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US Energy Sec: Energy Ties to Africa Greatly Matters to US

Source: www.gulfoilandgas.com 12/1/2006, Location: North America

U.S Energy Secretary Samuel Bodman said Friday that Africa - one of the fastest growing petroleum regions in the world - was of growing strategic energy importance to the U.S., particularly as it tries to diversify its supply of oil and gas.

Speaking to ministers, officials and executives at an African Oil and Gas Forum here, Bodman said, the projected rise in U.S and global demand, "puts Africa in an position of increasing strategic importance to the U.S. and global markets."

Bodman's statement's come ahead of an Organization of Petroleum Exporting Countries meeting in December, where several key producing states have said they want to cut crude supplies again.

The Secretary said he was urging OPEC members to keep the global market supplied ahead of winter demand and thought another cut would be unnecessary.

Any hopes the U.S. may have to loosen some of the control the OPEC cartel has on the crude market through increased oil development of Africa's crude and natural gas production may have been diminished by an announcement earlier this week by Angola that it wishes to join OPEC.

Angola, sub-Saharan Africa's second-largest oil producer behind Nigeria, is a key area for near-term petroleum production growth on the continent.

Companies such as Chevron Corp. and Exxon Mobil Corp. have pumped in billions of dollars to exploit the country's oil-rich fields, lifting output 1.4 million barrels of oil equivalent a day. That's expected to rise to two million barrels by 2008, with the ramp-up of several large offshore projects, according to the Energy Information Administration.

Angola's proven oil reserves stood at 5.4 billion barrels as of January 2006. Africa supplies around 20% of the U.S.'s crude imports. Algeria and Nigeria - both members of OPEC - and Angola are among the top ten oil suppliers to the U.S. market.

Asked what he thought about Angola becoming a member of OPEC, Bodman told reporters after his speech to the conference, "I would think that it would be a challenging decision because you give up a certain rights and flexibility of operating on your own."

Earlier Bodman said, "We continue to believe the most effective way to be integrated into the global energy system and the global economy is through a committment to market principles and pricing," rather than cartel-like price manipulation.

The Energy Secretary said the U.S. wasn't making any efforts to try and discourage countries from joining OPEC.

In the short term, Bodman said he didn't think OPEC's decision to cut 1.2 million barrels a day of crude production at its last meeting was necessary, and in conversations with OPEC ministers, he had urged them to continue to "keep the markets fully supplied."

On Thursday, Bodman met with Algerian energy minister Chakib Khelil, who said he believed that OPEC should cut output at its next meeting on December 14 and that a decision to reduce production was probable.

Khelil said he was concerned about oil oversupply not in the winter, but in the second quarter, when demand would drop and production from non-OPEC suppliers is expected to grow. Any cut decided in December wouldn't be implemented until at least late January or early February, Khelil said.

"I didn't think the first cut was necessary, Bodman said, adding that he was "not displeased" with the current level of supplies, but was concerned about how another cut might impact the U.S.

"The impact on oil supplies or heating oil in homes is consequential and something that I do worry about," he said.

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