India-Africa Hydrocarbon Conference & Exhibition
November 6-7, 2007, New Delhi

Address By Ms. Lakshmi Puri, Acting Deputy Secretary-General, UNCTAD

Hon Ministers of External Affairs and Petroleum of India, Distinguished African Ministers Dignitaries, President and Secretary General of FICCI, Distinguished Delegates, Excellencies, Ladies and Gentlemen.

UNCTAD is glad to be organizing this conference with the MINISTRY OF PETROLEUM & NATURAL GAS GOVERNMENT OF INDIA and FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY. It is also proud to have it as one of the pre-events of UNCTADXII conference which is to be held in Africa in Accra Ghana, in April 2008.

UNCTAD has four reasons to be associated with this enterprise of forging a strong hydrocarbons partnership between India and Africa, which this conference seeks to promote.

First, comprehensively addressing the trade and development problematique of the commodity economy has been UNCTAD's vocation since its founding. The commodity economy is undergoing many changes in these early years of the 21st century with an intensified competition for natural resources opening up new opportunities and challenges for developing countries. INCTAD is very much engaged in harnessing its benefits for development in all its changing contexts.

Second, with the oil price hitting the dollars 100 mark and with demand expected to grow relentlessly, there is no viable alternative to energy dependence on oil for at least the next 20 to 30 years. At the same time many developing countries face the formidable challenge to clear the backlog of energy poverty- 1 bn people without access to electricity. We are therefore likely to see a continued scramble to gain assured and affordable access to hydrocarbons energy resource everywhere. In this context, we have been working with developing countries to map out national energy strategies including the right energy mixes, whilst also encouraging governance, coherence and solidarity-based energy strategies at the regional, inter-regional and global levels.

Third, the African region has been our focus area because of the high incidence of commodity dependence and the fact that most LDCs are in Africa. In the last dozen years, we have been working with African countries individually and on a pan-African platform through our annual oil and gas conferences, last of which was held in Kenya. This is where the UNCTAD India collaboration idea for this conference took shape. UNCTAD therefore foresaw the rise of Africa in Oil and Gas sector long before it was recognised as such.

These 12 years have been transformational for Africa oil and gas and UNCTAD has had the privilege of partnering them in their journey. The importance of African oil and gas to the world and India are on account of the following factors:

They have the best quality, light crude oil and a significant share of global oil production (currently estimated to 11-12%). This translates into 10 million barrels a day and is expected to grow to almost 14 million barrels by 2010.
They are the fastest growing in terms of increased production and finds. There have been unprecedented investments in the oil sector of Africa and related infrastructure which has driven this growth.
African oil is important as much for its current capacity as for its potential. Already proven reserves are around 9.5% but new finds are made every day. In the last few years, for example, one of every 4 barrel found outside North America was in Africa. The increasing global demand and world oil prices has spurred the recent surge of exploration and development outside the club of producers as the recent discoveries in Ghana and Uganda and re-emergence of African oil producers like Libya, Sudan and Chad with extensive reserves illustrate this.
Africa Gas reserves and production are playing an important role too, with reserves representing nearly 8% of global reserves. Reserves-to-production ratio are among the highest in the world - that is at the current rate of production, these reserves will last 78 years.
Additionality and value added that it brings to global supply and global energy security is significant. New players and producers in the market enables diversifying sources of supply, just as new consumers have brought competition in the demand side.

India has always held a very special place for UNCTAD especially since the 2nd Conference which was held in New Delhi in 1968. Today, we are happy to herald and support the emergence of a dynamic New South in Trade and Development in which India is playing a key role. We are also seeking to foster south-south trade in its entire New Geography dimension, and the India-Africa emerging energy partnership fits within it perfectly.

Why do we say this India Africa emerging energy partnership is part of a new geography of south-south trade? There are several reasons for this.

Because South-south cooperation, including in this area, is not so much a political slogan anymore, but is becoming a market reality.
In terms of scale and scope; it is no longer a cottage industry. It has assumed critical mass size (south-south trade in fuels increased from 13% to 21% in the last decade).
It is not limited to being only about buying and selling of oil and gas but is also about investment, joint-ventures, transfer of technology and value addition.
There is not only competition among developing regions but instead growing complementarity.
Energy sector trade is not only intra-regional but more and more inter-regional, supporting energy sector cooperation between the 'Asian drivers' and African producers.
Last but not least, no longer are Asia and within it India on one hand and Africa on the other marginal markets and sources of supply for each other. They are being drawn into a relationship of closer inter-dependence.
It is our observation and belief that the new emerging partnership between India and Africa in the hydrocarbon sector is vital and mutually beneficial - what we in UNCTAD call 'Development Transmitting Partnership'. In the energy and hydrocarbon areas, the revenue windfalls and terms of trade gains to African oil and gas producers would not probably have been there without Chinese and Indian economies guzzling hydrocarbons to power their economic growth. In addition, Africa now has in prospect a rush of FDI in this sector from multiple suitors ad the competition among them is hotting up. For Africa, this means better terms of trade and returns for their precious resources. On the other side, the Africa energy dimension is important for India's vital energy security needs. It is rightly being pursued through all possible instruments such as long-term purchasing agreements, FDI in exploration and production of oil and gas among others. I hope this conference can help to foster this new win-win partnership between India and African countries in the true spirit of what UNCTAD refers to as 'co-development'.

We expect that this spirit of South-South co-development, will quite clearly evoke trade and investment transactions that will enable India to enhance its energy security so necessary for achieving India's development ambition including reducing energy poverty. At the same time co-development means that this partnership will nurture innovative ways of financing, effective institutions, technology transfer and development, environment sustainability, increased local content, human resource development and employment generation for Africa. We in UNCTAD will support this through research and development, networking and inter governmental and multi-stakeholder policy dialogue and consensus building.

I am certain that India Africa Hydrocarbon Conference and Exhibition will be a success and wish you all the best in your important work. I hope it is one of many initiatives which make India a strong development partner for Africa.