"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
PRESENTS
A NEPAD TRUST FUND?
Alexander VON GERLACH
MARCH 2006
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Von Gerlach Project Developers cc
South Africa
OIL AND GAS
INTRODUCTION
Its institutions such as the New Partnership for Africa’s Development (NEPAD) and the AFRICAN PARLIAMENT - create untold opportunities for Africa.
AFRICAN RENAISSANCE stands for an awakening of our Continent. Africa, and the rest of the world, as is apparent from international media coverage, is beginning to take this vision seriously. History teaches us no significant developments can occur without a prior vision people can aspire and commit to.
AFRICAN RENAISSANCE/NEPAD will, it is hoped, prove the catalyst for development for which Africa has waited for so long and is so desperately in need of.
It gives hope of a better future to all of Africa and is the one initiative able to revitalize and to energize the Continent.
It is welcomed and most encouraging that governments of northern African countries appear to be as enthusiastic about AFRICAN RENAISSANCE/NEPAD as their counterparts in sub - Saharan countries.
NEPAD institutions, programs and initiatives will require, by definition, very substantial finance on an ongoing basis. These financial requirements are likely to grow as NEPAD gathers momentum. It would appear that future funding - theoretically unlimited in view of Africa's developmental needs - cannot rely solely on foreign financial assistance and financial contributions African governments may be able to make.
The Heads of States and Government Implementation Committee (HSGIC) of NEPAD in its draft communiqué issued at the end of the eighth summit in Maputo, Mozambique in July 2003 recognized this and recorded in:
And in paragraph 28:
In line with the above it is suggested that oil and gas, Africa’s most valuable resource, be developed into a funding mechanism able to generate very substantial funds, on a continuous basis, required for critically important and highly commendable NEPAD initiatives. In order to achieve this objective it is further suggested the proposed NEPAD Trust Fund launch the NEPAD OIL AND GAS INITIATIVE, which is outlined below.
AFRICAN OIL – A SPECIAL RESOURCE
So is oil, he would agree were he alive – which has, unfortunately, at best, proved a mixed blessing for Africa till now.
It is expected to become an increasingly scarce, yet economically essential resource for which there appears to be no viable alternative in the near future.
Almost all nations, including those beginning to play important roles on the world economic stage such as China and India, need secure supplies of oil and gas at reasonable cost to grow their economies.
The scramble for oil is on and Africa is not an unimportant arena. What a wonderful, extraordinary window of opportunity for NEPAD and for Africa and its people!
The oil industry is by far the most important in Africa and is growing rapidly. Crude oil exports overshadow all other African exports and the industry accounts for roughly 90 % of all foreign direct investment to the Continent.
Is it not time for Africans to engage more actively in the African oil industry?
Is this not what NEPAD is all about?
After all, oil is a finite resource - Africa's most valuable resource - that could, should and must be made to play a far greater role in the development of the African Continent and its people.
STRATEGY
MicroPro GmbH is the successor to the Institute of Microbiology, which was attached to the National Oil and Gas Corporation of the former GDR before German re-unification, and has conducted over forty years of research, successfully applying microbiology to the hydrocarbon exploration industry.
MPOG (Microbial Prospecting for Oil and Gas) is a surface exploration technology, based on analysis of microbial distribution anomalies and biochemical activity in soil samples, to detect substantial hydrocarbon deposits, even in complex reservoir conditions. In summary, it employs specialized microbiological techniques to detect the presence of methane-, butane- and propane-oxidizing micro - organisms. As an effective stand-alone method of prospecting, it allows for the identification of the presence of oil and gas deposits, on shore as well as off shore, quickly, far less expensively, and with a very high degree of accuracy. An MPOG presentation to the World Bank/ International Finance Corporation in Washington in May 2005, which explains the use of these microbiological technologies in the search for hydrocarbon deposits, is attached at Appendix A. A list of MicroPro GmbH investigations for clients as well as a list of successes (there were no failures), are available.
