Bodman urges African nations to adopt 'bedrock principles'

Dec. 2, 2005
Billions of dollars in venture capital are pouring into energy projects worldwide, US Energy Sec. Samuel W. Bodman said. But it will require commitments to "the bedrock principles" of property rights, contracts, transparency, and the rule of law, and to letting markets run their course for the projects to succeed, he said in remarks to a Washington, DC, conference.

By Nick Snow
Washington Correspondent

WASHINGTON, DC, Dec. 2 -- Billions of dollars in venture capital are pouring into energy projects worldwide, US Energy Sec. Samuel W. Bodman said. But it will require commitments to "the bedrock principles" of property rights, contracts, transparency, and the rule of law, and to letting markets run their course for the projects to succeed, he said in remarks to a Washington, DC, conference.

"In years past, of course, we saw the big energy companies make large-scale investments. Now, in addition, we are seeing new entrepreneurs and new investors betting on advanced technologies and processes," Bodman told the 2005 Africa Oil and Gas Forum on Dec. 1.

"Their pursuits are hardly altruistic. They are trying to turn a profit, to get rich. But the beauty of our system is that if they succeed, we all benefit. If they win, we all win," he observed.

Bodman said that the administration of President George W. Bush spelled out its commitment to a multinational energy approach in its national energy policy early in 2001 with detailed recommendations ranging from domestic energy production to energy efficiency, renewable energy, and environmental practices.

"But most striking, over one third of the recommendations addressed enhanced international relationships," Bodman said. Specifically, this included reinvigorating the US-African energy ministerial process; promoting a more receptive climate for US oil and gas trade, investment, and operations; and developing more geographically diverse energy supplies while addressing transparency, sanctity of contracts, security, and other issues, he said.

"Free trade and free markets are at the heart of our vision of a healthy international energy system because experience has shown that they are the best at delivering the outcomes that are most favorable for producers and consumers," said Bodman.

He said that the US wants to see more African countries engaged in programs with the US under the African Growth and Opportunity Act—or AGOA—and other trade enabling mechanisms. "A reliable energy infrastructure and a developed energy services sector are critical to developing oil and gas resources and expanding trade and investment," he maintained.

Bodman said that multilateral cooperation already has resulted in projects such as the $4 billion Chad-Cameroon pipeline project that now delivers 225,000 b/d of oil from oil fields in Chad to the Cameroon coast.

"With the completion of the 650-mile pipeline in July 2003, Chad has become a significant energy producer. The pipeline has also created new opportunities for Cameroon to revive its declining petroleum sector. A share of this oil even has been exported to the United States, clearly illustrating the role that African nations can play in the global energy market," Bodman said.

Successful completion of that pipeline has inspired other projects, he indicated. The West African gas pipeline, for example, will deliver 140 MMcfd of natural from Nigeria to commercially viable markets in Benin, Togo, and Ghana when it is completed in another year, he said.

"When complete, the open access pipeline is expected to help commercialize much of the region's natural gas. At a time when the United States is working to foster a more robust global market for natural gas, the West African gas pipeline is poised to help meet the needs of African businesses and consumers," Bodman said.

He said that Africa is positioned to play a greater role in the energy trade and investment equation with its close proximity to various markets, including the Atlantic Basin. "There are several promising emerging producers in Africa. Notably, West Africa is a promising exploration and production region with some of the most favorable rates of return on investment for companies," he said.

But African nations also must be prepared to take the steps necessary to attract and keep private investment, according to Bodman. They include a commitment to intellectual property protections, a fundamental commitment to private property rights, a willingness to honor the sanctity of contracts, creation of more transparent markets, and a dedication to regulatory certainty and the rule of law, he said.

"Only when these pillars are in place will private companies—including many represented at this forum—feel confident enough to invest on the scale necessary to help fully develop the abundant resources found in so many African nations," Bodman said.

Contact Nick Snow at [email protected].