Tuesday, March 17, 2009

Africa, Energy and Mauritius

AfrAsia Bank views Mauritius as the ideal international business and financial services platform between Asia and Africa. For our part we are active in both continents already including India. We continue to see energy, specifically oil based energy, as a long term issue that both underpins and undermines economic growth. We need to find alternatives to it eventually but until we do it is at the heart of nearly all economic growth in the world.

“Africa is the great frontier for oil companies and is the largest continent open to oil companies. It has vast and untapped interior areas for exploration new deep-water tracts and ultra-deep-water basins. In some places, the history of oil is over a century old and there are some 500 companies working in the African oil industry today. In terms of growth rates, Africa is the No. 1 destination for oil investment in the world. Through 2030, OECD estimates peg African oil investment at well over $1.25 trillion -- ahead of Russia and the Middle East. About 50% of that money is just for power generation. The other half is for oil and gas exploration and production, with a smidgeon for coal. Nearly all of this money comes from outside Africa. “ Note 1

Whether that investment into Africa is European, American, Chinese, Indian or others, Mauritius is increasingly playing a value added role across trading, logistics and financial services. And although oil prices at just below USD50/barrel have unbelievably declined a lot from their peak, remember that only a few years, that USD50/barrel was just as unbelievable when viewed from a USD25 perspective. Oil and energy will continue to dominate economics for some time.

Note 1: From Chris Mayer who writes for The Daily Reckoning and is the editor of the US Fleet Street Letter

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