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10th African Oil & Gas Trade & Finance Conference Algiers, Algeria 2-5 April 2006

NOT AN OFFICIAL UNCTAD RECORD. 10th African Oil & Gas Trade & Finance Conference Algiers, Algeria 2-5 April 2006. Theodore Ahlers Director, Maghreb Department World Bank Middle East & North Africa Region . Oil & Gas in Africa. Diagnostic of the oil and gas situation in Africa

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10th African Oil & Gas Trade & Finance Conference Algiers, Algeria 2-5 April 2006

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  1. NOT AN OFFICIAL UNCTAD RECORD 10th African Oil & Gas Trade & Finance ConferenceAlgiers, Algeria2-5 April 2006 Theodore Ahlers Director, Maghreb Department World Bank Middle East & North Africa Region

  2. Oil & Gas in Africa • Diagnostic of the oil and gas situation in Africa • Challenges that this represents for the future • Response of the World Bank Group

  3. Diagnostic • Significant but very unevenly distributed energy resources • High vulnerability to oil price shocks • Supply deficit • Complexity of oil and gas development projects

  4. Challenges • Energy infrastructure essential for poverty reduction and economic growth • Unmet energy investment needs, particularly regarding trans-border investments • Energy efficiency • Need for regional solutions

  5. Response of World Bank Group • Priority to Africa and to infrastructure • Emphasis on transparency • Support for clean energy development • Integrated regional approach with corresponding risk-mitigation instruments

  6. West African Gas Pipeline Capital Expenditure of about US$668 million First Gas in Q1 CY 07 Private Sponsors: Chevron 37%, Shell 18% Public partners in Nigeria, Benin, Togo, Ghana

  7. The Project–23 years in the making 1982 – ECOWAS proposed a natural gas pipeline across West Africa as a key to regional economic goal. 1992 – World Bank study confirmed viability of the pipeline based on ample reserves in Nigeria and regional energy needs 1995 – Nigeria, Ghana, Togo and Benin signed Agreement to develop WAGP based on private investment and commercial principles 2000 – Countries signed intergovernmental agreement for a harmonized fiscal and regulatory regime for the development, construction and operation of the pipeline 2003 – Countries and the Private Company signed International Project Agreement for development of the Pipeline 2004 – World Bank, MIGA and OPIC guarantee and insurance support was finalized 2005 – Construction began 2007 – First gas in Ghana

  8. World Bank’s Role in WAGP • Ghana, Nigeria, Togo and Benin are WB Clients • Requested by the Government of Ghana to provide guarantee support to the Project • WB carried out complete financial, economic, technical due diligence of the project • WB Group Support to the Project • IDA: partial risk guarantee of US$ 50 million for Ghana • MIGA: political risk equity insurance of US$ 75 million for Ghana • Other Bilateral Support • OPIC (US Govt. Agency); insurance support of up to US$ 125 million

  9. Basic Regulatory Scheme for WAGP Federal Republic of Nigeria International Project Agreement creates concession République du Bénin West African Gas Pipeline Company Ltd (WAPCo) WAGP Treaty République Togolaise Republic of Ghana

  10. WAGP Political Risk Guarantees IDA (Guarantor) Republic of Ghana Indemnity • IDA Project • Agreements • reps & warranties • covenants • Government Consent & Support Agreement • guarantee of, inter alia, obligation to pay ‘WAPCo Termination Payment’ if GSA has been terminated due to breach by VRA • IDA Guarantee • guarantee of Government payment of IDA’s share of arbitral award for 'WAPCo Termination Payment' N-Gas WAPCo (Beneficiary) Steadfast Insurance Co * Guarantee Multilateral Investment Guarantee Agency (MIGA) Guarantee * Steadfast Insurance Company provided similar guarantees for Benin and Togo.

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