Africa to Supply 30 Percent of the World's Liquids Increase and 25 Percent of Global LNG Capacity by 2010.

LONDON -- Ron Mobed, Energy President and COO, IHS, Addresses Global Energy Challenges at IP Week in London

Africa will supply 30 percent of the world's liquid production increase and more than 25 percent of global LNG capacity by 2010, said Ron Mobed, president and chief operating officer of the Energy segment of IHS, a leading provider of oil and gas information and consulting services. Currently, Africa's liquids production constitutes 12 percent of world production. This significant contribution to global oil supply growth will be a critical source to the global market, but particularly to the U.S., where the gap between domestic production and increasing imports has grown at a rapid rate, Mobed said at a presentation on "Africa's Role in Meeting Energy Demand" today at the International Petroleum Week (IP Week) energy conference in London.

"The number and size of hydrocarbon discoveries continued to decline during 2004-2005 and many areas of the world became less accessible due to political constraints. Oil and gas companies are increasingly seeking access to larger oil reserves in Africa to meet growing global demand," Mobed said. "Africa's major oil and gas producing provinces will likely continue to attract huge exploration investments and yield larger-than-average discoveries. Exploration will expand from these successful plays into adjacent countries and provinces, especially on the Atlantic continental margin, where access to export markets is key."

According to IHS statistics, African discoveries in the period 2000 to 2004 have contributed nearly 25 percent in the international liquids reserves (exclusive of onshore U.S. and Canada) and 12 percent of the discovered gas. Approximately 300 billion barrels of oil equivalent, two-thirds of them liquids, have been discovered in Africa through 2004, 85 percent of which has been found in just 10 basins, with Libya's Sirte Basin yielding the largest resources (22 percent of Africa's total). At the end of 2004, the estimated remaining liquids resources in Africa are nearly 105,000 million barrels of oil (MMb): Nigeria (35,651 MMb); Libya (26,842 MMb); Angola (13,619 MMb); Algeria (14,169 MMb) and Egypt (3,428 MMb). Africa's remaining sub-Saharan and Saharan countries account for an additional 11,173 MMb). Sudan, currently a political wildcard, is also rapidly expanding both its production and reserves.

Additional forecasts by Cambridge Energy Research Associates (CERA), an IHS company, show that Africa will add 38 percent in oil production, contributing an additional four million barrels of oil per day by 2010. A substantial portion of this growth will be from new giant fields in Nigeria, Angola and Algeria. This growth represents 30 percent of the projected 13,650 million barrels per day global capacity growth. Giant deepwater discoveries in sub-Saharan Africa are expected to add more than 2,200 million barrels per day, with Angola and Nigeria being the major contributors.

Africa's contribution to the world energy supply however is not limited strictly to oil. The continent's new LNG capacity will be a growing source for natural gas. At the end of 2005, Africa had 50 million metric tons per year of the world's online LNG capacity of 173 million metric tons per year, with Algeria and Nigeria leading the way. Egypt opened a new train that will accommodate 3.6 million metric tons of LNG per year, while Equatorial Guinea and Angola have announced their first LNG projects.

"After 9/11, U.S. energy companies sought greater diversity in supply and began to refocus on Africa as a complementary source of energy," said Mobed. "Now, five years later, we see a fundamental shift occurring in the economic and political controls on oil and gas exploration. Namely, we see increasing dominance of national oil companies competing against international and U.S. oil companies for access to hydrocarbon resources.

"This is happening globally, but in Africa, for example, according to IHS data, 10 years ago, national oil companies had 95 license holdings in Africa. By 2005, however, this number had increased to 216, so national oil companies, particularly Asian companies, are becoming much more aggressive in securing energy supplies to support their growing economies," Mobed said.

The most active national oil companies operating in Africa are Statoil (Norway), CNPC (China), Petronas (Malaysia) and Petrobras (Brazil). China has been taking bold steps in recent years to secure raw materials in Africa to fuel its economy, and recently took the dramatic step of purchasing a 45 percent stake in Nigeria's giant deepwater Akpo field for U.S. $2.3 billion. And in just the past few weeks, China and India agreed to cease competing for hydrocarbon resources and to cooperate in securing new exploration deals.

Despite continuing political and civil unrest in countries like Nigeria, Mobed said companies are still attracted to the region because of the enormous hydrocarbon potential, particularly in the offshore. And while some African countries have increased their "state-take" to correspond with perceived higher prospectivity or potential, other African nations have balanced their fiscal terms with their country's E&P performance. Still, in other countries, their terms remain out of balance with their performance, Mobed added.

"However, on a positive note," he said, "is that many African countries with frontier prospects realize the need to promote their opportunities and to provide investment incentives. Their participation in leading industry expos like NAPE(R) Houston, APPEX London, and the APPG International Pavilion creates competitive pressure that often helps induce changes in their legislation and fiscal terms. Better incentives, combined with higher oil prices, make it possible for oil and gas companies to undertake the risks and considerable costs associated with frontier exploration and development."

Mobed's presentation was part of a panel addressing "The Changing Role of the International and National Oil Company in Meeting Global Energy Demand." Other speakers on the panel included Sir John Collins, president of the Energy Institute; Malcolm Wicks, MP energy minister; Joroen van der Veer, chief executive of Royal Dutch Shell; John Pearson, deputy managing director of AMEC; and H.E. Dr. Ibrahim Bahr al-ulum, oil minister for Iraq.

IHS (www.ihs.com/energy) provides integrated E&P information, software and consulting services to oil and gas companies worldwide. IHS is one of the leading global providers of critical technical information, decision-support tools and related services to customers in a number of industries including energy, defense, aerospace, construction, electronics and automotive. (NYSE:IHS). (www.ihs.com).

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