Report by Elias Ali
Setting the
tone for the first African Local Content Investment Forum, with the theme,
Pan-African Strategy Towards Sustainable Funding of Africa Oil and Gas
Projects, held last week at Eko Hotels and Suites, Lagos, Nigeria, the Executive Secretary, Nigeria Content Development and Monitoring
Board Engr. Simbi Kesiye Wabote, in his Welcome Address unveiled the purpose of
convening the forum, “ to propose some ideas to enhance continental
collaboration and global support for our natural resources; while urging, at
business, national and continental levels to attract and deploy funding, to the
oil and gas sector”
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| Executive Secretary (NCDMB) Engr. Simbi Kesiye Wabote |
Speaking further, he said, “the African continent is blessed with enormous human and capital resources. The challenge of inadequate energy is partly the reason why Africa is faced today with poverty, conflicts, migration, brain drain, and ranks low on human development index. Ironically, the African continent is reputed to hold vast deposits of natural resources including oil and gas.”
“In the last
four decades, a number of African countries that produce oil has increased
rapidly as new discoveries are made; with the latest addition being Mozambique,
Senegal, Uganda, Namibia, Mauritania and South Africa.”
“The
expectation is that existing and new hydrocarbon discoveries would have
presented additional opportunities to address the energy challenges in the
African continent, but the narrative we are hearing from most of the advanced
countries of Europe and North America are quite disturbing and disheartening.”
“The quest
for energy transition, as is being advocated in some European countries and
other parts of the world, is now taking centre stage, and as this trend
progresses, hydro carbon resources in Africa is becoming an endangered
resources. If you extrapolate it, Africa
is becoming an endangered continent.”
Still continuing
on the imperative of the forum, he gave the insight that “this is the first
time a group of nations are coming together in the name of mankind, and is
setting deadline for the adoption of one form of energy to the detriment of
others.”
“At the COP
26 in Glasgow, in 2021, these countries made a commitment on behalf of the rest
to curb and maintain zero emission by 2050 and, end international financing of
fossil fuel. This, to put it mildly, is a declaration of war.”
“Already,
some European banks are pulling out of hydrocarbon development projects and
most of the international operating companies are shying away from investing in
hydrocarbon projects to avoid backlash. The unfolding scenario is a huge
challenge to African leaders and policy makers in the oil and gas industry.”
“It is
therefore critical that we explore the necessary steps required to address this
funding and investment challenge, so that our hydrocarbon is not abandoned like
coal in most African countries, including Nigeria.”
Concluding
he “reiterated that there is genuine battle for the Soul of hydrocarbon
industry in Africa. We must all rally to save the industry. We need to build on
the good initiatives already in place to increase the pool of funds already
available for hydrocarbon projects, and also motivate credible investors to
pick interest in the industry. While the
activists are demonizing oil and gas industry, our message must be consistent
to the effect that fossil fuel will not disappear or be transited or shifted
out of energy base so soon”.
Supporting
the NCDMB Executive Secretary’s position, Omar Farouk Ibrahim, the Secretary
General, African Petroleum Producers’ organization (APPO) spoke in the same vein,
in his Opening Remarks.
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| Secretary General, APPO, Omar Farouk Ibrahim |
He “agreed that the conference could not have come at a better time.” Referring to the outcome of the COP 26 as it affects hydrocarbon, he said “it was a deliberate strategy to demonize fuel. Funds were provided to conduct research on the impact of fossil fuel on the atmosphere, and by implication, on the health of the people living on earth. These findings were given wide publicity, and NGOs were given funds with mandate to demonize hydrocarbons.”
“It is
interesting to note” pointing out “that these findings were not new”. He took
the attendees back to such research in the past. “As far back as 1859, John
Tyndall, an Irish physicist, had made similar findings; a Swiss scientist had
also published his findings on the same subject in the 1800s; but because it
was not in the interest of the industrialized powers at the time, the USA and
others, the findings were not publicized. For nearly two hundred years, they
continued to use fossil fuel to consolidate their economies. Now that their
economies have graduated from relying on intensive energy for production, and
Africa is on the verge of industrialization, these countries have suddenly
realized that fossil fuels are harmful to mankind.”
“It is
obvious therefore, that the energy transition agenda had been on the agenda of the advanced
countries since the last quarter of the last century but we in Africa failed to
see it.” “The oil and gas industry” he continued, “needs a new development
model to survive. If it fails to
strategize and come up with a new model, it risks the 125 billion proven crude
oil reserve and trillions of proven gas reserves.”
“This new
model sees in greater cooperation and collaboration among African gas
producers, the only way to survive the challenges posed to Africa by the energy
transition agenda. Thus while still
encouraging local content as currently practiced, the model shall also seek to
emphasize a continent wide approach to addressing the funding challenge, the capacity
development challenge, the lack of cross border and regional and sub-regional
infrastructure challenge, the technology deficit challenge, and the under
developed energy market challenge, using the African Continental Free Trade
Agreement Zone as an enabling venue”
While
declaring the conference formally open, the Minister of State, Petroleum
Resources (Nigeria), Chief Timipre Sylva, represented by the Permanent
Secretary in the Ministry of Petroleum Resources, Dr. Nasir Sani Gwarzo, made
it clear that “governments of APPO members are heavily dependent on oil and gas
to make their socio-economic obligations”; adding that, “for Africa to have
energy security, an in-continent value addition must address the following
limitations- lack of funds to finance oil and gas projects, limitations in
technology mastery, because even with the commitment, mobilization of
resources, a huge threat to the sector would be the absence of appropriate
technology. As they withdraw their funding, the technology would deliberately
disappear.” “The above realities” he further stressed, “make this forum
compelling.”
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| Dr.Nasir Sani Garzo Permanent Secretary, Ministry of Petroleum Resources, Nigeria |
The ECOWAS Commissioner for Energy and Mines, Mr. Sediko Douka, in his presentation, extolled local content, and the achievements and vibrancy of the NCDMB in providing leadership for other African countries in local content matters. “Nigeria is leading the way in Africa”, he said, “and that is what we are following”. On the aspect of funding the indigenous companies so that they can compete with the IOCs (International Oil Companies), the Commissioner called out the government of each member countries of APPO, the banks and others in the financial sector, stressing that much is expected from them.
For Mr. Imoh
Umah, representing IBTC Bank, he promised that “our bank would support oil and
gas. Ours is to mobilize funds and direct them to where capital is required”,
adding that, “Africa is our home”.
From the
NEXIM bank angle, “the metrics for financing projects, what matters most is the
viability of the transaction.
Mr. Isaac
Yalah, Director, Finance and Personnel Management, NCDMB, noted that only one
commercial bank, IBTC bank, is present at the event, and this he said, “presents
a challenge, and some level of disconnect”. He wooed the commercial banks to
key into it.
The event
had an impressive attendance from within, and outside the country especially
from APPO member countries, through in-person and online.
As noted by
the various speakers, the event is key in the face of the energy transition
agenda. An attendee sums it this way, “the conference has been an eye opener,
for it situates very well the issues surrounding the energy transition agenda,
how it affects us, and what Africa must do to avoid being trapped in the agenda
of the developed nations”
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