11 th Africa Oil & Gas and Trade & Finance Conference and Exhibition 23 rd – 25 th May, 2007 Nairobi, Kenya NOT AN OFFICIAL UNCTAD RECORD

11th Africa Oil & Gas and Trade & Finance Conference and Exhibition23rd – 25th May, 2007

Nairobi, Kenya

NOT AN OFFICIAL UNCTAD RECORD

Financing Oil and Gas in Africa: Past Experience and Future OppotunitiesHartwig C. SchuenExecutive DirectorCommodity FinanceWestLB Capital Markets

NOT AN OFFICIAL UNCTAD RECORD

WestLB AGHerzogstraße 1540217 Düsseldorf

Commodity FinanceHartwig C SChuen

23.05.2007Nairobi 2007Seite 3

Introduction




Agenda

Introduction

Oil and Gas in Africa

Financing

WestLB

Conclusion

Introduction




Conclusion

Because… Africa’s oil and gas sector and national and international trade patterns of hydrocarbons have changed significantly

…African oil and gas companies will require different forms of financing then in the past

Introduction








World Crude Oil Reserves 1995: 1,027.0 bln bbl


North America9%

South & Central America

8%

Europe & Eurasia

8%

Middle East64%

Asia Pacific4%Africa

7%




World Crude Oil Reserves 1995: 1,194.1 bln bbl


North America5%


9%

Europe & Eurasia

12%

Middle East61%


10%




World Crude Oil Reserves: + 16% Oil and Gas in Africa

1.027,0

1.194,1

1995 2005

bln bbl




Africa’s Crude Oil Reserves 1995: 72.0 bln bbl


Algeria14%

Angola4%

Chad0%

Republic of Congo2%

Egypt5%

Equatorial Guinea1%

Gabon2%Libya

41%

Nigeria29%

Sudan0%

Tunisia1% Other Africa

1%




Africa’s Crude Oil Reserves 2005: 113.8 bln bbl


Algeria10%

Angola8%

Chad1%

Republic of Congo2%

Egypt3%

Gabon2%

Libya33%

Nigeria31%

Sudan6%

Tunisia1%

Other Africa1%

Equatorial Guinea2%




Africa’s Crude Oil Reserves: +58%

72,0

113,8

1995 2005


bln bbl




Africa’s Crude Oil Reserves: +58%

Africa is the world‘s second fastest growing region after Europe & Eurasia which is mainly driven by new discoveries in the Caspian area.

Africa‘s growth driven by new discoveries in Angola, Libya, Nigeria and newcomers: Chad, Equatorial Guinea and Sudan





Africa’s Crude Oil Reserves: +58%Oil and Gas in Africa

Country 1995(bln bbl)

2005(bln bbl)

Change

Angola 3.1 9.0 + 5.9 + 190%

Equatorial Guinea

0.6 1.8 + 1.2 + 200%

Libya 29.5 39.1 + 9.6 + 33%

Nigeria 20.8 35.9 + 15.1 + 73 %

Sudan 0.3 6.4 + 6.1 + 2033%




World Oil Production 1995: 68.1 mln bopdOil and Gas in Africa

North America20%


8%

Europe & Eurasia

20%Middle East

31%


10%




World Oil Production 2005: 81.1 mln bopdOil and Gas in Africa

North America17%


9%

Europe & Eurasia

22%

Middle East30%


12%




World Oil Production: + 19%Oil and Gas in Africa

68.103

81.124

1995 2005

´000 bopd




African Oil Production 1995: 7.1 mln bopdOil and Gas in Africa

Algeria19%

Angola9%

Chad0%

Egypt13%

Gabon5%

Libya20%

Nigeria28%

Sudan0%

Tunisia1%

Cameroon1%

Republic of Congo

3%

Equatorial Guinea

0%

Other Africa1%




African Oil Production 2005: 9.8 mln bopdOil and Gas in Africa

Algeria20%

Libya17%

Nigeria25%

Sudan4%

Tunisia1%

Gabon2%

Equatorial Guinea

4%

Other Africa1%

Angola13%

Egypt7%

Cameroon1%

Chad2%

Republic of Congo

3%




African Oil Production: + 38%Oil and Gas in Africa

7.113

9.833

1995 2005

´000 bopd




African Oil Production: + 38%

African production growth unrivalled by any other region

Production grew twice as much as world average

Growth mainly driven by Algeria, Angola, Nigeria and Newcomers: Chad, Equatorial Guinea and Sudan

More oil producing countries

Production more evenly spread across countries





African Oil Production: + 38%Oil and Gas in Africa

Country 1995(´000 bopd)

2005(´000 bopd)