The GDR Government determined that the technology was of strategic importance and, through its National Oil and Gas Corporation, developed, tested and refined the technologies over more than forty years. The research program was classified Top Secret and the Director of the Institute of Microbiology, Dr. Manfred Wagner, now Chairman of Micropro GmbH, was not allowed to travel abroad or to publish scientific papers on his work.
There are similarities between the history of MicroPro’s MPOG technology and that of the Fischer-Tropfsch process that underpinned the emergence and evolution of SASOL.
The Fischer-Tropfsch process adopted and developed by SASOL was well-known coal - based gasification and liquefaction technology used by the German army to produce fuel for its tanks at the end of WWII. The former South Africa government, which saw South Africa's lack of petroleum resources as a strategic weakness, subsidized further development and application of this technology from the 1950s onwards.
The result today is a world class petrochemical company that produces some 40% of South Africa's fuel requirements, saving billions of Rand in foreign exchange, is highly profitable, employs thousands of people, has developed unique, proprietary technology it is able to license internationally and has expanded into other parts of Southern Africa to the benefit of the regional economy.
SASOL would not have emerged or survived during the apartheid years without government support.
Likewise, the MPOG technology would not have been developed to its present level without support from the government of the GDR.
The MicroPro GmbH technology today offers an opportunity to render African oil exploration and discovery greatly more efficient and cost-effective, potentially saving foreign exchange, creating jobs and assisting African countries with hydrocarbon potential to identify and develop their oil and gas resources. A MicroPro brochure is available
MicroPro GmbH has been retained by PetroSA to undertake microbial investigation of Block 14, PetroSA’s concession area in the Sudan.
Preliminary investigation (wild cat exploration) of certain areas in South Africa, Zambia and Namibia have also been undertaken, indicating viable oil and gas deposits that need to be explored further. The Zambian preliminary report, commissioned by the President of Zambia and the Zambian Geological Survey, is available. The results, with values over 70 considered excellent, are clearly very promising, warranting further exploration. The report was completed within three weeks, at a cost of US $ 6000. No oil exploration company in the world could deliver that!
VGPD secured or is in the final stages of securing, five oil and gas reconnaissance licenses in Mozambique, Namibia, Zimbabwe, Zambia and Malawi. Negotiations are underway with a number of other African governments
BEE participation has been secured, in principle.
The NEPAD OIL AND GAS INITIATIVE, it is suggested, is to focus on oil and gas exploration only. The development of viable oil and gas fields are to be left to major oil companies, with the NEPAD Trust Fund retaining significant equity stakes.
The MPOG oil and gas exploration technology can also make an important contribution towards South Africa’s oil and gas production, reducing its dependence on oil imports. (Current oil imports of 450 000 barrels/day, an oil price of US $ 60.00/barrel and an exchange rate of SAR 6.3/US$, gives an annual import bill of R 62 billion.)
SECURING A PORTFOLIO OF AFRICAN OIL AND GAS CONCESSIONS
The gas potential of Africa is far greater than that of oil. With the assistance of SASOL, the world’s leader in coal/gas to liquid technology, and Mossgas, a South African producer of 45 000 barrels of oil from gas a day, the vast gas reserves of Africa could be developed and prove of considerable value and importance in future
- a most exciting opportunity for both NEPAD and SASOL.
The MPOG oil and gas exploration technology allows one, as stated above, to identify viable oil and gas deposits, on shore as well as off shore, quickly, cheaply and accurately, as opposed to conventional oil exploration technology, which takes very much longer, carries a huge price tag and is less than accurate.
The MPOG oil and gas exploration technology is critical to the success of the proposed strategy.
Without MPOG, as was the conclusion reached by the World Bank/IFC explained below, it would take too long, cost too much and be too risky to pursue the proposed course of action.
The writer is passionate about using the MPOG technology for the benefit of Africa. He argued in correspondence with the President of the World Bank:
“If the first world perceives high oil and gas prices a threat to economic growth, poor African countries, without oil production, stand no chance at all. Their meager export earnings will be largely consumed by the importation of petroleum products. What would happen to these countries if oil went to US $ 100 a barrel – perhaps not a very likely, but certainly possible scenario?” Copies of correspondence with the World Bank/IFC are available
Having successfully presented the oil exploration technology to the World Bank/IFC in Washington in May 2005, he appealed to the President of the World Bank to consider reintroducing a World Bank program to assist poor countries in identifying their hydrocarbon resources to enable them to attract oil companies to develop these. The program was abandoned in 1990 as the World Bank concluded oil and gas exploration was “too rich for its blood” – an American phrase, meaning it being too risky and too costly.
