Okwuosa: Govt Must Create Enabling Environment for Investors Interested in Renewable Energy

The Chairman/Group Chief Executive Officer of the Oilserv Group, the company handling the $2.8 billion  Ajaokuta-Kaduna-Kano gas pipeline project, Mr. Emeka Okwuosa, in this interview on the sidelines of the recently concluded Offshore Technology Conference in Houston, Texas, United States, spoke about the importance of energy transition for Nigeria in line with the 2050 target date to achieve net-zero emission. He also spoke about the project his company is handling. Obinna Chima brings the excerpts:

Agriculture as springboard for carbon footprint reduction

Oilserve has six companies. The Oilserve Group, apart from one of its companies, is a group that transacts business in oil and gas and energy sector. One of the companies which goes by the name ‘Ekcel Farms Limited’ is actually a company that is involved in agriculture and agriculture is not just about farming; it is about processing of the products. We have our primary feeds – cassava and tomato. We are trying to develop cassava at the moment. Part of the reasons for this is not to only provide for the teeming population of Nigeria, but also provide products or feeds that can be used in the pharmaceutical and other food industries. What that means is that it helps us to balance our footprints in the energy industry. One of the aspects of our foray into agriculture is to be able to generate power by using biomass and biogas, taking the waste and then converting it to energy. That again helps us to address our carbon footprints. Having said that, if you look at the energy sector in the world – if you look at oil and gas – you will see a lot of discussions going on.

There is actually an energy transition, it’s been ongoing. There is the net-zero goals 2050 targets and all that. We put out all kinds of statistics. At the end of all this, the important question is how do we leave this world in a sustainable manner? That is the bottom line.  For us to live in this world, we need energy. Countries and people never develop except by increasing the amount of energy that is available and the amount of energy that can be used. There is a direct correlation between energy transition in any country and in any locality and the Gross Domestic Product of that country.

By implication, the quality of life and the level of development of the economy. So you cannot say let us stop greenhouse emissions, climate change effects, the impact of human footprints on the Earth, by eliminating human beings or by stopping the use of fossil fuels. No, It’s about how do you replace the fossil fuel utilisation in a sustainable manner without damaging our ability to sustain life. And when you talk of sustenance of life, there is a gap. That gap is between what you see in the developed world where the transition is easier to manage because they have, by and large, the finance, the funding to be able to manage that transition. Put that side by side with the scenario in Africa where we are still trying to grow – still trying to get out of poverty. To do that, we need to develop our energy base, utilise our energy base in order to build our economy. So it is a balance that has to be made.

Nigeria’s efforts towards energy transition

Nigeria, I will say, has done quite a lot in trying to develop its oil and gas industry. We’ve done positive things; we’ve made our mistakes. We have since realised that gas should be the mainstay of our energy delivery. But you cannot talk about gas without infrastructure. Gas is not like oil. You can produce crude oil and put it in tanks, leave it there for as long as you want, and then move the tanks when you want. But when you think of gas production, from the day you are thinking about it, you should also be thinking of infrastructure to move that gas.

Because you can only store a small quantity of gas and that depends on how you can even store it – at what pressure and how do you contain it? It’s inconceivable that you want to store the gas that you are producing. For you to use gas, you either build pipeline systems which includes all the facilities that goes with pipeline. Pipeline here is not just a piece of pipe, you build the infrastructure, including stripping the gas, being able to move the gas into its various constituents like the (unclear), LPG and all sorts. Then you now move them to places where you use them.

You must match production which utilisation, otherwise, production has to shut down. Another way that enables us to move gas in a larger scale is the Liquefied Natural Gas (LNG). But that is mostly for utilisation in moving this gas far away from sources of production. For instance, Nigeria produces, gas convert it to LNG and moves this gas to as far as Australia. So, these are ways to move gas. Gas utilisation depends on infrastructure and that is where Oilserve is located very strongly, apart from other businesses we are doing in the industry. We have built more than 70 per cent of all gas distribution systems in Nigeria.

Bridging infrastructure deficit

Let me first say on a positive note that this current government in Nigeria has done quite a lot of things for which it has not been given credit. When President Muhammadu Buhari came into power, the AKK pipeline was already under discussion since 2009, it’s never moved anywhere. Within three months of coming into power, he brought the issue up and said it must be done. His government gives us the support to navigate that process, especially the funding.

The government has been determined to ensure the Nigeria Gas Master Plan is fully executed because of its impact. That is why we are talking about the (pipeline) to Ajaokuta, which is the last interlink. So, I give them credit for that. There are quite a number of programmes the NNPC has initiated, like the seven gas programmes we have. The Train 7 NLNG is ongoing as we speak. A lot has happened. That is why I keep saying that gas is the mainstay of our transition. If we get gas right, it would be easier for us to transition into renewables. The Nigerian government has done a lot. But, as a developing country, you know we are struggling with so many things for now. It is about focusing on what matters the most.