Change

Algeria 1,327 2,015 + 688 + 52%

Angola 633 1,242 + 609 + 96%

Equatorial Guinea

7 355 + 348 + 4,971%

Nigeria 1,998 2,580 + 582 + 29%

Sudan 2 379 + 377 + 18,850%




World Natural Gas Reserves 1995: 143.43 tln m³


North America6%


4%

Europe & Eurasia

44% Middle East32%


7%




World Natural Gas Reserves 2005: 179.09 tln m³


North America4%


4%

Europe & Eurasia

36%

Middle East40%


8%




2.142,4

2.762,9

1995 2005

World Natural Gas Production: + 25%Oil and Gas in Africa

bln m³




Africa’s Natural Gas Reserves 1995: 9.93 tln m³


Algeria37%

Egypt7%

Libya13%

Nigeria35%

Other Africa8%




Africa’s Natural Gas Reserves 2005: 14.39 tln m³


Algeria32%

Egypt13%

Libya10%

Nigeria37%

Other Africa8%




Africa’s Natural Gas Reserves: + 45%Oil and Gas in Africa

tln m³

9,93

14,39

1995 2005

tln m³




Africa’s Natural Gas Reserves: + 45%

Africa is the region with the second highest growth rate in gas reserves after the Middle East

Growth mainly driven by Egypt and Nigeria

94% of reserves still concentrated in Algeria, Egypt, Libya and Nigeria





World Natural Gas Production 1995: 2,142 bln m³


North America34%


3%

Europe & Eurasia

42%

Middle East7%

Asia Pacific10%

Africa4%




World Natural Gas Production 2005: 2,763 bln m³


North America27%


5%

Europe & Eurasia

38%

Middle East11%


6%




African Natural Gas Production: + 96%Oil and Gas in Africa

83,3

163,0

1995 2005

bln m³




African Natural Gas Production: + 96%

African gas production grew at the same rate as the Middle East‘s

Growth mainly driven by Egypt, Libya and Nigeria

Less concentration in Algeria (1995: 70%; 2005: 54%)

Nigeria‘s and Egypt‘s shares increased

96% of production concentrated on Algeria, Egypt, Libya and Nigeria





Outlook: Crude Oil

Large producers will grow: e.g. Angola, Nigeria, Libya

More oil producers: e.g. Mauritania, East African countries

Continued change in trading patterns: more oil to Asia, in particular China

Relatively high crude oil prices

More intensive competition for resources





Outlook: Natural Gas

Existing large producers will continue to dominate production on the African continent

Possibly new producers: e.g. Namibia

Relatively high natural gas prices

More intensive competition for resources





Financing




Past Experience

Past experience for banks is overwhelmingly positive

Few material defaults

Good track record: e.g. Sonangol

Almost entire range of bank debt financing products already offered Pre-export finance (e.g. Angola) Reserve based lending (e.g. Nigeria) Project finance (e.g. Nigeria, Egypt) Asset backed securitisation (e.g. Egypt) Local receivables finance (e.g. Ghana)

Bank activities focused on a small number of countries (i.e. Algeria, Egypt, Angola, Nigeria, Ghana, etc.)

Financing




Recent Developments

Established borrowers benefit from high level of liquidity in the banking markets and their good track record

Higher loan amounts

Looser structure providing more commercial flexibility to borrowers

Longer tenors enabling borrowers to adequately finance longer term projects

Lower risk margins

More competition from non-traditional market participants

Financing




Outlook

Established borrowers will continue to benefit from good market conditions,

Will improve or obtain credit ratings which will give them (better) access to capital markets (corporate loans, bond issues)

New borrowers will need to tap the banking markets to finance their projects and to establish positive track records

Pre-export financing for new borrowers

Domestic and local receivables financing

Continued competition from non-traditional market participants

Financing




Challenges

Banks will put more focus on good governance and transparency issues and environmental and social sustainability issues audited financials

For banks: compete against on-traditional lenders, ma

For borrowers: detach financial from commercial issues (pre-payments)

Maintain a prudent approach to lending (healthy competition)

Financing




WestLB




Who is WestLB AG?

WestLB AG is a European commercial bank with firm roots in North Rhine-Westphalia,its home region, and Germany

It has a close business partnership with the savings banks in North Rhine-Westphalia and Brandenburg, with more than 11.5 million customers

WestLB is the financial partner for major corporations and medium-sized companies, institutional and public-sector clients

WestLB is a leading provider of specialist services, including lending, structured finance,capital market and private equity products, private banking, asset management,transaction services and real estate finance

WestLB AG




European Commercial BankPositioning as a profitable European commercial bank with

headquarters inNorth Rhine-Westphalia

WestLB ensures capital market expertise and access to the international marketsfor savings banks and medium-sized companies

It provides an efficient range of innovative financial products of international standingfor its domestic and international clients

The focus of its international activities is on Europe

WestLB is represented in all major financial centres worldwide,with branches in 26 countries and a dense sales network in Germany and Europe

WestLB AG




Strong Financial Partner in the Savings Banks Alliance As a member of the Sparkassen-Finanzgruppe, WestLB cooperates

closely with its partner institutions

WestLB is the central institution for the savings banks in North Rhine-Westphalia and Brandenburg

WestLB is central service provider for the savings banks, specially

as a strong partner of the savings banks for innovative investments- and financing products

as “the window on the world” with international capital market expertise

It ensures the timely development and provision of competitive products tailored to the needs of the savings banks and their clients

WestLB AG




Expansion in Selected Markets Worldwide

WestLB with its 28 branches has established the

largest number of international locations among

all former Landesbanken

WestLB generates more than 50% of its income

in international business

In its core areas WestLB is among world leaders

WestLB AG




Successful Re-Orientation as “Premier Structured Finance House“

Focusing on high-growth sectors in which WestLB has acquired particular expertise

WestLB Core SectorsMetals & Mining, Media, Entertainment &

Telecoms, Diversified Industries/Leveraged

Finance, Transportation, Infrastructure,

Hospitality, Energy

Demand for the product know-how of the Bank is particularly strong in the above sectors.

