruction of the fiscal systems to optimise under an harmonised framework, the common interests of Producing Countries (APPA Members) and their strategic partners, acress the « APPA space framework, » under an harmonised characterised by innovation, dynamic stability and attractive to investors

18. 18 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Some of our initiatives Action/Project TitleMajor Thrusts Harmonization of the fiscal framework for petroleum exploration & production in APPA member-countries Adoption of common definitions and procedures (which respect fundamental national values and sovereignty, as appropriate)

19. 19 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 UNCTAD 10th AFRICA OIL & GAS TRADE & FINANCE CONFERENCE & EXHIBITION ALGIERS Some of our initiatives Action/Project TitleMajor Thrusts Management of marginal oil fields Reinforce the capacity of Member Countries with respect to marginal field development policies Develop local competence to exploit these assets efficiently Development of expertise and competences available in the petroleum sector of Member Countries Consolidate/create synergies among existing training and human resource development infrastructure

20. 20 AFRICAN PETROLEUM PRODUCERS ASSOCIATION mars-06 20 AFRICAN PETROLEUM PRODUCERS ASSOCIATION Feb-05 Action/Project Title Major Thrusts Joint importation of petroleum productsResolve the unsustainable fragmentation of demand Integration, joint ownership and manangement of African refineries Consolidate/regionalise refining infrastructure as much as possible Opportunities in intra-regional trading in petroleum products Establish an oil clearing « house » to purchase dedicated amounts of crude or products from producers, refine and sell to African countries Some of our initiatives

21. 21 AFRICAN PETROLEUM PRODUCERS ASSOCIATION mars-06 21 AFRICAN PETROLEUM PRODUCERS ASSOCIATION Feb-05 Concluding remarks An institutional platform is always required to spearhead harmonisation This provides better visibility for investors and allows for fast-tracking development Provides for cost savings for investment in other uses

22. Institutional Cooperation and partnership 22 AFRICAN PETROLEUM PRODUCERS ASSOCIATION mars-06 22 AFRICAN PETROLEUM PRODUCERS ASSOCIATION April-06 With the firm commitment of its Members, APPA is determined to work with regional and international institutions to transform its vision into durable beneficial results for its Members and more importantly for Africa In this process, the international oil companies are and remain our long term strategic partners.

23. www.africanpetroleumproducers.org APPA « Zone » APPA « Zone »