The World Bank responded in a positive manner, but pointed out the Bank does not prescribe to clients. It is for clients i.e. governments, to apply for funds for oil and gas exploration using the MPOG technology if they so wish.
The writer therefore proposed to governments of African countries with hydrocarbon potential, but not even on the television screens of oil majors, to commission the use of the MPOG exploration technology, possibly with funds from the World Bank/IFC or grant concessions to VGPD, that would seek to raise the finance required to explore these, again deploying MPOG technology. Most African governments seemed to prefer the latter option.
It stands to reason Heads of African governments, on behalf of
The NEPAD Trust Fund, are much better positioned to assemble a portfolio of oil and gas concessions, on shore as well as off shore, than the writer is able to. VGPD would, however, be delighted to assist in this regard if asked to do so.
Neither the task of assembling an oil and gas portfolio nor the exploration of these would make demands on governments or on NEPAD. The NEPAD Trust Fund, would hold oil and gas concessions in trust, to be used exclusively to further NEPAD’s development goals. Management of the Fund, the African Development Bank, it is suggested, would delegate the exploration of these to VGPD, assisted by its select team of experts.
African governments are, of course, to continue to share in the development of oil and gas concessions granted to the NEPAD Trust Fund through Production Sharing Agreements, as is the case with concessions allocated to oil companies at present.
They are not asked to give up anything. On the contrary, governments will, in fact, be deriving an additional advantage, as the share in future profits accruing to the NEPAD Trust Fund, derived from its carried interest/share in oil and gas producing fields, will be used exclusively by NEPAD for the development of the Continent and its people. A truly Win-Win situation!
By definition, this is not the case if concessions are granted to oil companies.
It is likely that MicroPro GmbH would agree to grant the NEPAD Trust Fund exclusive rights to apply the MPOG technology in Africa. That, plus its future extensive portfolio of oil and gas concessions, would give the NEPAD Trust Fund a huge advantage over conventional oil exploration companies, enabling it to play a prominent and meaningful role in the oil industry on the African continent.
Once viable oil and/or gas fields, on shore as well as off shore, have been identified, and ideally confirmed by drilling successful exploration wells, thereby reducing risk to a minimum, management of the NEPAD Trust Fund, would enter into joint ventures with oil companies that, in return for their share, will be asked to fund and manage the development of the oil and gas fields.
In some cases, where limited oil finds do not make exports viable, depending on location of such finds, it may be possible to install mini refineries to meet local demand. Oil companies, generally are unlikely to pursue such options.
Management of the NEPAD Trust Fund, the African Development Bank and its associates, are to conduct negotiations with oil companies.
It is not recommended to even consider developing or managing oil and gas fields. That is best left to major oil companies.
Timing for the successful implementation of the proposed strategy could not be better, as oil and gas is expected to continue to be much in demand, not only in traditional markets, but also in new ones such as China and India.
It is further suggested the NEPAD Trust Fund display a willingness, in principle, to negotiate with oil companies from all over the world so as not to run the risk of antagonizing any one government, all of which are able to make contributions towards the development of Africa.
FUNDING
A figure of US $ 5 million to launch the initiative is a negligible one in the world of oil!
In view of the modest amount required and the huge potential benefits to Africa it should not be difficult to put the NEPAD Trust Fund in funds.
RETURN ON INVESTMENT
Suffice to say, the NEPAD Trust Fund could potentially earn very large amounts of money from its shares in oil producing fields, both on shore as well as off shore, to fund NEPAD development projects from a modest capital investment.
MORAL VALUES AND STANDARDS
Only those eager to commit to the above principles should be given the opportunity to serve the NEPAD Trust Fund.
