Oando Harps on Accelerating Energy Transition in Nigeria, Africa

*Advises national oil companies to prioritise attracting investments into the petroleum sector

Peter Uzoho

Oando Energy Resources has stressed the need for Nigeria and other African countries to redouble their efforts towards achieving the continent’s energy transition task in order to avoid being left behind by the rest of the world.

The Nigerian independent energy major also advised national oil companies (NOCs) in Africa, such as the Nigerian National Petroleum Company Limited (NNPC), to focus their attentions more on attracting investments into the oil and gas industry so that they could be able to extract the huge hydrocarbon resources the continent is blessed with.

The duo of Oando Energy Resources’ Chief Operating Officer and the Senior Economist, Dr. Ainojie Alex Irune and Ms. Ololade Olubi, respectively, stated these at their separate panel sessions at the just concluded sixth Nigerian International Energy Summit (NIES), held at the International Conference Center (ICC), Abuja.

Speaking during the CEO Roundtable, with the topic: “Building Energy for Tomorrow”, Irune urged African countries to  “act fast and act now.”
Africa’s energy transition has been projected to cost an estimated $100 billion annually between 2020 and 2040, presenting a huge task for the governments and industry players across the continent to achieve.

Sharing his thoughts on creating a sustainable energy future, Irune said, “For the first time in the history of the world, we are going to see energy growth and demand outstrip average economic growth across the world, in a time where the energy mix is still being contended; contended because the primarily developed world has a view of what this mix should be, and Africa has a different perspective.
“Against the backdrop of our youth population, poverty index and intra-African collaboration, we need to get impatient about delivering value and development to our people. The molecule of oil in our ground must be excavated with urgency; I’m talking about oil; we must create the balance sheet that will fund the transition.”
Noting that the Petroleum Industry PIA (PIA) had come to make that journey a little less tortuous and that whilst the PIA was not perfect, it was a starting point, he added that it was also understood that the PIA could quickly become obsolete because of the pace of change.
Also touching on gas as a transition fuel, Irune said the stakeholders had recognised gas as a transition fuel.

With Nigeria being the leader in the discourse because of its status as a gas province with a little bit of oil, and by investing in developing gas, Irune said that would be, “the lever for developing our industry, kickstarting our economy and taking us into the age where we can genuinely compete with the rest of the world.”
In another panel session, Olubi stressed the need for national oil companies (NOCs) in Africa, such as the Nigerian National Petroleum Company Limited (NNPC) to focus their attentions more on attracting investments into the oil and gas industry so that they could be able to extract the huge hydrocarbon resources the continent is blessed with.
She said the NOCs should also focus on strengthening their operational business models, adding that NOCs have to play a huge role in ensuring that business models were optimal.
“And when I mean optimal, it’s really speaking to cost optimisation and ensuring returns for shareholders across the value chain, and ensuring that you’re doing this in a sustainable manner.

“So when we speak to attracting investments -how do they go about funding these projects and how do they go about attracting investments, would it be in form of equity or in form of debt? Or in form of partnerships? I do think we have to have the right mix. Attracting capital is not going to be as easy as before as companies transition to cleaner fuels,” she said.
Olubi pointed out that the oil industry was going to rely a lot on the African focus development banks and companies that were still into investing in the traditional fossil fuel space.

She said another big thing to look at was collaboration, saying it was going to be important to work with other joint venture (JV) partners.

 “It’s something we have done for a long time and we have efficiently and mostly successfully capitalized on this particular platform of just working with other partners across the industry to make sure we harness that value that we have.  

“We have the capabilities, we do have the talents, and I do believe we have the creative and innovative solutions to unlock value. What’s really important is that we rely on each other and that collaboration and that partnership is what is going to propel us to the next stage in this industry and in this sector,” she stated.

However, in terms of attracting funding, the Oando senior economist said NNPC was going to play a large role because of its position as the largest oil company in the country.

According to Olubi, NNPC is going to, “set the tone as to how much investment we’re able to track; how we’re able to secure the financing or ensure returns because at the end of the day, if you are going after debt, investors are concerned with your business model in ensuring that they’re able to get the returns that you have promised.

“So the NNPC is going to lead these efforts and this initiative, and as partners and as other JVs and other players in the sector, we piggyback upon that. It’s important that they set the right track record and we’re able to rely on those efforts to raise as much financing as we can in a very tight and very limited sector.”