Intervento di Claudio Descalzi in occasione dell Oxford Energy Seminar 19/09/2016

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1 Intervento di Claudio Descalzi in occasione dell Oxford Energy Seminar 19/09/2016 Good evening and thank you for giving me the opportunity to address the Oxford Energy Seminar and to speak about Africa and its crucial relationship with Europe. So, why talk about Africa? Well, firstly, at a personal level, I spent a great deal of my career and life in Africa. I know both the people and the territory and I have first-hand experience of its potential and needs. Secondly, Africa is central to Eni s identity, a real key to our history. It is one of the places where our company really grew up. We ve been there since the 1950s and today more than half of our production, and a major portion of our resources come from there. That s yesterday and today - but it s also our tomorrow. Recent years have seen many major discoveries in Egypt, Congo, Mozambique, Angola and Ghana and we continue to carry out many major development projects. All in all, we invest more than half of our budget there, which reinforces both our presence and commitment. 1

2 But there is a third reason for me to talk about Africa. This is the role that Africa has played in Europe s past, as well as its potential to provide solutions to the futures of both continents. Looking back, many European countries forged strong ties with African countries even before doing so with their neighbours. This helped Europe to build commercial relations with the nearest continent, making it the prime destination for African goods and its principal investor. And what happened was that Europe was able to benefit from this situation which contributed to its increased industrialization. At the same time, Africa did not capture the same level of opportunity, leading to lower levels of industrial diversification and making it more dependent on the export of raw materials. Today, 80% of oil production is sold outside the Continent and we see uneven levels of development which have widened social and economic gaps and worsened social tensions. Africa s situation has reached a critical point and must be addressed with a strong sense of urgency. Geopolitics, energy, development, migration and environment - these are all points where the two continents are intrinsically linked. This very close relationship may have existed for a number of centuries, but what are the results of this partnership? From what we can see today, the model used has ended up with a poorer Africa - and a weaker Europe. 2

3 Access to energy is, in particular, a major issue. Africans have limited access to energy and around 2/3 of people in Sub-Saharan Africa live without electricity and in unsafe environmental conditions. Moreover, the population is subject to a great deal of pollution caused by the unsustainable energy mix which is based on traditional biomass like wood and charcoal, and which still makes up about 50% of the energy mix. Just in 2013, this was the cause of more than 450 thousand deaths. This is a real paradox considering the huge potential of energy resources that exist in Africa, which, for example, could cover African gas needs for at least the next 3 centuries. It is also worth noting the considerable potential it has for renewables: solar accounts for about 300,000 GW, wind power for about 7,000 GW, not considering the strong potentiality in terms of hydroelectric and geothermal energies. On the other hand, in Europe, domestic production is not sufficient to cover demand, and we are experiencing an increasing need for energy imports which will lead to energy security problems. The development strategy that was put in place by Europe and Africa was based on the short-term and aimed at maximizing profits by investing in Africa mainly to receive exports in return. 3

4 (The lack of domestic energy consumption has been one of the main reasons for the underdevelopment and deep poverty that exists in some regions and the consequent high levels of migration.) This approach is no longer affordable. Europe is beginning to realize its own limitations. We have resource scarcity, energy dependence, the lack of a common development plan, and increasing internal fragmentation which is exacerbated by immigration and security issues. In order to find a solution that addresses African development, Europe has to switch from a short term strategy to a value creation model. This can establish a long term partnership with Africa and turn African and European weaknesses into strengths. The two continents are indeed complementary. Africa has something like 16% of the World s population, but uses only 5% of its energy. Europe is home to 7% of the World s people but it consumes about 12% of the planet s energy. Energy security is the major shared concern. Europe has the interconnections but not enough resources and supply diversification, importing 70% of its gas needs. Africa, on the other hand, has an abundance of natural resources but large parts of her population have no access to energy. 4

5 Europe enjoys the economic resources but does not have an outlet for its production, whereas Africa is going through a major population growth without the economic means and the necessary infrastructure to sustain it. What is needed is not only charity and funds. Since 1960, Africa has received around 1000 billion dollars, half of which just in the last 10 years. This has not had a significantly positive impact on development and social equality. What is needed is a strong commitment to provide access to energy to Africa. In fact, the key to everything is access to energy to bring development and stability, allowing Africa to exploit its potential for African growth. Europe needs to invest in Africa in a long term project that creates shared value and supports local culture. There must be real economic diversification to lessen the reliance on oil & gas and other mineral resources. There must be greater investment in agricultural projects, manufacturing processes and industrial initiatives that better use locally produced natural resources. Moreover, access to energy is not enough because we have to consider the correct energy mix, substituting the 50% that is biomass with cleaner sources such as gas and renewables. 5

6 This new Africa for Africa model will create many new jobs, will help to improve the living conditions in Africa and will bring more stability to the whole region, reducing migration due to wars, famine or economic instability. So, what could the contribution of the private sector be? The private sector can play a crucial role, investing in this Africa for Africa model, in order to develop African resources for Africa s growth. This is something Eni has always done, right from the start. As we were the last of the big oil companies to come into Africa, we needed to do something more than just investing for export. We invested to capture domestic potential to increase local development. And this initial weakness became our strength. We understood right at the beginning that by involving the host countries more and supporting them to develop, was the only way to grow together and to be recognized. Essentially, the main step is to pass from being merely a shareholder to being also a stakeholder. By doing this, we became local, anticipating and providing for domestic needs. We were the first IOC to produce gas that was not only destined for export but for local consumption. Similarly, when we build a 6

7 power plant for our installations, we ensure there is enough capacity to provide electricity for the surrounding area. We also addressed access to energy by investing in projects outside our core business, installing more than 1 GW of electricity capacity in 4 plants in Nigeria and Congo, for an investment of more than $ 2 billion, which today provides power to over 18 million people. We shared our know-how to help with the diversification of local economies and the improvement of health conditions, as well as always maximizing local employment in our operations. So, why did, and why do we still do all of this? It gave us recognition and credibility - we earned the trust of the local populations. We gave something that nobody had ever given before. To finish off, it is our unshakeable belief that if you have a solid partner, you build your own strength. We believe in the need for Africa to become a stronger partner. We can make sure this happens by using African energy, and the energy of the African people, to underpin African development and to help build a brighter and more sustainable future. And I really believe that a stronger Africa can only help Europe s growth and stability. 7

8 Thank You. 8