 Today's event marks the launch of a series that the CSIS Africa program is organizing on Africa's changing energy landscape. This is done with the generous support of the Chevron Corporation. Ali Mosheery, who is originally on our agenda, is unable to make it today at a last-minute pressing schedule change. We're going to be looking at the trends and the implications for U.S. policy engagement. And there are two distinct aspects of Africa's changing energy environment, and they're linked in important ways, and they both are going to be critical determinants of Africa's economic future. And the first is the big changes in energy production, new oil and gas fines, new producers, the rise of renewables, and new technologies that are extending and expanding the reserves of already existing producers. The second is of electric power that are going to be essential if Africa is going to see an eventual economic transformation. And then the great irony is that even as Africa is poised on the verge of this hydrocarbons and energy production boom, it suffers from these major power deficiencies. So how do you get those two things working together to reinforce one another? Our purpose in the series is first to understand the scope and the significance of these big changes for Africa, for the global energy market, for the United States, for investors. And second to understand what kinds of opportunities are emerging for growth, for development, for investment, and conversely, what are the big challenges for governance, for geopolitical competition, for prospective investors, for equity, for security, and so forth. And then finally, through the course of the series, we're trying to better understand what this means for calculations of U.S. interests. Commercial interests is one, commercial and economic, energy security interests, and our longstanding interest in African development and seeing African economies grow and thrive. And what does this mean, then, for U.S. engagement? So we have just a great panel, one of whom is not yet here, but we're going to lead off with Ambassador Carlos Pascual, who's the State Department's Special Envoy and Coordinator for International Energy Affairs. He was appointed in May 2011 to head the newly established Bureau of Energy Resources. He served as Ambassador in Mexico and Ukraine. And early in his career, you have bios with you, but worked in Sudan, Mozambique, and South Africa, all new or prospective energy producers now. The ambassador, I think, is going to lay out the big trends, how the U.S. is looking at both the energy access issue and the energy production, and how the U.S. is positioning itself to engage on these issues. Next we'll turn to Philip Van Niekerk, who's Managing Director of Calabar Africa. This is a consulting firm that focuses exclusively on Africa, on integrity, due diligence, and anti-corruption issues. He's former editor of the South African newspaper, Mail and Guardian, 30 years' experience as an investigative journalist, looked a lot at the interconnection of resources and conflict, and now an advisor to foreign investors with a special emphasis on the energy and agribusiness sectors and banking sectors. And then finally, we will have the Ambassador of Ghana, Daniel O'Henne O'Geekum, who's been ambassador here since 2009. Ghana obviously at the forefront, a potential model for some of the new energy producers trying to avoid the pitfalls that some of the older producers have suffered from. At some point in this conversation, we're going to be joined by Senator Coons. His schedule has shifted. I think he'll come probably just before 10 and offer some remarks. My apologies to the panelists in advance if we have to cut you off for that, but then we'll return with question and answers, keep the discussion going, and we have until 10.30 for that. So Ambassador Pasquale, thank you so much for joining us. It's a real pleasure to have you here, and thank you all. Jennifer, thank you very much. Thank you to CSIS for sponsoring this event, to Senator Coon for allowing us all to be here together and all of you for joining. I'm going to be speaking off of some slides, which since you obviously can see that we don't have a projector, we've actually done something horrifically bad for the environment and printed these things. So if you can each make sure you have one, and I can see that the two of you don't have one. Maybe somebody back there can get a couple for the folks up here. I'm the head of the Energy Resources Bureau at the State Department. It's a relatively new bureau was created officially in November of 2011. The first trip that I took in my capacity as the head of the bureau and the coordinator for international energy affairs in the State Department was to Africa to Nigeria and Gola and South Africa, and it's reflective of the fact that we really have to incorporate Africa in the energy possibilities that we have today. But the first slide that I wanted to draw your attention to on page two is what's happening more generally in Africa and economic growth. You see on the left-hand side of the page a chart that has two different factors. One is foreign direct investment, where we've seen foreign direct investment on levels of $40 to $50 billion a year consistently over the past decade, and growth rates that have gone as high as 6% and 5% growth rate is on the right-hand side of that chart. And that economic potential is indicating what Africa can be. It's creating a demand for energy resources as Jennifer was indicating a little bit earlier. It's also driving down rates of poverty. And if you look on the chart on the right-hand side of the page, it's a little bit counterintuitive, but if you look on the decreased side of that chart, what it basically tells you is the number of the ratio of people within the country that have been reduced from being taken off of the poverty rolls so that the economic growth that we've seen in Africa over the past decade is starting to have very different kind of environment of a continent which is growing, a continent where people are starting to come out of poverty that is creating economic opportunity and is attracting private investment in ways that we had not seen when I first started working on the continent in the 1980s. But we can't forget the poverty picture, and that's what I want to draw your attention to on the next slide. In any kind of econometric analysis that you look at, there is no bigger factor as a driver of economic growth than access to energy. And this picture is a very sharp indication of the problem. So on the one hand, the little square that you have on the left-hand side of the page is a state of New York, a population of 19.5 million people and a generation capacity of 40 gigawatts, 40,000 megawatts. That is the equivalent of the entire installed generation capacity of sub-Saharan Africa if you exclude South Africa. And that just, as a broad figure, it tells us something about the potential impact on economic growth, on competitiveness, on job creation, on access to education, on health care, on access to cold change. And in effect, this question of access to electricity is an economic development problem. But here's another perspective that we can't forget as well. How long will the people of Africa support the extraction of natural resources from their continent if they themselves do not benefit from access to energy? And at a certain point, this becomes a political issue as well that is of direct concern to us as an energy-importing country. And so we have to bring these factors together, both from a perspective of economic development but from a perspective that if we want to help Africa develop these resources, we can't separate those resources from Africa's own aspirations for greater access to energy. And hence the following chart that I wanted to bring your attention to. There are 2.7 billion people in the world, this is global, that do not have access to clean cooking facilities. There are 1.3 billion people in the world that don't have access to electricity. 