The government has done a lot, but there is room for more. It needs to make it possible that there is an enabling environment for investors who are interested in the renewables. If we do not deliberately do that, nobody, and I repeat, nobody, will invest. That is because you don’t invest to lose money; investment is business and it is not government that should do that. In terms of investing, government only encourages the private sector. Even the government that built power plants 20 to 30 years ago later realised that that was not the right way to go. They have sold them because government is not the best suitable to run businesses. It can only encourage them. So, renewable needs to be encouraged. I may not be able to give you specifics because I don’t have one now.

The reason is that there are many factors out there you have to consider. But what is important is that there is a huge gap between the energy we need and the energy we have today. It is massive and the way to bridge it is to quickly scale up energy availability using gas and slowly transitioning to renewables, over time. If we do not take a deliberate action on it, then we will be caught in the middle where we have oil and gas but will not be able to produce it because there is no finance to do that. I can’t speak the mind of the international community, but when you talk about energy, it is usually about the national interest of any country. It is also about interests of businesses: where do you put money and make money? Today, because of what is going on in the world, there is a renewed interest again in Africa’s gas. You can see that where national interest is threatened, countries move. It is left for us to market ourselves to the world and let them understand the need to have their own energy security tied to our own energy security, that is key. It is a win-win.

If it is not a win-win, it is not going to work. But I believe we have a way of making it a win-win. Beside the energy security, you can see what is going on because of the poor economy that we have. Some of our folks are trying to cross the Mediterranean Sea. I can tell you the reason is primarily because of the poor economy of Africa. Most Africans would prefer to live in Africa but economy is an issue that drives people away from their home. They want to live a better life. If we take this message to the West and anchor it very well, they will see the nexus in helping us develop in order to keep also the West the way they want it.

Currently we are executing half of the Ajaokuta-Kaduna-Kano Pipeline which is 40 inches by 614 km. We are executing 303 km of the 40 inches plus another 15 km of 24 inches, to supply gas to a power plant that is envisaged to be built in Abuja. Make no mistake, this is actually part of the Nigerian Gas Master Plan. And what is the Nigeria Gas Master Plan? It is a master plan conceived by the NNPC to move gas within Nigeria and achieve domestic gas utilisation plans.

You have the Western flank of it which is the Escravos to Lagos Pipeline which is already in existence as we speak. It has been a second loop of 36 inches line built. You have the Obiafu-Obrikom-Oben (OB3) Gas Pipeline which is the largest pipeline in terms of diameter. It is 48 inches diameter between Obiafu and Oben. We have built that and commission our own portion, that is, an interlink between east and west. You may wish to know that’s a lot of the gas that exist in Nigeria today lies between what we call ‘South-South’ and ‘South-East’. But gas utilisation is all over Nigeria. So the only way you can use this gas is to build pipeline systems that will help to move this gas.

So this interlink is important. We are building the AKK Pipeline but on the back of that is what actually will complete the (unclear) South Pipeline which is Qua Iboe Terminal of ExxonMobil, through Obi Igbo Road, then through Umuahia, Enugu, all the way to Ajaokuta. That field is important. That is already being conceptualised as we speak. When we finish AKK, that angle will come in and that will make up the backbone of Nigeria Gas Master Plan. The rest will just be distribution lines or trunk lines, say from Zaria to sokoto, Kano, Maiduguri. And like we are planning to execute now within the South-east – to move gas to Onitsha, Nnewi, Owerri and the likes. All that will be done. Plans are underway. Already, Lagos is fed. And like I mentioned, we built the entire gas distribution system in Lagos. There’s another concept to move gas from Shagamu to Ibadan, Ilorin and Jebba. All these form the gas distribution system.

Nigeria needs gas to develop. And when we talk of energy transition, we have to transit from oil-based energy supply, which is the crude oil itself and the constituents that come out of refining (whether it is HPFO for or LPFO, diesel, AGO, petrol, kerosene) to gas-based supply. Gas is cleaner, gas is more available in Nigeria. It is not just available, it will last a long time of use in Nigeria. So if we move to gas, it would be easier for us to transit into renewables. I am not saying we shouldn’t go into renewables, we should. But we should pay stronger attention to gas distribution because that is one thing that can change the face of Nigeria energy delivery system. My point is that our coming to OTC enables us to share these ideas with various parties and be able to learn a lot and interface, get access to technology and what have you.