PRESENTATION

BY

GBOLAHAN ELIAS D.Phil (OXON.) SAN G. ELIAS & CO. (SOLICITORS AND ADVOCATES)

AT THE

AFRICA LEGAL NETWORK (ALN)CONFERENCE AND ANNUAL GATHERING 2013

ON

“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

(November 22, 2013)

G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

TABLE OF CONTENTS

1.Introduction

2.Actors

3.Locations

4.Commodities

5.Issues – Then and Now

6.Issues – The Future

7.Law Firm Practice

8.Apologies

9.A Comprehensive Table?

10.End2

G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

1. INTRODUCTION

The West Africa energy sector has grown rapidly over the years

The principal actors in the sector, locations, energy sources, issues and development of legal practice on it have changed significantly over the years

In this presentation we will examine the main stages in its development and what those stages have meant for the practice of lawyers

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)

“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

2. Actors

The initial actors were electricity producers for the mining sector

They were followed by State-owned hydro electric power entities

The larger international oil companies came later

These were followed by national oil companies such as Nigeria’s NNPC

National integrated electricity monopolies followed

Then foreign oil and gas independents came

West African independent oil and gas producers are now players

West African independent electric power companies are now also becoming significant players

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

3. Locations The early centres of activity were inland coal and other mines

and swamps

Then the coastal onshore areas became very active

True offshore activity began in earnest about 1990

Attempts to make progress in onshore basins have so far not been very successful

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)

“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

4. Commodities The earliest work was with coal and hydro power for local electricity production

Then we began to produce oil for export

Gas for export then followed with condensates, natural gas liquids and liquefied natural gas projects The production of gas for local consumption – petrochemicals and power - is becoming central Work on tar sands has begun but much still needs to be done

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G. Elias, SAN (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

5. Issues – Then and Now

The main issues in the early days were about licensing and foreign investment

Tax and the environment also later became major issues

The control of ministerial discretion and executive power has also been very significant

More recently, divestment programmes by foreign investors and programmes of preferences for local actors have become key issues

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

6. Issues – The Future

Pressure to privatize the NOCs and State electric power assets will intensify

Pressure to improve tax incentives will grow under the threat of competition from Portuguese-speaking, East African and Western (shale gas) competition

Pressure to reduce the role of executive discretion will grow as public sector transparency improves

Pressure to have a single regulator for both gas and power will grow

Pressure to allow cost-reflective tariffs but counter anti-competitive combinations in the electric power sector will increase

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

7. Law Firm Practice

As long as Governments and IOCs virtually monopolized the sector, much of the talent in the sector was outside the law firms

With greater complexity in the issues arising, the law has, and lawyers have, become more sophisticated and true expertise has developed

With greater private sector involvement and demands for public sector transparency, the demand for legal expertise has grown and so have the revenues and skills resident in law firms

The coming years are set to be very exciting, perhaps more so on electricity sector work rather than oil and gas

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

8. Apologies

This presentation has been Nigeria-centric (although I have tried to disguise it). It is the country that I know best, and it has a long history in the sector

The various stages described thus far overlap both within any given country and across countries

It is difficult to bring all of the various elements together in a single, simple, one-sheet presentation, but I try to do so on the next sheet.

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G. Elias, SAN -- G. ELIAS & CO. (SOLICITORS AND ADVOCATES)“WEST AFRICA ENERGY – GROWTH, VARIETY AND EXPERTISE”

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Era Actors Locations Commodities Issues Lawyers

Stage 1 Hydro power, coal Rivers; mines Water; coal Licensing Little local expertise and revenues

Stage 2 +IOCs, NOCsoil independents

+coastal onshore and offshore

oil for export environment; incentives;+discretion; state immunity

+developing local expertise and revenues

Stage 3 +gas independents +inland basins? +gas for export +pricing; tax; local content

+more local expertise and revenues

Stage 4 +electricity entrepreneurs; petrochemical entrepreneurs

+inland basins? +gas for local use

+tar sands?

+unified gas and power regulation; free market pricing; foreign investment

+true local expertise, sophistication and revenues

THANK YOU!

END