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Africa Oil Gas Forum -- Houston, TX -- Nov 30, 2004

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Africa Oil Gas Forum -- Houston, TX -- Nov 30, 2004

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    2. Contents The US interest towards African oil & gas The views from Houston and Washington Managing governance-related risks A critical view at CSR and US policies Who really wants to fix these problems? Are real solutions practicable, acceptable? A note of hope, anyway

    4. The US Interest (1) The view from Houston

    5. The US Interest (1) The view from Houston (cont’d)

    6. The US Interest (2) The view from Washington

    7. Sustaining Oil Supply Diversity: Africa important, not decisive by itself

    8. US interest towards African oil -- Summary Africa is key to the majors’ global growth strategies Africa is important -- not in itself decisive -- to sustaining world oil supply diversity The Houston-Washington consensus: Making Africa safe for energy investment

    9. Oil & Gas Investment Risks From old to new issues From sanctity of contract, protection of economic rights, tax predictability… Have receded -- though not disappeared To governance-related issues Political instability / conflicts / civil violence Human rights abuses Corruption / government wrongdoing

    10. Governance-Related Risks The general context

    11. Africa is no exception Latin America: Colombia, Bolivia… (Venezuela?) Caspian / Central Asia: next governance headache for the industry? Outside OECD, governance-related problems are the rule, not the exception Old issues, new risks Industry has known these problems for decades -- and lived with them Pressure from NGOs has turned them into reputation risks -- and legal risks as well (FCPA, ATCA) Governance-Related Risks The general context (cont’d)

    12. US companies long remained skeptical of CSR-like initiatives But it has changed: ChevronTexaco, ExxonMobil, Marathon, invest in community-development, health programs But remain wary of unilateral publishing of payments to governments Governance-Related Risks Houston’s Response

    13. Philanthropy v. Transparency CSR as reputation risk management Dirty secret: IOCs can live with bad governance -- though they truly dislike it Acting for transparency means likely trouble -- but unlikely benefits Philanthropy yields reputation gains without hurting host government -- but leaves the structural problem intact

    14. Rationale: Governance issues may hinder Africa’s oil & gas development Bilateral carrot & (soft) stick approach Preference for multilateral solutions (IMF, G8, OECD) Proposals for a more aggressive US policy -- more attractive carrots, harder stick Governance-Related Risks Washington’s Response

    15. Fixing Governance Problems Possible? Acceptable? Oil revenues are a destructive poison No CSR solution; Transparency not enough Proper management of revenues is a key factor, though no magical fix to the “oil curse” The Chad-Cameroon example Strict limitations to sovereignty over resources Who else will accept such a regime? “Talkin ’bout a revolution” The most fundamental institution of the oil industry is at stake -- state-IOC E&P contract

    16. Why Things Could Improve at last, a note of hope! Reputation/legal risks could escalate to the point that IOCs ask for radical solutions A “race to the top” among African governments could progressively develop CSR may contribute to raising the general level of interest for Africa’s oil-related troubles

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