TelecomEnergy Infrastructure

WestLB one of international Top Players in the following sectors

April 2006

Vodafone Japan

JPY 1,280,000,000,000

Senior Secured Bridge Facility

Mandated Lead Arranger

Australia Oct 2006

Rivercity Motorway

A$1.839bn

Senior Loan Note Facility

Joint Lead Arrangers and Underwriters

US April 2006

LS Power Equity Partners

USD 1,240,000,000Acquisition of Duke Energy

North AmericaGeneration Portfolio

M&A and Financial AdvisorArranger & Bookrunner

WestLB AG




Germany‘s Leading Bank for International Project Finance

In 2006, WestLB financed a total of 34 deals

Total volume amounted to USD 4 billion

Hence, WestLB is the most importantGerman project finance bank

Internationally, WestLB is one of Top 10 banks worldwide

Objective for the next three years: Top 5

Global project Finance Loans

Mandated Lead

Arranger

Volume

in Mio

USD

Num

ber

Market

Share in

%

1 Calyon 7,211 51 5.2

2Royal Bank of

Scotland6,599 56 4.8

3 BNP Paribas 5,313 47 3.8

4 Mizuho 5,151 52 3.7

5Mitsubishi UFJ

Financial Group5,124 55 3.7

6 Credit Suisse 4,640 15 3.3

7SG Corporate &

Investment Banking4,114 31 3.0

8 BSCH 4,103 37 3.0

9 WestLB 3,963 34 2.9

1

0Goldman Sachs 3,916 11 2.8

Source: Dealogic, Global Project Finance Review, January 24,

2007

WestLB AG




WestLB One of TOP 5 Western Banks for Islamic Finance Aston Martin: WestLB was Mandated Lead Arranger for a

quasi-debt financing (volume: GBP 225 million) in connectionwith a Leveraged Buy-Out (LBO) for the acquisitionof the car maker

Financing in conformity with Sharia principles realizedfor the acquisition syndicate

This transaction is the first LBO in the UK to be exclusively realized in accordancewith Islamic legal provisions

WestLB is one of the Top 5 banks worldwide capable of providing such financingin the growth market of Islamic Finance within such a short period of time

WestLB AG




Shareholder structure

(Aa1/AA-/AAA)Düsseldorf

Sparkassen and Giro Association of theRhineland (NR) Düsseldorf

Sparkassenand Giro Association of Westphalia-Lippe(Aa3/NR/NR) Münster

25.154% 25.154%31.175% 17.469%

State of NRW(Aa1/AA-/AAA)

Balance of 0.524% each is held by the Regional Associationof the Rhineland and by the Regional Association of Westphalia-Lippe (indirectly held by the Westfälisch-Lippische Vermögensverwaltungsgesellschaft mbH, Münster)As of March, 2007

Düsseldorf, MünsterMoody´s A1

S&P A-DBRS A (high)

WestLB AG




Rating Long-Term Ratings of Selected Credit

Institutions

Banks Moody’s Standard & Poor’sDominion Bond

Rating Service

WestLB-Group A1 A- A (high)

Top 4 Private

Banks

Deutsche Bank Aa3 AA-

HypoVereinsbank A2 A

Dresdner Bank A1 A

Commerzbank A2 A-

BayernLB Aaa A

LBBW Aa1 A+

HSH Nordbank A1 A

Nord/LB Aa3 A

WestLB AG




Key Figures of WestLB AG – as at December 31, 2006 –

* full-time equivalent

in billion €Total assets 285.3Credit volume 98.3Risk-weighted assets

95.9

Capital and reserves

11.6

in millions €Income from ordinary activities

2,827

Administrative expenses 1,830

Profit before taxes 1,006

Employees (Number*) 5,862

WestLB AG




Conclusion




Conclusion

The African oil and gas sector has changed and will continue to play a more important role in the international hydrocarbon markets

Established borrowers will require different forms of banking and capital market products

New borrowers will come to the banking markets to finance their projects

Banks will introduce products already successfully offered in other markets

Challenges will have to be addresses adequately

Conclusion




Thank you!




Hartwig C SchuenExecutive Director

WestLB Capital MarketsCommodity Finance

Herzogstrasse 1540217 DüsseldorfGermany

Ph: +49-211-826-5839Fax: +49-211-826-5616Email: [email protected]

Data Sources: BP Energy Statistics 2006

Documents

11 th Africa Oil & Gas and Trade & Finance Conference and Exhibition 23 rd – 25 th May, 2007 Nairobi, Kenya NOT AN OFFICIAL UNCTAD RECORD