Three Changes For Global Good

By Richard H. Matzke, President
Chevron Overseas Petroleum Inc.

U.S.-African Energy Ministers Conference

Tucson, Arizona

It's an honor for me to be here today and have the opportunity to say a few words in support of expanding our business ties with Africa.

Before I begin, I'd like to take a moment to say how much we at Chevron have appreciated Dept. of Energy Secretary Bill Richardson's help and support over the past few years, especially on the West African Gas Pipeline, as well as his invaluable support for our efforts to commercialize our gas reserves in Nigeria.

I usually don't spend too much time reflecting on world events. I'm usually too busy. But it occurred to me the other day just how much the world has changed over the past 10 years.

In the last decade, empires have fallen, walls have been torn down, and societies have been reborn. Just last month, the world celebrated the 10th anniversary of the fall of the Berlin Wall. As coincidence would have it, I also became president of Chevron Overseas Petroleum Inc. almost exactly 10 years ago. There may be some significance to the convergence of those two events, but I'm not sure what it is. One thing is certain, the world isn't the same place it was 10 years ago.

The fall of the Berlin Wall and the collapse of the Soviet Union were watershed events that set in motion a cascade of change that is still going on. Countries everywhere from Eastern Europe to Central Asia to Africa are enjoying a new birth of freedom.

The transition to open, democratic, free-market societies has been a tough one for many, however. That's why you see a growing nostalgia in some countries for the "old ways." They seem to be saying, "We didn't necessarily like the old ways, but at least we knew what to expect."

If you're used to having your life all mapped out for you, democracy can be unsettling. A free, open and democratic society gives you the opportunity to go as far as your individual talents and energy will take you. But a free, open and democratic society also gives you the opportunity to fail. And that is something that many people, I suspect, are having trouble coming to terms with.

It's easier to have someone tell you how to live than to try to figure it out for yourself. It may be easier, but it's not better. Ultimately, freedom and democracy is the better way. If the 20th century has taught us nothing else, it has taught us that. That's why it's so gratifying to see so many countries, especially in Africa, choosing to take the high, rough road to democracy. In spite of all the difficulties they'll encounter along the way, I know they'll be glad they chose that road.

We've also seen a great deal of change in the global oil and gas industry over the past 10 years. Since the late 1980s, the industry's been squeezed, whittled down and merged. We don't look the same as we did 10 years ago either.

But there's always an upside to change. We've had some tremendous new opportunities come our way as a result of all the upheaval. We're also leaner, faster, and, I believe, better -- better able to bring the right mix of experience and expertise to help countries develop their resources and build healthy energy industries.

Developing a nation's natural resources, of course, demands a great deal of capital. Every nation on earth is competing every day for the same limited pool of international investment capital. And it's a basic rule of economics that investors will put their money where the risks are the lowest and the returns are the highest.

The risks are lowest in those countries that can offer a stable environment for investment along with the highest potential for investors to make a reasonable profit.

That means three things:

  • There must be peace and security. War and civil strife drive investors away for obvious reasons.
  • You must have consistent laws and regulations governing foreign investment. Investors need that assurance in order to make long-term business plans.
  • You must have a competitive mix of financial incentives to draw in investors.

There's no reason why the nations of Africa can't meet these criteria and compete head-to-head with the other nations of the world in attracting investment dollars.

Having been involved with Africa for as long as I have, I'm especially pleased to see that many African countries have already taken the steps necessary to attract investors. I applaud their foresight and their courage.

Now, what must companies do to successfully compete for the best projects in Africa, or anywhere else, for that matter? For me, several things stand out.

First, companies must adhere to a high standard of ethics in all their business dealings. I have found over the long run that everyone's interests are better served -- governments and companies alike -- if all business relationships are fair, open and honest. Companies can show their commitment to open and honest business dealings by signing the Global Sullivan Principles, a voluntary but important "code of conduct" for companies doing business around the world.

Next, companies should always strive to make their operations as safe and clean as possible, because caring for people and the environment is not only the right thing to do, it's also good for business.

You may have heard that Chevron, along with five other companies, has signed a contract to build one of Africa's most important new regional energy projects -- the West African Gas Pipeline. The project is designed to capture, process and deliver 120 million cubic feet of clean-burning natural gas every day from Nigeria to Ghana, Togo and Benin for power generation.

This project will accomplish several things at once:

  • It will help monetize Nigeria's vast reserves of natural gas.
  • It will reduce gas flaring, which will reduce greenhouse gas emissions.
  • It will help the economies of the nations involved by providing a clean fuel alternative for new industrial and commercial development, which means more jobs and a higher standard of living.

I'm personally excited about the future of natural gas in Africa. I think it will continue to grow in importance, both as a domestic fuel source and as feedstock for such applications as gas-to-liquid conversions.

Now, besides ethical behavior, safety and care for the environment, there's one more thing that companies should do. They should invest both their time and their money in the communities where they operate. Companies must show a greater awareness and a demonstrable commitment to their local communities. In other words, companies must be willing to "go beyond" their contractual commitments to do a little extra to help where help is needed. That can involve building schools, health facilities or other infrastructure projects. Job training and helping to generate opportunities for small business are also important. In other words, companies must be prepared to demonstrate that they can be good neighbors as well as revenue-generators.

Of course, private enterprise can't be expected to shoulder the entire responsibility for looking after the general welfare of local citizens. The lion's share of that responsibility -- as it does in the United States and elsewhere -- must continue to fall to local government agencies.

So, both governments and private enterprise have their own specific responsibilities for making free enterprise work. However, to help nurture the seeds of free enterprise you sometimes have to cast the net a little wider to bring in other influential parties, such as the U.S. government, which has a key role to play as well. That's why it was so nice to see the U.S. Congress do their part by passing the Africa Growth and Opportunity Act. That laudable action sends an unmistakable message to interested investors: Africa is open for business.

In case you haven't guessed what we've been leading up to, it's this: We must all work together -- governments, private enterprise, nonprofit organizations, international banking and development agencies, everyone -- if we're going to help the nations of Africa realize their true potential in the years ahead.

If there's one key message that I would like you to leave you with today, it's that. Working together is the only way to achieve the things that the nations of Africa and their people need and desire most.

I want to thank Secretary Richardson for inviting me here today and also the Department of Energy for hosting this conference. I think it provides a wonderful opportunity for us to develop and strengthen business ties between the United States and the nations of Africa.

I wish you all my very best for a very successful conference.

Thank you very much.

Updated: December 1999