600 million of those people who don't have access to electricity are in Africa. If we want to bring that number to zero, the IEA has estimated that it's going to require $48 billion a year in investment every year through the year 2030. If we think of that as a development aid problem, we have failed because we will never see those levels of development data on a consistent basis. But if we look at it from the perspective of changing the incentive structure to attract private investment, it means the attraction of 3% of the total private investment in energy infrastructure that we see every year. And that's a task that we can accomplish. And so as we go through this discussion, and as you go from this room, if there's one important thing that I can leave with you, one important message, it's how do we reduce risk and increase the prospects and the environment for private investment and the development of energy resources and energy access, because if we can't accomplish that task, we will not accomplish the broader goal of helping Africa achieve greater access, energy access for its people. All right. The potential is obviously there. And what you see on slide five is the range of resources that we've seen it being emerging throughout the continent. In West Africa, phenomenal amounts of oil and the ambassador from Ghana who will join us, I'm sure we'll speak to that. We've already known the story of Nigeria in the past. In Kenya, on the east coast of Africa, but in particular, one of the things that we have started to see is the emergence of new gas resources in Mozambique and Tanzania. Mozambique has had the largest gas finds that we've seen in the last 30 years in 2012, four out of the five largest gas finds that took place in the world took place in Mozambique. And if we see that chart on the bottom right hand side of the page on increasing gas production, that's just based on existing reserves that have already been started to develop. And it doesn't even take into account the additional resources that we might see out of Mozambique and Tanzania. This is going to have huge geopolitical implications. And indeed, one of the things, and I want to come back to this point then in the next slide. We have to think about these emerging resources from a perspective of what markets are they going to serve. And in today's world, the biggest and the fastest growing energy demand is in the non-OACD countries. Last year in 2012, for the first time in history, the non-OACD countries consume more energy than the OACD countries. And if you look at this going into the future, it is China and India and South Africa and Brazil and the countries of the Middle East that are going to be the biggest energy consumers. As a result of that, there are going to be the biggest pull factor on resources. And there's an irony here that I'll mention as well that is of direct interest to us in the United States. The gap between demand and supply in these countries. So think about it this way, the gap between demand and supply in China is going to be the biggest price pull factor on global prices. And so how China meets its energy demand is going to be of direct interest to us here in the United States because it's going to affect global prices. It's going to affect our economic growth. It's something that we are not used to thinking about because we've never found ourselves in this kind of situation. And hence, that gives significance to this chart that I've focused here just on gas, but you can do something similar even on oil. Fastest growing demand for gas in the world is in Asia. The biggest country in terms of demand is China. Japan, especially after Fukushima, has become a huge consumer of gas. Korea, India. And so as a result of this, the supplies that are coming out of East Africa are immediately going to find a pull factor into the Asian economy. And it's no surprise then if you turn to the following page on Chinese energy investments in Africa, throughout the continent you consistently see the presence of China as an investor and the development of these resources. And hence, the debate that often comes up is that a good thing or a bad thing. And I think the answer to this is it depends. And it depends on how those resources are developed. Is it a good thing that China potentially participates in the development of natural resources if it brings additional resources onto the global market, if those resources are freely traded, and if revenues, in fact, go back to the country that they can benefit from, that could be a good thing. If resources are developed in a way that lock them into a particular producer, or if they're developed because there is a deal between the producer and a host government that results in non-transparent systems of governance and the diversion of resources in ways that they will not benefit the people of that country, then that's a bad thing. And so it underscores a point that I want to come back to, which is the critical importance of energy governance and transparency. Because one of the ways to address this problem is to continue to reinforce the need for clear governance of energy resources and accountability for those resources in countries across the continent. So look at the next slide on African oil producers. Standing out at the top of that are Nigeria and Angola. These are countries that have been producing oil for a long period of time. I think the stories that we've heard, let's just take Nigeria, for example, about the tensions that they've had in development of a resource regime for the development of Nigerian resources, the difficulties they've had in passing a petroleum industry bill to create the investments that are necessary for additional investment. I think Philip's going to talk more about these issues. For anybody who's been involved in the industry, something that has been a challenge and a problem for more than a decade. If we look at gas, again, some of the similar countries, but let's take Mozambique as an example with the massive resources that they had. When I worked in Mozambique from 1989 to 1991, two and a half year period, it was in the midst of a civil war. The per capita income of the country was just about $350 per year. They had virtually no national institutions that had a capacity of managing their policies and managing their resources. And Mozambique is running, running, running really hard and really fast to develop those capabilities. But the reality is that the institutions that they have are still nationed in the ability to manage these resources. And hence, I come back to this point of the importance of governance and transparency and some of the issues that are outlined on page 10. If you don't manage those resources well, we have all known the problems of the so-called Dutch disease of countries being developing with complete dependence on natural resources. There are cases where it could lead to currency appreciation because of the influx of foreign exchange into the country that isn't effectively managed. So if you go to Angola and you go to one of the international restaurants and you want to buy, remember one time thinking about ordering a salad in a hotel and it was $48? I thought better of it. But just one of those small indicators of the divergence in economies that start to be created where you have an external economy that becomes impossible for most people of a country to live by and then another very small economy which affects the indigenous population. Those are some of the kinds of things that we want to try to avoid, but how to do that. And to do it, one of the things that we have tried to focus on are tools for transparency, the way that you tender and execute contracts, the way that revenues are collected and whether they're put into account and account where they can be identified, the way that countries develop their budgets and how they have accountability over their expenditures and transferring funds from revenue accounts to actual expenditures. Stakeholder engagement we've tried to underscore because in the end, it is civil society that has to continue to maintain pressure on its governments for transparency on the use of those resources. And finally, on environmental safeguards because sometimes there is such a pressure to get resources out that you can begin to actually destroy the resource base itself. In the State Department and as part of the Energy Resources Bureau, we've had a small project, the Energy Governance and Capacity Building Initiative. It's just about $2 million a year. We've worked with a limited number of countries. You see some of them there. We've also had some regional workshops. We've tried to target the focus of our assistance so that we can really build capacity within governments to be able to manage resources more effectively. And in the end, the goal is how do populations get the confidence that their government is managing resources in a way that is actually going to benefit that population in the long term? Now, transparency is not the only part of the equation. The other part of the equation that we have to focus attention on as well is commercial business opportunity. And let me remind, take you back to the chart that was on page three, the one that or page four, the