WEDNESDAY, 14 JANUARY 2004

201 Improved Security in Liberia Heralds More Support for Development Funding
(Officials speak in advance of international donor conference) (830)
202 West Africa Poised to Be Key U.S. Natural Gas Supplier
(ChevronTexaco executive discusses intricacies of supplying liquefied natural
gas) (1140)

*AEF201 01/13/2004
Improved Security in Liberia Heralds More Support for Development Funding
(Officials speak in advance of international donor conference) (830)
By James Fisher-Thompson
Washington File Staff Writer

Washington -- The security situation in war-torn Liberia has improved enough to start planning for more long-range development assistance, according to Department of Defense and Department of State officials who are involved in supporting the 8,700 peacekeepers in the United Nations Mission in Liberia (UNMIL). They spoke in advance of a donor's conference on Liberia set for early February.

After providing more than $8.2 million on humanitarian assistance to Liberia and $26 million in military-related assistance to ECOWAS (Economic Community of West African States) and U.N. forces in 2003, the U.S. government is poised to spend a further $245 million for peacekeeping and $200 million dollars on humanitarian assistance to the West African nation, according to Colonel Victor Nelson, director for West Africa in the Defense Department Office of International Security Affairs.

The funding for peacekeeping was vital to support the ECOWAS/UN intervention in the summer of 2003 that -- with the help of a limited number of U.S. ground forces -- helped stem the violence in the West African nation.

Nelson said security funding was still an important issue because the UNMIL force is due to almost double to 15,000 troops in February when the international reconstruction conference on Liberia will take place. The career soldier said he plans to visit Liberia later this month to assess security needs in the region.

"The U.S. government" he said, "is currently discussing next steps with U.N. special representative [Jacques] Klein in Liberia" about how the new U.S. funding can best be used.

In Congress, he said, there were differing opinions about whether more money should go to "security sector reform" or be spent on "more humanitarian-related things. Our position right now in the Inter-agency [Working Group on Liberia] is that if you don't have security, all the money you spend on humanitarian efforts will go down the drain if fighting is renewed," he explained.

According to the State Department, U.S. assistance to Liberia, besides providing humanitarian relief, will also include developmental goals: resettlement of refugees; reintegration of former combatants, especially child soldiers; community revitalization and providing basic social services; reconstructing police and judicial structures; establishing an independent media; military reform; forest sector rehabilitation; and support to the Central Bank.

The civil war in Liberia that began in 1989 came to an end in 2003 when a peace agreement brokered among the warring parties and groups called for President Charles Taylor to yield power and depart to Nigeria. The peace came about, in part, because of an ECOWAS-backed intervention force of West African troops, some of whom had been trained by the U.S. Army.

Colonel Nelson, former U.S. Defense Attaché in Nigeria, had helped organize the training of several battalions of Nigerian troops in the fall of 2001 in Operation Focus Relief (OFR), some of whom were later used for peace enforcement duties in the region. The Nigerian force that was rapidly deployed to Monrovia to stop the killing "got rave reviews for their abilities and comportment," said Nelson. "Also, other elements that had received OFR training and a Ghanaian contingent, which had received ACOTA (Africa Contingency Operations Training Assistance) program training, all did very well."

[ACOTA is the follow-on program to the highly successful African Crisis Response Initiative (ACRI), which helped train the armies of seven African nations in peacekeeping operations while enhancing their overall professional skills as security forces supporting democracies.]

Acting Assistant Secretary of State for African Affairs Charles Snyder believes Liberia is doing well "given where it was -- that it was a totally failed state. You can now see the way forward. The U.N. is beginning to get some traction on the ground."

Snyder was hopeful after his recent meeting with U.N. Special Representative Klein. "Clearly, Klein is very much an activist and he has a rational plan, which is what we were hoping for. He is talking about reestablishing the rule of law as the U.N. forces move out."

In that light, Snyder said "the upcoming donor's conference is so important" in generating the money needed for the rebuilding process. To that end the U.S. government continues to cooperate with the United Nations and other international organizations to provide humanitarian aid aimed at refugees and other war-affected populations in Liberia.

In addition, the United States also provides funding for the civilian police mission in Liberia, for the U.N. Development Program's reintegration efforts for 3,500 ex-combatants, and for two Treasury Department advisors to the National Transitional Government of Liberia.

The State Department notes that other foreign contributions to stability in Liberia include $42 from the European Union (EU). Meanwhile, the Scandinavian nations, Canada, Japan, China and other donors have offered to contribute to the Liberia reconstruction effort.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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*AEF202 01/13/2004
West Africa Poised to Be Key U.S. Natural Gas Supplier
(ChevronTexaco executive discusses intricacies of supplying liquefied natural gas) (1140)
By Charles W. Corey
Washington File Staff Writer

Houston, Texas -- West Africa is poised to be a key supplier of natural gas to help meet ever-expanding U.S. energy demands, says Bill Hauhe, manager of global liquefied natural gas (LNG) market development at ChevronTexaco.

