- 1. Downstream and non oil investment in Africa: Key to Asian
NOC success in Angola and Nigeria? Alex Vines, OBE Research
Director, Regional and Security Studies; and Head, Africa
Programme, Chatham HouseWorld National Oil Companies Congress
Grange St. Pauls Hotel, London, 24 June 2010
2. Asia in Africa: Business & Politics What does Asia see in
Africa: Main focus countries for China Resource security 99% of
worlds chrome; 85% platinum; 54% gold; 25% agricultural land etc
New markets and investment opportunities 1 billion consumers; final
frontier of globalization; emerging middle class; increased
stability Symbolic diplomacy and development co-operation Africa as
a space within which emerging global status is demonstrated Forging
strategic partnerships 25% of UN gathered together; increasingly
active, assertive and coherent in international forums Brown most
active, grey least activeSource: Private China & Africa
LiteratureReview, Chatham House AfricaProgramme2 3. Chinas
Commercial Drivers: The case of Oil Tri-annual Forum for China
Africa Cooperation; Solidarity principles of South-South
Co-operation; Taiwan one China policy from 1950s onwards; The
desire to lessen their dependence on the Middle East; 13% of
Africas oil exports went to China in 2008, while 22% went to the US
and 33% to EU; Chinas investment in Africas oil and gas accounts
for less than 1/16 of the global investment in the field. CNPC
annual turnover is less than 1/3 of Exxon; In 2008 Sino-African
bilateral trade broke the $100bn barrier but in 2007, Chinas
bilateral trade with South Korea alone stood at $160bn; China
receives around 33% of its imported crude from Africa. In 2008,
Chinese officials indicated that they aimed to increase this figure
to 40% in next 5-10 years US may increase from 15% to around 25% by
20153 4. Why does China thirst African Oil? Chinese re--engagement
Union Oil Company of California (2005) sale blocked by Congress to
CNOOC went to Chevron; 2003 power shortages but also Chinese
National Energy Strategy and Policy 2003 (China became net importer
of oil in 1993. Nine out of ten of Chinas top trading partners in
Africa are oil producing; Chinese companies only produce in Sudan
(160,000 barrels a day). Recent Japanese survey found Chinese oil
companies overseas found they were in no obligation to sell their
oil to China they could sell to the highest price; In Sudan China
has liaised with ONGC and Petronas; Independents like Kosmos Energy
in Ghana, Heritage in Uganda and HyperDynamics in Guinea seeking to
strike a find and get bought out by a major or NOC. Others like
Tullow and Anardarko seek to use finds to grow into genuine players
through JVs.4 5. Asian Interest in African Oil Indian-African trade
has grown from $967 million per year in mid 1960s to $35 billion in
2008 and $39 billion in 2009. The intention is to increase this
figure to $50bn by 2012 At present 30% of Indias energy needs are
met by oil and rest by domestic coal. The IEA predicts that by
2025, the Indian growth trajectory will make it necessary to import
90% of petroleum supply Asia has in the past sourced oil from
Nigeria and Angola through: government-to-government term supply
contracts; through oil traders with lifting quotas; spot market;
New and significant: from 2004/05 some Asian oil companies began to
secure oil blocks in both Nigeria and Angola through direct
investment, or oil-for-infrastructure deals. 5 6. US and Chinese
Imports of CrudeUS and Chinese Imports of Crude and Products from
Selected AfricanCountries1200 1000800Thousand bbl/d600US
China4002000 Nigeria Algeria AngolaCongoGabon Chad Equatorial
Cameroon Sudan(Brazzaville) Guinea 6 7. Lessons from Asian National
Oil Company engagement in Nigeria and Angola Source: Thirst For
African Oil:Asian National Oil Companies inAngola & Nigeria,
available fromwww.chathamhouse.org.uk/africa 8. Asian Interest in
African Oil In order to lessen their dependence on the Middle East;
In the past ANOCs sourced oil from Angola through:
government-to-government term supply contracts; through oil traders
with lifting quotas; spot market; New and significant: from 2004/05
some Asian oil companies began to secure oil blocks in Angola
through direct investment, or oil-for-infrastructure deals; China
has facilitated loans to Angola amounting to at least $13.4 bn
(some estimate up to $19.7bn).8 9. Breakout of Nigerian oil
Exports, 20089 10. Different fortunes - Nigeria Nigeria is
difficult for ANOCS Obasanjo administration failed to manage
oil-for infrastructurescheme; Various different leaders revoking
previous decisions; Security situation; Reasons ANOCs in Nigeria
failed to understand politics; Lack of predictability in Nigeria;10
11. The success of India in Nigeria India was marginally more
successful than other ANOCS Nigeria was 3rd biggest supplier of
crude to India in 2009; But court decision in 2009 in favour of
KNOC Reasons Long-standing ties between the two Commonwealth
members; Strong trade links and commercial relationships; Regular
bilateral visits; but China much more aggressive11 12. 12 13.