one that looks like this on investment for access. The question that we have to ask ourselves to is how do you create a commercial case for this to occur? And let me give you an example. In Nigeria, on the coastal side of Nigeria, people are paying about $0.50 kilowatt hour for electricity. If you go into the northeastern parts of the country, people are paying about $0.70 per kilowatt hour for electricity. Why? Because it's largely diesel-based, and they haven't been able to take advantage of the gas resources that are so abundant within the country. In Washington DC, we're paying about $0.11 per kilowatt hour in places that have a significant amount of hydro capability. They're paying about $0.07 to $0.08 a kilowatt hour. Wind has now consistently come back in at $0.15 per kilowatt hour. Solar is moving way, way down fast in its affordability. And so in some places, it's going to be consistently available for $0.15 a kilowatt hour. So here's the thing we come back to, is how do we turn that into a business proposition? So that international suppliers who have the resources and the capabilities to be able to develop these resources and renewable energy can work with local business partners to create viable business deals and bring the actual benefits to the population. So if we think about this from the perspective of solar and wind energy, going back, or solar and hydro power, going back to page smaller numbers any longer without my glasses, on page 11. The hydro power that exists in Africa is legendary. And indeed, Congo, if there could be a resolution of some of the governance challenges, the inga dam possibilities could actually power much of the continent. The solar possibilities that you see on the lower chart are quite extensive as well. On the following page, one of the things I just want to highlight is the potential for geothermal that exists throughout the Rift Valley Basin. And in Kenya, we've seen one project where USAID provided technical assistance. OPIC provided $300 million of financing. The Kenyan Pension Funds provided a significant portion of the financing for the development of a hydro project which led to an investment that is soon going to be producing about 210 megawatts. And the potential for further development is quite significant. The ability to do that depends on creating the right kind of business environment where utilities can recover their costs and operate as a normal business. And so here's another case, Nigeria, on the following page, which is a challenge. Nigeria is going through one of the largest privatizations ever undertaken in the power sector. They're privatizing their generation companies, their distribution companies. They've leased out their transmission companies. They're looking at going from about 4,500 megawatts of power generation capability in a country that is estimated to need about 16,000 megawatts, just to give you a scale of the requirement. They're looking to go from 4,500 megawatts to adding an additional 10,000 megawatts by 2020. The potential for investment, if the policy environment is right, is absolutely enormous. But the key in the end is something very basic. You have to be able to bill your customers. You have to be able to collect your bills. The cost that you charge has to be able to compensate the technologies that you're investing in. And you have to be able to return that to those who are actually generating the electricity and supplying the fuel. It's not that complicated of an equation, but that is the challenge that we face right now. And we have to continue to work with the Nigerian government as they work through this very ambitious process. In closing, I just wanted to come back to putting these issues and these challenges into a broader global context. About a year and a half ago, the UN Secretary General launched what was called the Sustainable Energy for All Initiative. It's now a joint initiative that is headed by Secretary General Ban Ki-moon and President Kim of the World Bank. It has 40 members of an international advisory board, including ministers and CEOs from around the world. It's a public-private partnership. Its goal is to achieve universal energy access by the year 2030, while at the same time increasing access to renewable energy and improving energy efficiency. There are companies like Bank of America that have indicated that they're available to provide $50 billion of financing and $100 million in grant support if there are good projects that are brought forward and put on the table. The kind of model that is being developed is fascinating, and I won't go into it too much, but it's in effect a network approach. And you see on the following page this idea of a global support team. And the purpose of that global support team is to work with country teams that develop help individual countries develop action plans. There's 61 countries that have signed up to develop those action plans so far. That associate those action plans with what are called high-impact opportunities, where you have private sector participants who have been engaged in issues from gas flaring to energy efficiency, who might be able to lend their skills to individual country situations in a way that then can draw in the appropriate capabilities from the World Bank and the UN and the African Development Bank, in effect, not to replicate capabilities that are to exist, but to serve as a mechanism that creates that network that links those capabilities together. And so I'll leave you with one final point on the last page on African power sector investments. We can imagine the interests of US commercial interests that exist in the oil and gas sector, but may also focus on power. Because in effect, the way that investments in power occur is going to develop the fundamental shape and character of the energy sector throughout Africa, how renewable it is, and how positive it is to contributing to global interest in reducing net CO2 emissions. So in Africa, between now and 2035, the IEA estimates that there will be $745 billion of investment in power. Power generation, transmission, and distribution. You see in the chart just on the right-hand part of the page that just focuses on the generation part of it. The African part of generation is estimated to be over $430 billion. And so the point that I want to leave you with is this. We have an opportunity right now in working with Africa in a way that can provide greater resources to international markets, that if done well, can bring greater access to energy to people in the African continent who have lagged behind the rest of the world in getting access to those resources. If we can do that, we can continue to stimulate economic growth and job creation and competitiveness while improving opportunities for education and health care. We can do this in a way which serves US commercial interests, not just in oil and gas, but in the creation of a market for power generation in which the United States has a competitive advantage. And to the extent to which we do this in a way that helps Africa take advantage of its renewable energy resources in solar, wind, geothermal, and even using gas supplies as opposed to diesel, we can significantly reduce the CO2 implications of those power investments that are going to be made over the next two decades. This is a phenomenal opportunity that we have not seen crystallized in this particular form in the past. And what has incumbent on us is to be able to take advantage of it. So, Jennifer, thank you for bringing us together to try to give attention and focus to these kinds of questions. These are very exciting times right now for Africa. A decade ago, the narrative was of a continent that was doomed, beset by civil conflict, poverty, starvation, and epidemics epitomized by the infamous economist Kava declaring that Africa was the hopeless continent. And now the pendulum has swung almost in the other direction. And the new mantra, which we've heard a bit of today and that we're hearing increasingly in the media, is of Africa rising, of high GDP growth rates, movement of millions of people from poverty into a better life as consumers and also as citizens. I think Ambassador Pascal has given us an excellent overview of the importance of energy in this picture. And indeed, it's unconscionable that Africa, as it becomes more of an exporter of energy to the rest of the world, a continent of almost a billion people, has less power to go around, and that includes South Africa than the whole of Spain. I'm going to concentrate on hydrocarbons today because it's not only part of the African growth trajectory, but if you take away, if you look at the