How Nigeria’s oil, gas sector can survive energy transition
Managing Director, Shell Petroleum Development Company (SPDC) and Country Chair, Shell Companies in Nigeria, Osagie Okunbor and other stakeholders in the energy sector in Nigeria, have said Nigeria can sustainably manage pressure from energy transition if proactive steps are prioritized.
Speaking at the 2022 Oloibiri Lecture Series and Energy Forum (OLEF), Okunbor said Nigeria urgently needs to become a compelling investment hub with a stable political, legal and regulatory business environment.
Okunbor, who also made a case for industry consolidation especially for indigenous oil and gas companies, said advocacy and increased societal awareness on the future role of oil and gas remained sacrosanct.
Although Okunbor noted that Nigeria is energy rich, especially in fossil fuels, solar, wind, hydro, he said oil and gas would remain a key component of the energy mix for the foreseeable future, adding that making Nigeria a stronger, more compelling investment case is non-negotiable from a cost and carbon competitiveness standpoint
According to him, guaranteeing investments in the Nigerian oil and gas industry will go beyond the energy transition for Nigeria.
To him, tackling the lingering concerns of crude oil theft and vandalism must become a priority.
Okunbor said industry consolidation especially with local players may be needed to reposition for stronger, healthier and financially more viable businesses that could compete for future investments.
The MD added that evolving an integrated energy strategy that includes the strategic and efficient development and exploitation of our various energy sources would also be a game changer.
Insisting that improving Nigeria’s oil and gas investment climate goes beyond energy transition, Okunbor said stiffer and tougher competition for finance largely driven by ESG requirements would be a key consideration.
According to him, the societal pressure to withdraw investments from oil and gas may persist while Nigeria needs to overcome security challenges in the Niger Delta.
Reducing high cost of oil production through Operational Excellence, payment of outstanding cash-calls and gas and power receivables, strengthening and stabilising of the industry’s regulatory and commercial framework to grow investments and current Geo-Political tail winds impacting commodity prices would help attract investments especially in gas.
Okunbor said it would be impossible to predict with precision how future energy systems would evolve, adding that tackling climate change requires a combination of more renewable sources of energy and natural gas while expanding energy access as energy transition may move at different paces in different countries.
“Oil and gas will remain in the energy mix for decades to come. The world needs to meet its energy needs as it tackles climate change. Energy use today is far more than electricity,” he said.
Chairman, SPE Nigeria Council, Prof. Olalekan Olafuyi noted that the world is facing a serious energy challenge that requires an all-inclusive approach that could address specific regional problems with their peculiarities.
According to him, the outcome of COP-26 which has created a campaign against
fossil fuel funding has been challenged by the recent energy crisis resulting from the Russian invasion of Ukraine, adding that it was high time to formulate frameworks and adopt best practices for the United Nations’ Sustainable Development Goals, especially SDG seven, which aims at addressing affordable and sustainable energy for all and 13, which focuses on combating climate change and at the same time maintaining the United Nations’ SDG one and three, which are centered around ending poverty and promoting healthy living.