CONCLUSION
It would make African countries with hydrocarbon potential, partly or wholly sufficient in energy or even exporters, that would otherwise, left to themselves stand little chance of doing so. Clearly this would be the spirit of NEPAD at its best!
The ideas contained in this project outline may appear to some as grandiose, far fetched and perhaps even as difficult to achieve. To others these may manifest imagination and creativity. It is suggested there not to waste time on theoretical discussions. In view of the huge potential gains for Africa, all that is asked for, is to be given a chance to put the ideas to the test – a quick and inexpensive task. The results will speak for themselves.
When the ideas propagated above can be made to work, and there is no doubt they can and will work, our heads can be held high in pride and the world is likely to appreciate and to respect Africa for taking its future into its own hands.
LET US NOT WAIT FOR AFRICA’S BOAT TO COME IN, BUT LET US AFRICANS SWIM OUT TO SEA AND CLIMB ABOARD!
Alexander von Gerlach
A POTENTIAL, VERY SUBSTANTIAL, ONGOING SOURCE OF FUNDS FOR NEPAD AND THE DEVELOPMENT OF OUR CONTINENT
The President of South Africa, Thabo Mbeki, a true statesman and visionary, together with other committed African leaders such as President Olusegun Obasanjo of Nigeria, have painted a great, new vision for Africa - AFRICAN RENAISSANCE.
Paragraph 25:
“At its last meeting, the HSGIC had supported the exploration of adequate funding mechanisms for sustainable financing of NEPAD programmes and projects, including the possibility of a NEPAD Trust Fund to be managed by the African Development Bank (ADB).”
“In discussing the issue of funding and support for priority projects in Africa, the HSGIC decided that a clear strategy was needed with respect to the mobilization of African financial, human and institutional resources. The HSGIC urged that appropriate funding mechanisms be explored for a sustainable financing of NEPAD programmes and projects.”
Goethe states in “FAUST”: “Blut ist ein ganz besonderer Saft” (Blood is a very special juice).
UTILISING AN INNOVATIVE, UNIQUE AND PROVEN OIL AND GAS EXPLORATION TECHNOLOGY
Von Gerlach Project Developers (VGPD), a South African close corporation headed by the writer, has acquired the exclusive rights to market and to develop the commercial potential of a proven oil and gas exploration technology, MPOG, for all of Africa from MicroPro GmbH, a German company in Magdeburg.
The oil fields of Africa – explored and unexplored, developed and not developed, as well as a color key as to their oil potential, are set out in a map, prepared by the United States Geological Survey, copy available.
Initial funds for exploration of oil and gas concessions secured by the NEPAD Trust Fund would be modest, starting with as little as say US $ 5 million to be augmented, depending on success and performance, in future. This figure applies to on shore exploration including drilling of an exploration well, but would be higher for off shore oil and gas exploration. Off shore exploration for oil and gas is perfectly feasible as the MPOG technology works equally well off shore. Off shore exploration, potentially hugely interesting and profitable, could therefore be undertaken in future.
Once the proposed strategy is, it is hoped, accepted, in principle, a business plan, covering the initial phase of the project, is to be prepared.
The mission statement of a company of a friend and colleague states succinctly what NOGT will be about:
• We are of this Continent, anchored in it and committed to its success. We support and will do all in our power to promote the spirit and developmental objectives of NEPAD.
• We believe in the possibility of a peaceful and prosperous future for our Continent and its people and determined to play a proper part in bringing this about
• We believe strongly in the need to promote the emergence of a social and economic order enjoying society wide legitimacy.
• We despise mediocrity and shall strive to achieve excellence in all that we undertake.
• We know that failure is rooted in defeatism and that success springs from commitment, insight and perseverance. We understand that man's capacity to achieve is constrained only by the narrowness of his vision and accept no predetermined limits on our horizons.
• In all that we do, we shall always remember that our efforts are not exclusively directed to further our interests, but those of this Continent and its people.
The NEPAD Trust Fund, through the proposed oil and gas initiative, could earn very significant income to contribute towards the financial requirements of NEPAD’s development programs.
axel@cellpic-cc.com
Von Gerlach Project Developers cc
Johannesburg, South Africa
March 2, 2006
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