numbers, it's actually one of the main drivers of the growth that we've seen in Africa. And it also, what Africa does with the bounty, the new revenue that's going to come, will determine whether it's ever able to move beyond simply being an extractive continent that supplies raw materials to the rest of the world, and whether it's able to move into sustainable development and move beyond its traditional position in the global economy. We talk of extractive industries, but oil is a significantly and has been a significantly large part of that already for the past decade. Africa's existing producers, as we saw the chart, Angola and Nigeria being the main ones, are only responsible for 7% of global crude oil output. But for Africa, that's a big deal. That means disproportionately a lot to the African continent, given the size and the scale of African economies. We talk of China's burgeoning trade with Africa, but 65% of Chinese imports from Africa are in the form of crude oil, principally from Angola and Sudan. We took oil out of the equation. We would substantially deflate the figures of Chinese trade with Africa. Now we see a potential explosion of production. And the three main areas are the deep waters of the Gulf of Guinea, which is in fact where most of the development is going to be. East Africa's emergence for the first time as a crude producer, and then the natural gas discoveries in the Indian Ocean off the coasts of Tanzania and Mozambique. And then finally, we also have to acknowledge the exploration that is underway in formerly no-go areas. I mean, if you look at where oil companies have laid down their markers, where they've taken up acreage, where they're exploring right now, I think there's only six out of 50 countries in Africa where there isn't some level of exploration underway. So it's almost impossible to quantify exactly what that's going to mean in the future, but it certainly is going to be a game changer. Across the continent, this is going to dwarf investment opportunities in other industries or sectors for the simple reason that revenue from oil from hydrocarbons is generally so massive. Foreign direct investment in hydrocarbons, infrastructure alone, whether exploration and drilling equipment, pipelines, dredging and construction of the new deep water ports that we're going to see in East Africa, liquefied natural gas plants, offshore floating platforms. I mean, this could be anywhere between $150 to $200 billion. That's just the infrastructure over the next decade. Investment into liquefied natural gas plants in Mozambique alone could be three or four times the GDP of that country, annual GDP currently, which stands at about $10 billion. We've seen new producers, Ghana, Uganda, Sierra Leone, Liberia, Kenya, Mozambique, Tanzania, Mauritania, showing that the trend is towards diversification. Historically, it's been Angola, Mozambique, Gabon, Ecuador, Guinea, Cameroon, who's been a very sort of Sudan, of course. But now we're seeing a much greater number of countries that are going to be producing. But the important thing to keep in mind is that the existing players are going to still play the leading role. Nigeria, if they get their act together, if they manage to pass the petroleum industry bill, if they manage to reach an agreement between the international oil companies and the government on the fiscal terms for the deep offshore, there's up to a dozen blocks that are sitting there that could be exploited and could be developed, all of which have more than a billion barrels of reserves inside them. Nobody knows the exact figure, but there's potentially $50 to $100 billion of investment waiting on the sidelines if Nigeria is able to get its act together. If it's not, that's not very good for Nigeria because it's been a long time since, in fact, they have commissioned none of the deep water blocks since the 1993 bidding round. What that means is that in two, three years' time, Nigeria is going to start to see a decline in the amount of oil production, unless they start moving some of the deep water blocks into development now. If they do, that's very significant. Angola's sub-salt drilling successes, which have potentially opened up substantial new acreage using new technology, have followed technological breakthroughs in Brazil that almost doubled that country's offshore reserves. Gabon, also, which was a declining oil producer until recently, has considerable sub-salt potential as well, so another one of the existing producers that can actually become a major producer again. Where does the US sit? And this is quite interesting because the US actually has a dwindling interest in the resources themselves. What has happened in the market here in the US, fracking, the revolution in shale gas, has converted the US from an importer into a potential exporter of natural gas. So apart from transforming the global natural gas market, which is undergoing very dynamic change at the moment, this is going to ensure that the reserves off the coast of Mozambique and Tanzania will mostly find their way to East Asia, where, as we saw demand has surged. At the same time, US demand for African crude oil is waning. US purchases of African crude fell, I think, by 27% up to 2011, with further cuts in 2012. Imports from Nigeria were the worst affected because the shale oil from North Dakota is similar to the Nigerian brand crude, sorry, the bunny light crude oil, and therefore is displacing it in the US refineries. So while the US, the Asian nations, especially China, are going to be the major consumers of African oil and gas, and that changes the strategic calculation somewhat, the US and Europe are likely to remain the leading investors. US companies remain involved at about every level of the value chain. African oil and gas exploration and production was once dominated by the super majors. I mean, if you go back 10 years, Africa is a story about Exxon and Chevron and Shell and Total and the big companies. But the interesting thing about what we've seen in the last few years was the new discoveries is that they've been essentially made by the smaller companies by the mid-level independence. US companies like Anadarka and Sierra Leone, Cobalt International in Angola, Tullo Oil in Ghana, and Uganda, Ophir Energy off the coast of Tanzania. And this has led to a completely different constellation of players in the African oil sector. At the same time, we've seen a rise of African oil companies, indigenous companies, particularly from Nigeria, where you've had a much longer history of oil production. So you've got your Oandos and your Afrons and your shorelines also coming into play. The majors were slow off the mark because they generally prefer to hunt for the elephants. That's blocks of a billion barrels or more. But a combination of improved technology, willingness to take risk, and I think some very favorable oil regimes in the African countries who are very welcoming of the smaller and mid-level oil explorers has created this new generation of African oilmen, if you like. Now, the majors, even though they've been out of the picture in terms of the new discoveries, they maintain the technological edge in the deep water, which is essentially where the most development potential is going to lie. So Exxon, Chevron, Shell still have a big role to play in the development of the African hydrocarbon sector. And they are going to operate the really big projects. The explosion and the spill at the BP's Deepwater Horizon rig, which devastated the US's Gulf Coast, is an object lesson in the dangers of deep water technology and outsourcing deep water technology to subcontractors. Given the environmental risk for Africa as well, it is hard to see anyone other than the majors leading the way in the Gulf of Guinea's deep offshore. Then again, American engineering companies, your Baker Hughes, your KBR, will also be at the forefront of the mega projects. So there's a very, very intense American engagement. For Africa now, this is the make or break moment. Used wisely, the potential revenues could really build a new Africa. But the specter of the resource curse means the producers of Africa will have to overcome the diplomatic, environmental governance, and ultimately democratic challenges. The diplomatic challenge arises from the gathering disputes of the hydrocarbon rights across poorly demarcated maritime boundaries, some of them that hark back to the colonial times. So we have the DRC and Angola arguing over their maritime boundaries, Malawi, Tanzania and Lake Malawi, Mozambique versus Tanzania versus the Indian Ocean Islands. If managed well, these disputes could offer the