‘Reduced funding for exploration undermining Africa’s energy transition target’

The Minister of State for Petroleum Resources Timipre Sylva has stated that the risk of limited international financing of oil and gas projects could jeopardise Africa’s energy transition and roadmap to attaining net-zero by 2050.

According to the Minister at the Society of Petroleum Engineers (SPE) conference in Lagos, Africa must look inward and harness its resources, while accelerating technology development, to face the global energy transition onslaught.

He also stated the need for Africa to develop cross-border infrastructure and expand the regional energy market to guarantee long-term energy security.

He noted that Africa’s approach towards the climate-change-net-zero-emission should be to optimise the use of our abundant gas resource as a transition fuel option, maintaining that Africa’s energy poverty would have to be addressed by responsibly developing and utilising abundant natural resource-Fossil fuels from where the renewable energy would be funded amidst a gradual energy transition.

He pointed out that the campaign for reduced funding of fossil fuel exploration has led to a gale of divestment by the international oil companies in Nigeria, even as he expressed assurance of Nigeria’s independent producers’ capacity to fill the gap.

“I believe that Africa has a key role to play in securing a greener world where clean natural gas is used to power our economies sustainably. I have no doubt that the future of Africa’s oil and gas industry is still bright, despite the global energy transition uptake,” he added.

He added that Nigeria, as the oil and gas industry leader in Africa, is committed to pursuing the energy transition to promote economic growth, and is gradually investing in renewable energies, primarily solar, to reduce carbon emissions, whilst continuing to exploit hydrocarbon resources, especially natural gas recognised as the energy transition fuel for Nigeria.

In his words: “Nigeria has the most extensive gas resource in Africa with proven gas reserves of over 200 trillion cubic feet. It is envisaged that with the Petroleum Industry Act 2021 in full implementation across the broad spectrum of the oil and gas industry, Nigeria is well positioned for a reformed oil and gas industry that could sustain the local demand for natural gas and a high export income.”

He recommended that for Africa, adaptive strategies for the energy transition should be adopted across the continent.

He stated that all available energy sources will be required to end the high level of energy poverty in Africa and achieve the UN Sustainable Development Goal of providing access to affordable, reliable, sustainable and modern energy for all.

Also speaking, the Group Chief Executive Officer, Nigerian National Petroleum Company Limited, Mele Kyari, said before the current war between Ukraine and Russia, there were indications of short supply gaps in the world market.

He said energy security and energy transition are two sides of the same coin, saying that it is about increasing supply to meet demands adding oil and gas companies have a major role to play to achieve this feat.

He emphasised the need to boost production, taking cognisance of volume, adding that it is the backbone of sustainable development.

He said the new NNPC is a story of the future that is starting today, saying that NNPC will be leveraging the opportunities in the sector to deliver value to Nigerians.

He said his administration would aggressively back the development of gas infrastructure and energy development.

On his part, the Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission, Engr. Gbenga Komolafe said the theme of this year’s conference is apt considering the current trends and realities in the industry.

He pointed out that the commitments from the Paris Agreement of 2015 and the recently concluded 26th Conference of the Parties (COP26) in Glasgow, in which Africa actively participated, place a demand on all of the stakeholders to keep global temperature rise to within 1.5 °C – 2.0 °C of pre-industrial levels, noting that the implications of this for upstream oil and gas industry in Africa are far-reaching.

He stated that the need to decarbonise oil and gas production facilities not only requires commitments but entails industry stakeholders having the right discourse on policy direction to guarantee energy security throughout the journey to our net-zero target.

He advised that as the quest for cleaner energy and net-zero carbon footprint garnered momentum, the need for oil and gas producers in Africa to embrace the reality of energy transition and take a strategic position to leverage the opportunities presented by the unfolding era has become more pressing.

“Given this outlook, it is evident that in meeting the growing energy demand in the short and medium term, the upstream oil and gas industry in Africa would need to carry out further exploration and development drilling to optimize reservoir extraction, drill into new targets, and employ technological advances to optimize production yields for appropriate energy mix. We at the Nigerian Upstream Petroleum Regulatory Commission (the Commission) have steered our focus towards working with all stakeholders to ensure business investments in the oil and gas sector are adequately protected,” he added.

On his part, the 2022 SPE International president, Kamel Ben-Naceur, said Covid-19 was responsible for a very significant reduction in upstream investment, saying that the world observed between 2019 and 2020, a 30 per cent drop in upstream investments.

He noted that in the last five years, the world has witnessed a decline in upstream investments by almost 50 per cent.

Projecting into 2023, the SPE International president, said oil and gas demand would increase above the levels of the pre-pandemic, but stated that oil and gas operators are not prepared for the surge in demand due to the under-investment recorded in the oil and gas sector.

He stated that gas would remain a significant part of the energy mix for the next three or four decades.

The Chief Executive Officer, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Engr. Farouk Ahmed said energy transition is real and already taking place, saying that energy transition is driven by technological advancement and environmental concerns centred around energy security.

He said according to the Gas Exporting Countries Forum report on 2050, the global population is expected to from 7.8 billion in 2020 to 9.7 billion in 2059, adding that the report further states that Africa would account for 54 per cent of this growth with Nigeria’s population to become the third highest in the world.

“Available data indicates that about 160,000 TWh of energy consumed globally, fossil fuel still accounts for 85 per cent. Nuclear energy is less than 7 per cent, renewable sources remain expensive and have been stuck in single digits for over a decade,” he said.

He advocated that a sustained push for energy transition must align with energy security, saying that Africa is not ready to do away with oil and gas.