Angola Oil Exports - Destinations12000.00 10000.00 China8000.00
Korea million US$Taiwan6000.00 IndiaJapan 4000.00
SingaporeIndonesia 2000.00 0.0020032004 200520062007 Year13 14. Non
Chinese ANOCs Low profile; Absent in the pre-qualification lists
for postponed 2007/08 oil licensing round; Strategy: Emulate Chinas
approach; Trying to catch up Angolan diversification as
opportunity? 14 15. Angolan trade w ith China30,000.0 25,000.0
20,000.0 US$ m 15,000.0 10,000.05,000.00.02001 2002200320042005
2006 2007 2008 15 16. 16 17. 17 18. 18 19. Recent Developments
Addax was bought out by Sinopec for $7.6bn giving China access to
Nigerian acreage (awaiting Nigerian approval); Announcement that
China will build three oil refineries and one petrochemical plant
worth $23bn; China International Fund (CSIH) in Guinea ($7bn
natural resources for infrastructure offered in 2009 to junta and
2010 another $2.7bn for infrastructure for Iron Ore mine. More
recently n November 2009 in Zimbabwe a $8bn deal natural resources
for infrastructure; CIF - A Stalking Horse? Foreign Affairs
Spokesman claimed The Chinese government has nothing to do with
CIFs business operations, nor does it have knowledge of the
specifics but A joint CNOOC/Sinopec bid for 20% of Block 32 was
stymied by Sonangol; Reports of further contract revisions in
Nigeria CNOOC offering 49% stake in 23 blocks worth $50bn for some
$6bn b/d (a sixth of all oil reserves); Entering Election Cycle for
2011 and considering licensing round to sell off marginal oil
fields; Sunrise another Stalking Horse? Angolan licensing round in
2011? (Or Risk Service Contract?) 19 20. Different fortunes
Non-Chinese ANOCs failed; Chinese NOCs show great success: Angola
is 2nd supplier of oil to China in 2009; Chinese companies active
in reconstruction of country; Oil-for-infrastructure deals dubbed
Angola-mode by WB; But has China peaked? Strategy of
diversification, improved relationship with West and IMF. Reasons
Deep pockets and not risk averse; Understanding of local politics;
Adaptation of strategies and tactics to local context; Joint
ventures in various areas (including private interests) to lock-in
success. Angola very different than Nigeria Chinese better equipped
to understand Angolan politics? 20 21. Conclusion Leons apprises
Prsumer lide que les Etats Africains soient des Etats faibles doit
tre remise en question; Il est impossible de gnraliser sur les
compangnies Ptrolires Nationales Asiatiques en Afrique; Les
compangnies internationales ptrolires occidentales sont toujours
dominantes; Une bonne comprhension du contexte local et politique
Africain est essentielle; La Chine a pris avantage de la
libralisation conomique en Afrique partir de l adjustemement
structurel economique en Afrique que sest produite dans les annes
1980 et 1990 mois de risque pour la Chine; La Chine est dispos
prendre davantage de risques; Les tats Africains ont besoin de
dirigeants de qualit. 21