opportunity for creative ways of working together. In Nigeria, Oleshigan, a messenger, he showed the way more than 10 years ago, went off to international arbitration. He handed Bacassi back to Cameroon and established, I think, what was the first joint development zone in Africa between Nigeria and Sartome. And that could provide a model or a template going forward. A proposed pipeline in East Africa could link the now significant oil fields in southern Sudan, freeing southern Sudan from dependence on the north and from having to go through Port Sudan, Uganda, which is trapped in land, even potentially the DRC, even though they've been very slow off the mark with their blocks, and the new finds in northern Kenya in the Turkana area. And in the process of building this pipeline infrastructure, this will provide some level of cooperation that could bind the East African community, which is anyway moving into closer cooperation, which would bind them closer together. I think the biggest challenge of the coming boom will be to ensure that the benefits reach ordinary Africans. This is dependent to some extent, and it's not just a matter of corruption, but how assertive political leaders are in setting the terms, running the auctions, negotiating supply and production sharing contracts with the oil companies. Laws containing fiscal terms are being reworked. So one of the reasons why the PIB is so contentious is that it takes the existing fiscal framework and it says, all right, we have to get more back for the people of Nigeria. As Kofi Annan's Africa Progress Report noted last week at the World Economic Forum, Africa is losing billions of dollars every year through tax avoidance by the resource-extracting companies. Loopholes that allow for this through transfer pricing, non-payment of capital gains are increasingly under attack in some places. And Uganda, for instance, recently challenged the sale of heritage assets to Tullo. So though its outcome is uneven, some countries have mounted ambitious drives to boost local content. And we see that Nigeria increasingly has a full-blown local production industry, and they're not purely dependent upon foreign investment. Most history in the older producers, however, such as Nigeria, Gabon, Equatoria, Guinea, and Angola, show that fast influxes of natural resources, encouraged wealth, natural resource wealth, encouraged corruption, poor sector management, and low-value economic policies. Nearly all of sub-Zaharan Africa's current oil and gas-producing nations regularly come near the bottom of the transparency international grafts. And the perception is of a highly corrupt industry. Should I continue? OK, as the number of oil-producing states grows, governments and operators will need to be extra vigilant to protect oil wealth from plunder. Though oil wealth is far from vanquished, the international terrain, I think, is much changed. It's far more difficult. The era when autocrats like Omar Bonga and Sonia Baccia could hide hundreds of millions of plunder dollars in Swiss bank accounts has passed. The banks have tightened up largely as a result of the post-911 anti-money laundering measures, though the global system remains far from transparent. The US and the OECD countries in general can do much to clamp down on the use of havens, such as the British Virgin Islands, to hide corrupt deals. OK, OK, well, if you can take a seat, and then we'll come back to that. A inch of Africa policy issues, but particular focus on the opportunities for greater US engagement in Africa through investment and trade. And the notion that, yes, this is good for Africa's economic growth and prosperity, but really this is an opportunity for the United States as well in jobs and investment. And I think what's been critically important is his role in taking that message to a broader swath of the US public. Ambassador Pasquale referred to this. This is not just an opportunity for Africa. This is a big opportunity for the US private sector and the US employment and US economic interests. I would recommend to you all the report that Senator Coons issued this past March, which is embracing Africa's economic potential, recommendations for strengthening trade, relationships between the United States and sub-Saharan Africa. I won't take long, but just to say, Senator Coons, thanks so much, again, to your staff for helping us pull this together today and for joining us to make a few remarks on the opportunities and challenges for the US going forward. So thanks very much and welcome. Thank you, Jennifer, and thank you for accommodating my schedule. When we first agreed for me to make some brief comments, my schedule was quite different. I serve on the Judiciary Committee and we are beginning our second eight hour markup of the comprehensive immigration bill in seven minutes. So that will serve as some filibuster reform, some external constraint on me since it takes at least two minutes to get there. My time of remarks, hello, Amy, will probably be five minutes or so, we'll see. It's always lovely to begin remarks with a college classmate in the audience, as well as friends far and wide. So thank you, Jennifer, and thank you to CSAS for the great work you do and thank you to the panel and again, forgive my interruption. As anyone who has lived or worked in Africa knows, access to reliable energy is absolutely essential. Essential to development, essential to health, essential to laying the groundworks for a reliable and predictable and positive path for development forward. From cook stoves at the family level to reliable energy supplies for manufacturing or for healthcare services or for education. From my first time in East Africa in 1984, watching the women of the family I stayed with carry huge bundles of firewood on their heads and backs to my most recent visits earlier this year, I've been struck at the extent to which the human cost of energy insecurity really is a drain or is a downward pressure on the enormous upward potential of the entire continent. To the Center for Strategic and International Studies for organizing this forum and for leading this conversation, thank you as Jennifer referenced in my three years now chairing the Africa Subcommittee of the Senate Foreign Relations Committee, I've made visits to a dozen countries across the continent and persistently tried to move forward concerns about governance, about security, about humanitarian and health concerns, about infrastructure, about economic development. Energy lies across all of these different silos. And one of our challenges as we engage in positive constructive relations with Africa is to help others see that energy is a combining thread across all of these different areas. As you know, energy poverty affects many of the 600 million people in Sub-Saharan Africa, roughly half of those people don't have reliable, safe, steady access to energy and rely on things like cook stoves in the home that cause respiratory diseases, have challenges in terms of lighting in order to study at night in villages all over the continent, have difficulty with storing things like vaccines and anti-retroviral medications that are critically required to push back on childhood disease. And it's just tremendous losses, not just in individual human potential, but in the development potential of an entire continent. I preach a great deal across the United States about the huge potential of Africa economically. I remind folks so often that it's being sort of thrown back at me now that seven out of 10 of the fastest growing economies in the world in the coming decade will be in Sub-Saharan Africa. But when energy costs, energy production costs are two to four times that of Asian competitors, it is no question that energy security plays a critical role in securing that future, not just for a handful of countries but across the entire continent. Expanding access to reliable and consistent energy can also be a massive multiplier. So it is one area where investment isn't just across the different silos I cited but can accelerate progress across all the different areas that I cited. So when we think about our role in expanding investment as a nation in Africa, moving from relief and development to trade and real development partnerships for the long run, investing in energy security is absolutely vital. Africa happens to remain, of course, one of the most energy-rich continents on earth. One of the other factoids I throw out to audiences in Delaware and across the United States is that we get more oil as a nation from Africa than we do from the Middle East. And I've almost never found a room full of Americans that know that fact