CAPE TOWN (Reuters) - The International Finance Corporation expects closer future cooperation with China to provide funding in Africa’s growing oil and gas sector, a senior investment official said on Wednesday.
The world’s poorest continent is emerging as an important global source of oil and gas, attracting competing interest from Europe, Russia and Asia.
“We are hopeful that in a couple of years China will become a valuable partner for us because they have the risk appetite to take on the risks associated with Africa,” Kamal Dorabawila, the IFC’s top investment official for the oil and gas sector in Africa, told an oil conference in Cape Town.
China has displaced many western countries as the major investor in Africa, where it has pumped billions of dollars to secure access to Africa’s commodities which it needs for its industries.
However, China’s track record on environmental and social issues has seen the investment arm of the World Bank take a cautious approach to joint funding deals.
Speaking to Reuters, Dorabawila said that as global financial markets recovered from the downturn there was increased liquidity to fund oil and gas projects in Africa, although capital remained tight.
“There is definitely more likelihood for mergers and acquisitions given that in this environment small juniors who don’t have production systems.... are going to find it difficult to raise equity capital to meet expenditure,” Dorabawila said.
He said the IFC has seen more applications for loan assistance.
The IFC has a portfolio worth some $2 billion in the oil and gas sector globally, of which 20 percent was in sub-Saharan Africa or a little less than $400 million, said Dorabawila.
“We definitely would like to have that increase... Africa is a focus area,” he said.
The IFC provided $115 million to Tullow Oil and another $100 million to Kosmos Energy to help finance the $3.1 billion estimated cost of developing the Jubilee off-shore oil field in Ghana.