Speaking at a recent LNG workshop at the second annual Africa Oil and Gas Conference, sponsored by the Corporate Council on Africa in Houston, Texas, Hauhe said the United States is currently importing natural gas from Canada because U.S. demand now outstrips U.S. production. Demand for natural gas in the United States is predicted to increase year after year, he said.

(The United States Department of Energy recently forecast that by 2025, natural gas produced on the North American continent will meet only 75 percent of U.S. demand, thus further fueling the need for greater natural gas imports.)

"In North America the question is not market capacity," Hauhe told his audience. "To us [at ChevronTexaco] that is not the issue. The issue is how do you get LNG into the United States? There are only four LNG receiving terminals in existence right now," he said: Everett, Massachusetts, outside Boston; Cove Point, Maryland; Elba Island, Georgia; and Lake Charles, Louisiana.

"Several others are being proposed," he said, "and for us, we are proposing our own LNG terminal," known as Port Pelican, which ChevronTexaco expects to complete within the decade.

ChevronTexaco's proposed Port Pelican LNG terminal -- which will be located 37 miles offshore in the Gulf of Mexico -- Hauhe said, will utilize existing pipelines and infrastructure to efficiently bring liquefied natural gas into the United States.

"We will be able to bring in ships from the Atlantic Basin, tie them up offshore, offload the ships' LNG supply into storage, regassify it [reconverting it to gas from the liquefied form in which it is shipped], and send it onshore [via pipeline]. For us, we see that as the key issue."

( LNG is natural gas cooled to minus 259 degrees Fahrenheit. The cold temperature shrinks the gas into liquid form so it can be transported aboard double-hulled tankers. The LNG is then regasified and fed into existing natural gas pipelines for distribution.)

Hauhe reminded his audience that ChevronTexaco is Africa's largest U.S.-based private investor, operating in more than 50 countries on the continent. It was ChevronTexaco, he said, that scored the first offshore oil discoveries in both Angola and Nigeria. He said the company plans to invest up to $20 billion on the African continent over the next five years.

Hauhe called LNG production a "catalyst for positive change" across the continent, noting that ChevronTexaco is hoping to export large amounts of LNG from its production operations located offshore of Nigeria and Angola.

Special challenges come with the development of natural gas fields, he said. "The challenge of [developing] gas as opposed to oil is that it usually has to be developed in very large volumes to justify the economics of the long-distance transportation" and infrastructure needed, he explained.

"Unless there is a local indigenous demand for that gas, the gas that is produced must find a market or be reinjected into the ground. The processing and transportation of needed gas to distant markets, he said, "requires vast sums of capital, specialized equipment, infrastructure, and special expertise."

For distances up to about 2,000 kilometers, he said, pipelines are usually the most economical way to move gas to market. For longer distances, such as between West Africa and North America, he said, special double-hulled LNG ships are the preferred option.

The construction of needed LNG infrastructure, Hauhe explained, will allow for the expansion of domestic gas utilization across the North American market.

Hauhe went on to outline what both host governments and investors are expecting to gain from the development of natural gas projects across Africa.

With natural gas, he said, host African governments are expecting to utilize gas revenues to achieve sustainable development. "They want something that is not just going to last for six years and go away. We are talking about decades of development and sustainability for the economy. Also, they want to see ... something done about developing and further enhancing their own energy resources."

From an investor perspective, Hauhe said, ChevronTexaco seeks host governments that will be supportive of LNG projects as they are developed. "These are long-term projects," he reminded everyone, "so we would like to see the governments there standing behind these projects and supporting them."

Acceptable price structures and predictable commercial and financing terms in the host country are also essential to any successful project, he said, because the natural gas price must be competitive worldwide.

Any new project needs to be competitive, he said, adding that market prices for LNG dictate the terms of the deal. "You will basically sell at no higher, no lower than the market -- and that is constantly changing," he said, which poses an "ongoing dynamic" between the buyer and the seller on pricing.

In that regard, he said, "we want to make sure that each individual project is competitive within a portfolio of projects. We want to ensure that each project is robust for the company and partners, including the government if they take an equity stake."

What is also important, he said, is attention to the market. "LNG buyers can never be forgotten. The four key issues are reserves, and market, market, and market. LNG has to have a place to go. It is not a fungible [interchangeable] commodity like oil is yet."

"In the world today, oil can go to any one of hundreds of refineries around the world. You put it in an oil tanker and it can go basically anywhere, and in fact, cargoes are diverted all the time -- bought and sold many times on the water -- and end up anywhere. It is traded on an international market basis... Everybody can pretty much use it."

LNG markets are more limited, however. "There are not that many places where you can deliver LNG" because of the extensive infrastructure required, he said.

Speaking for ChevronTexaco, Hauhe said his company looks for long-term relationships of 20 years or more. He then outlined the challenges for LNG projects, reminding everyone that LNG projects are unique and different from oil projects.

"In oil projects, you develop those operations knowing that you will have a place to put your oil," he said. "In LNG projects, you don't necessarily know that, so you need to develop the commercial arrangements simultaneously with the technical and reserve-type activities so you can effectively develop a project."

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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