or that understand its consequences. And frankly, appreciating how unequal energy distribution is within these oil-producing countries is also a reminder of the very real human costs, whether it's in Nigeria, Angola, or Gabon. You've got countries across the continent that are truly oil-rich but where a majority of their own people don't have reliable access to electricity. And so working in partnership with those governments to address this long-standing challenge in terms of infrastructure is one of the ways that we can work together positively. Solving these challenges is up to African governments and African peoples and African institutions, but we can provide critical technical advice and critical facilitation. We can provide encouragement that there be accountability and transparency, that the natural resource riches of the continent read down to the benefit of peoples all over the continent, and that African initiatives to ensure transparency and accountability for the use of natural resources get needed support and acceleration from the United States. As Ambassador Pasquale, I spoke about earlier, there are U.S. government programs that I celebrate and I intend to support that accelerate capacity and access to energy in a private sector role. And I do think we can and should continue to share U.S. technology, U.S. resources, and U.S. insight from our own experiences, both positive and negative, over the decades since we began developing our own energy infrastructure. Since the United States is already the single largest contributor to multilateral development banks, crucial to power infrastructure, I think it's important that we continue support for linkages between projects and programs that actually distribute power to communities and the sort of transparency that many have spoken about. The African Development Bank is playing a leading role in implementing energy development ideas and has pledged 20 billion in energy projects through 2030 and to mobilize 80 billion in additional resources by partnering with private and public enterprises. Those opportunities are enormous and that's in part why I was quite disappointed to hear that the U.S. Department of Commerce has chosen to withdraw its ADB representative, something that I urge us to redress by reinstating our representative. The American private sector has a huge amount to offer and both the report that was referenced by Jennifer in the introduction and legislation that I've cosponsored with Senators Durbin and Bozeman seek to address what is a persistent problem that across U.S. government entities, XM, OPIC, TDA, state, AID, commerce, many others, we don't have a sufficiently coordinated, focused and thus effective program at accelerating the U.S.-Africa trade relationship and ensuring that investment opportunities are being taken advantage of. So the report that I released in March has a whole menu of proposals, there's a reference in there to the legislation, it's on my website, I'll simply move forward. Our own experience in energy development, our own still emerging experience, for example, in tapping and managing offshore oil and gas and shale gas, our environmental challenges and concerns and our evolving technology, can and should be put to advantage across the continent. On a visit to South Africa earlier this year, of all the topics 20 South African legislators could discuss with Senator Isaacson and I, how to reliably and responsibly access shale gas in the Karoo without destroying an ecologically fragile area was one of the most valuable and to both of us exciting opportunities for conversation. In a visit to Uganda last year, a conversation about how to access newly found oil reserves, same in Tanzania, offshore gas reserves, how to access them without either destroying some of the cultural fabric of the country in Tanzania or in ways that don't destroy vital biodiversity areas right along the edge of fragile lakes in Uganda. So we need to export not just technologies, but also lessons, lessons from our own ecological failures and lessons from our own technological successes. At the end of the day, I think this is an area where we can see enormous beneficial development for both countries. We have 200 years of experience in energy development and some would say some modest experience with transparency and with ensuring that our energy is developed in a way that builds the infrastructure for sharing energy across our entire country. Partly why we have hospitals that have reliable 24 seven power, part of why we have manufacturers who have reliable 24 seven power is things that were put in place two generations ago to ensure rural electrification, to ensure an appropriate regulatory role, to ensure a national network that is strong, robust and reliable. As the United States and as our energy committee and our national government entities face the challenges of energy reliability and sustainability in the 21st century, we can and should share those resources, those ideas and those insights, the skills needed, the capabilities needed, the technologies needed with our partners across the world's most exciting emerging continent. With that, thank you to CSAS for hosting today. Again, I apologize for the change in schedule and I appreciate your tolerance with my very brief remarks. Have a great conversation today. Thank you. Senator, thank you very much. Really for excellent and succinct remarks. I think what we'll do now is turn back to Philip just to if I think you're wrapping up in just a couple of minutes and then we'll turn to Ambassador Kagan. No, no, you can press the button on your mic if you'd prefer. What I was going for was one of the most significant policy instruments for dealing with corruption in Africa which has come out of the US is the Foreign Corrupt Practices Act. I think it often gets sort of forgotten when people talk about these sort of big initiatives but in fact of the 10 largest settlements that the Department of Justice has managed over the last five or six years, five of them have been in the African oil and gas sector and majority of those actually in Nigeria. Furthermore, talking about the international kind of mood against corruption, there's the Extractive Industries Transparency International which many African governments themselves have signed up to and there's also a greater sense that journalists guard and report this, global witness reports things. It's harder to get away with things now that you were able to pretty well get away with five years ago. But I think ultimately the main point I wanted to make, the most important constituency for good governance and transparency in Africa is ordinary Africans themselves. As we saw last year when millions of people took to the streets to protest the abolition of fuel subsidy in Nigeria, what they were really protesting against was corruption in the elite. And I think if we're gonna make democracy, if it is at all to be meaningful in an African context, there has to be some way of accounting for these new revenues that are coming in and making sure that they're not misspent and abused and that they're used for the benefit of Africans. Thank you very much. And thanks for looking. You were interesting downstream. So welcome and thank you for joining us. Thank you Jennifer and thank you CIS for organizing this forum. First of all, I apologize for dropping it a little bit late but I was very keen to be part of this discussion because we want to listen to you more and to learn from you. Let me start by taking it from where Senator Coons left off. I think Africa as a whole has a lot to learn from the US and from the rest of the world, particularly the US. And it's only through this kind of interaction that we'll be able to take advantage of the lessons that you in the US have learned over the years in managing the oil resources that have been part of your economic development assets. And I have listened to the previous speakers. I've looked at the charts here. Obviously Ghana is not even mentioned in the area that deals with the gas production. We are not there. In the area of oil production, I think we are about the last. So we are more or less the new boys on the block. And so we have a lot to learn from the American experience, so to speak. I believe that listening to the previous speakers and listening to Senator Coon, much of the knowledge and information that we need to have as investors is all out there. I'd like to look at the challenges and the opportunity that exists in Africa from a slightly different perspective, if I may. We've talked about what oil can do for us. We've spoken and participated in a number of conferences