Featured, Oil & Gas
Austin Avuru, managing director of Seplat Petroleum Development Company, explains why Africa should focus on domestic energy security as crude oil price above $80 is detrimental to investments
By Anayo Ezugwu
AUSTIN Avuru, managing director, Seplat Petroleum Development Company Plc, has stressed the need for crude oil price to stabilise around $60 per barrel threshold. He also said that $80 oil price and above could be detrimental to investments in the sector.
He also called on African players in the oil and gas sector to focus on domestic energy security as the multinational companies are moving investment funds from oil and gas into the renewable energy sources. He argued that even though the multinational majors are shifting to the new frontiers of renewable energy, oil and gas will continue to remain relevant to Africa.
According to him, it will take another 20 years for these new frontiers being developed by the majors to be available for Africa’s consumption after they are fully developed.
He cited the case of electric car, which he said, will take additional 20 years to reach Africa after it is fully developed in 2035.
In his keynote address speech at the second edition of the West African International Petroleum Exhibition and Conference, WAIPEC, Avuru described what is generally regarded as low oil prices as the real balancing.
According to him, when crude oil approaches $80, $90 and $100, it encourages operators to embark on massive investments in unconventional sources of energy, which create glut in the oil market and crash the price. Avuru added that when the price of oil is too low as in February 2016 when it was $26 per barrel, a lot of projects are deferred. He added that the $69 oil being witnessed currently is as a result of projects that were deferred.
“I was telling somebody that I am praying that it doesn’t get to $80 per barrel because it will draw us out. We are safe at $60. But by real balancing what I am referring to is the fact that when the prices get to certain threshold, certain forms of unconventional become attractive and over a period of time, it crashes the price. Conversely, when the prices are too low as we saw $26 in February 2016, a lot of projects are deferred,” he said.
Avuru noted that as the multinational companies are moving resources away from oil and gas to the renewable energy, African players should recognise that these new frontiers, when fully developed by the multinationals, would take another 20 years to get to Africa.
To this end, the Seplat boss suggested that as the majors are moving resources into these new frontiers, Africa’s focus in the next five years should be domestic energy security.
According to him, domestic energy security will help Africa to sustain consumption of energy until the new frontiers get to the continent.
“So, as emphasis and investment funds are moving away into new frontiers of renewable energy, we as Africans need to recognise that a lot of those new frontiers, when they fully developed, will take another 20 years to return to Africa for our consumption. Therefore, was investments are going into these new frontiers, we here in Africa, will emphasise domestic energy security so that our own, internally, we can survive.”
Avuru stated that with the generation of power crucial to the nation’s economy, the share of it is set to rise by 20 percent in 2035. He said the global trend in energy supply may increase as consumers will turn their gaze to the consumption of renewables.
“The global trend in energy supply would seem to suggest an alarmist way by 2035. Perhaps, there would be no place for oil and gas in the world. However, within Africa, we are seeing, if the pace of GDP improvement continues, you would see the increased consumption of energy,” Avuru said.
– Feb. 17, 2018 @ 5:30 GMT |
Tags: Why Africa should focus on Domestic Energy Security