on the dangers that the discovery of oil can pose for any emerging economy or emerging market. And we've talked or heard about the so-called dark disease. This is all well and good. We in Ghana, from the very beginning, went round the globe to consult with many countries and also domestically to consult with the civil society and other stakeholders. And we came to the conclusion that the only way that the oil resource that we have found can be of benefit is to, from the beginning, establish a framework, a legal framework that will govern the management of the oil resource. We know of the dark disease. And I don't want to mention names. We have also learned from the experiences of other sister African countries. Let me make a story. One of these countries has huge resources. And from the beginning, the country established, quite rightly, five oil refineries. As we speak, I believe that one and a half of those refineries are now operating. The one at half capacity, the other half is almost collapsing. Why am I telling this story? For so many years, Africa has been perceived as one of the richest continents. But it has always, the emphasis has always been on the extractive industries and exporting these resources in their raw form. What I want to propose, even with the oil resource that we have found, it is important that we are able to add so much value to this resource so that the benefits that we talk about can be spread to reach out to the people who need to be part of this whole experience, to enjoy the benefits of this oil resource. So long as Africa continues to export, whether it is oil or gold or diamond or any of these other new resources, as I see it, we're going to remain where we are. We can talk about corruption, it is important. But the point I'm making is this, that if you look at African economies and you remove the oil factor, what else do we have? We have gold in Ghana, diamonds in Ghana, bauxite in Ghana, now we have oil. For now, much of this is being exported in the raw form. I want to propose that if we are able to use the oil resources as a catalyst for development in other areas to support development in the field of education, in health, to build our infrastructure, we need to establish manufacturing plants that will transform these resources, add value to it so that it will be of greater benefit to the people of Ghana. Now as I started saying, we from the beginning conducted widespread consultations with civil society and other stakeholders. And we came to a conclusion that of the total amount of oil that is produced. At the moment, we are producing about 110 barrels of oil a day and we hope to increase this to about 200, 300 barrels a day in the near future. We do have a challenge. The gap between demand and supply today, between those who have access to electricity in Ghana, it's a huge one. Only 72% of the country is covered by those who have access to electricity. The next year or two, we would need between now and 2016-15, we would need to produce at least 5,000 megawatts of electricity. At the moment, we are operating around 2,300. There is this huge gap that we need to fill. Breaking this down into a smaller unit, we've had discussions with the US government on the MCC and as I speak to you today from the investor standpoint, we are faced with a problem that we need to address almost immediately to produce at least $700 million to be able to meet the energy gap that exists today. We are told that the US government will provide about $250 million, $300 million. We need about $500 million to meet the demand, the gap. And we have appealed to the private sector that saying the US government cannot do it alone, we expect that the private sector will come in. Unfortunately, because of the issues of government, democracy and all that, the response has not been as encouraging as we would wish. We don't have much time. But I want to stress that, and this is a point that is all, is very well known. It's not just Africa. Ghana has a lot of opportunities, but we do have challenges. As a government, I think you all know, we've tried to ensure that there's democracy. We've talked about that. There's the rule of law. We've established a legal framework so that we can manage the economy and the oil resources as efficiently and responsibly as we can to ensure that we achieve our objective of making electricity power available to the majority of our people. So what is my point? My point is we can meet and talk about these issues. We know them. We have identified them. We know the challenges. I think we are very much aware of the opportunities as we have all talked about today. What I think is lacking is a clear understanding that given these riches, these resources, Africa cannot make a headway until our partners in development appreciate the fact that just as they travel on the same path, produce, manufacture, and add value to your produce. Without doing that, it's very difficult for some of us to appreciate how far we can go. I'm saying please understand that Africa cannot continue to be perceived as if you like. The producers of all these raw materials, the hero of woods and the carrier of water, we need to be supported in terms of making technology available to us, supporting us to build plants, to industrialize so that we can get to where we have reached. For me, this is very important. For Ghana, I think we know our partners have a lot of confidence in us. We don't have to tell the story time and again, but we will hope that in due course, over time, our oil resource will not just be a resource for export, but will serve as a basis, as a catalyst, and to do that, we need to transform it at all levels to be sure that we have added value to it. We can then serve as a hub to supply the other sub-regional states with a petrol product that we at the moment import from abroad. So again, I think I will stop here and give questions as they come. Thank you very much. Thank you very much, Ambassador. Thank you. I think we'll want to open up to some questions. I think we'll take maybe three at a time and turn back to our panel. We don't have a whole lot more time. I maybe would like to start with Ambassador Pasquale. It leads from the ambassador's point on energy access. Right now, kind of the big thing is the new private sources of financing that are coming in behind power infrastructure and other forms of infrastructure as well. In that sense, in some ways, it's incumbent on the governments to kind of set the terms and create power strategies that are bankable and the tariff setting and so forth. But I kind of want to get at what would be the U.S. government role within that. A certain amount will take place with the private sector. And you mentioned a couple of the initiatives that different parts of the U.S. government is doing. What do you see as kind of a broad policy framework, or do you see that supporting this question of energy framework, energy access? Do you want to jump in now? Do you want to add a couple more? Let's take a couple at a time. We have a gentleman here and Andy. And a mic is coming if you could introduce yourself. I'm Dr. Sam Hancock of Emerald Planet, Emerald Planet TV. Jennifer, thank you for hosting this. But this is really to both ambassadors and Philip, if you could follow on this. But how can we balance the investment in renewables so that African nations are getting more immediate access to power, various types of energy and dispersed throughout the countries at the same time as they're building their own infrastructure and this goes back to the ambassador from Ghana in order to be able to export the value added but at the same time take more advantage as the bridge, say through natural gas and other fossil fuels as they move to renewables because they can actually be an example to the world of how you balance this because in a sense it's a clean slate. Thank you very much. Excuse me. I'm Andrew Mack with AM Global here in Washington. And my question is basically about the social impacts of a lot of this. We have a tremendous amount of expectation that grows up. Our firm does a lot of work with technology, a lot of work with corporate social responsibility specifically in Africa and have worked with a number of oil and natural resources companies. And there's a tremendous amount of expectations that comes out of this when we're seeing a huge amount of money that's expected but not always a lot of employment. And so the question is what would we see as a best-case scenario for the role of the energy companies and for the role of the governments that are interfacing with them so that we have realistic expectations on all sides and long-lasting development perhaps with a focus on technology? I'm happy to start. And on those three questions we can probably spend another hour and a half in and of itself, so the answers will be inadequate. But first of all, on what the United States can do on providing support, let's divide it into two areas to think about. One are larger-scale, on-grid projects. And they're more traditional, they're a little bit easier to do. Part of the challenge is to create the policy environment internally within a country so that you have a viable commercial power sector. And in that context, the United States has been providing technical assistance to address the wider issues on the power sector. Nigeria is an example of where some of that work has been done. There's still a lot of big challenges ahead, but there's been a lot of support for the privatization program to create a bulk purchaser so that if there are investors in independent power projects, that there is a mechanism and by providing that technical assistance to help create the right policy environment, but in addition to that, say OPIC has instruments where they have the capacity to provide insurance on the power purchase agreements between individual power producers and the bulk buyers so that if there are changes in the terms, it reduces the risk. They can participate as a financing partner in some of these projects. We see that as developing similar kinds of interests and so part of the challenge is to be able to bring together technical assistance that helps create the policy environment, the financing and insurance that helps buy down the risk, and then by doing that be able to make it attractive for the private investors to come in. Now, the question on renewable energy is related to that because the price of renewable energy and what you can deliver it for to the customer is part of what makes it attractive or not and competitive in that marketplace. There are two issues that one has to think about in terms of its competitiveness. One is what was the previous source of power supply which may have been none or may have been diesel and where it's a lot easier to bring renewable energy and show its cost competitiveness. In other cases, if you're competing against gas or hydro or coal and the biggest challenge here is coal, how to be able to demonstrate that it is competitive internally within that economy. There are a number of African countries that are struggling that and yours South Africa is the one where it's been the biggest challenge. There's another piece that we need to think about that is a different business model which is decentralized off-grid power where one is looking at what kind of approaches can be taken to encourage investment and power generation that doesn't necessarily depend on the traditional grid infrastructure that we've had in the past. In many cases here what we're dealing with are very small scale investments. They may be 10 to 20 kilowatts in some cases and they may be bigger but in some cases they're extremely small and in some cases they're not individual household installations and so in those cases it's become totally unrealistic that you're going to think about foreign investors or donor agencies coming in and providing direct support to those kinds of projects. One has to think about how do you create the business model where you have some ability to be able to provide finance and you're not going to provide it on a one by one basis. That can provide the financial network. How do you work with the technology providers? How do you ensure service capability and how do you impose quality control over this whole system in a way that makes it functional and viable. And so those are the business challenges that we're working with. In the second one the models are going to have to be different and one of the things that you have to start from the outset is recognize that you have to build capability in local institutions, local financial institutions and technology providers because they're the ones who are going to be out in the field, they're the ones that are going to be decentralized, they're the ones that are going to be the biggest providers of distributed power. And trying to build up that combination of capacity, finance, technology, service and quality control. If you can't put that package together you can't put together a reliable business proposition. We have a team in fact right now in Ghana. And there is a combination of individuals from the State Department, USAID, the World Bank, the UN, the African Development Bank. The UN Foundation is putting together meeting private sector entrepreneurs to look at what has been done and be able to bring in the mystery of energy is serving as the key counterpart. Ghana has developed already a preliminary country access plan. We're going to help them understand how they may be able to expand it. And in looking at this we're looking at both parts of these equations. Both the big picture of where there might be investments in on-grid, larger scale, utility scale investments, as well as off-grid, more innovative distributed power and the business models that have to surround that. That's the big challenge that we're facing now. Just a point on the how natural gas that is and how best to kind of economically make it useful. And also back to the ambassador's point. Gas is a wonderful hydrocarbon. It's got very many uses. It's much cleaner than many of the others. Unfortunately, the way that gas is disposed of in most of Africa today is either it's flared and Ghana is in fact flaring currently because the gas is not up yet. But Nigeria is the second largest flara in the world after Russia which is a huge cause of global warming and greenhouse gas emissions. But the second is liquefied natural gas which is often the only solution. When you can't bring that gas into your industry and use it to increase and elevate the value chain. And that's almost the worst, the lowest you're ever going to get as a country. You freeze your gas and you export it. And it costs a lot of money to build these plants. There's a lot of cost recovery before anything trickles back to your local economy. And the difficulty is in many cases that you don't have Mozambique is sitting on 150 TCF potentially of gas sitting off in the Indian Ocean. But it's way up north. There's no infrastructure to channel that gas into, to build the kind of industry. I think Ghana stands a better chance because there is industry, there is something to start with. And Nigeria even more so because what is probably not often recognized is there is an embryonic petrochemical industry in Port Harcourt which can utilize the gas and make more of it if you like. And that's definitely got to be part of the future and not just seeing gas as something that you export with something that you use to build your industry. Certainly it's had a huge effect here in the U.S. Not only low prices of energy which have come down but also the development of the petrochemical industry and I think that's got to be a very important part of how Africa sees its hydrocarbon legacy. What you just said and I think our experience has been of course then from other experiences it's our intention to pipe the gas that we have found from onshore to onshore and I hasty to mention this having secured a loan from the Chinese we started building the gas pipeline and it's almost about complete. Now this will be fed into our thermal plants for the generation of power at the same time to be connected to the West African gas pipeline which will be of benefit to the larger community so that ultimately eventually we might become the next exporter of gas. So from the very beginning we decided to avoid the danger of flaring the gas and we've kept it down there we've just been told by one of your company's cosmos that it's about time that we have to get it out otherwise it could create problems for further gas exploration. So this is what we have tried to do. We hope that as you said we are able to use this gas also as a basis of establishing we have sought along our coastline we can use this as a basis of establishing several chemical industries and I seem to be talking more about industries I think for us it's very important. We are at time unfortunately and I know that Ambassador Pasquale has another commitment I want to thank our panelists for their presentations I do wish we had had more time for questions and answer and discussion but because we are at time we're going to have to cut it there. Thank you to our panelists please join me in thanking you we hope we can look forward to working with you again. You are welcome. Thank you.