Oil & Gas
As global campaign for more environmental friendly Green Energy is gaining ground, African oil and gas producers should maintain their stand for scientific and all inclusive approach to the energy transition drive, bearing in mind the huge cost to their economies and development.
By Anthony Isibor.
THE search for better, cleaner and more environmentally friendly energy sources will ever remain an attractive project by stakeholders in the global oil and gas industry. The effect of this search is already being felt in the industry as many oil majors are turning their attention away from fossil fuel and investing more on the alternative Green Energy.
As the campaign for the transitioning from fossil-based energy production and consumption; including oil, natural gas and coal to more renewable energy sources like wind, solar, as well as lithium ion batteries continues, there are fears that African oil and gas producers will be mostly affected.
It will be recalled that the search for better, cleaner, more environmentally friendly source of energy supply is not new. From the use of biomass in the 15th century, coal in the 19th century, to oil a century later, and to gas, which was seen as a cleaner fuel in the late 20th century, and now in the 21st century, an increasing clamor for outright shift to the renewable energies, has not stopped the search as more and more countries have started calling for the use of green energy.
With each movement, African countries and Nigeria in particular have had to abandon its large reserves of coal, petroleum, and may also abandon their gas resources, which are mostly their major source of foreign exchange earnings to the detriment of their economic growth and development.
Some of the key drivers of the current push of energy transition were captured by Simbi Wabote, Executive-Secretary, NCDMB, while delivering his lecture at the Realnews 9th anniversary lecture in 2021, to include the reduction in the acquisition cost of renewable energy source such as solar and wind, as well as the cost of energy storage leading to massive roll-out of solar power electricity in homes and the increasing adoption of electric vehicles by companies and consumers, Environmental regulatory issues and the need to reduce energy related green-house emissions through various forms of decarbonization, and the depletion of hydrocarbon reserves in most of European hydrocarbon-rich countries. For example, the North Sea that used to be a prolific producer of oil decades ago, peaked in 1999 and is now largely a location for decommissioning of oil production assets among others.
Wabote had noted that European Countries are mainly at the fore-front of the push for energy transition as the level of their hydrocarbon resources have plummeted. according to him, some still retain some elements of hydrocarbon in their energy mix.
While Nigeria has declared year 2021 to 2031 as the Decade of Gas in the realization of the enormous prospects that gas holds as a cleaner, more efficient fuel in Nigeria, the 2050 Net Zero Report, of the International Energy Agency, IEA is calling for an immediate halt in fossil fuel supply projects.
Some of the major European banks have heeded this call and announced a halt to financing of hydrocarbon related projects as part of their support for decarbonization efforts, all in efforts to force countries to adhere to the net zero targets.
For instance, Wabote stated that in 2007, Germany announced its plan to phase out subsidies for its coal industry in the year 2016, the Dutch parliament voted for 55% cut in CO2 emissions by the year 2030, Norway agreed to ban the sale of new internal combustion engine vehicles by the year 2025 while Britain also agreed to ban all diesel and petrol cars and vans.
Already, some oil executives are reacting to this campaign, For instance, Vicki Hollub, Chief Executive, Occidental Petroleum Corp, has complained that some of these decisions are made without the input of every stakeholder in the oil and gas industry. Speaking at the four-day World Petroleum Congress in Houston, US in 2021, Hollub condemned the exclusion of oil officials from key parts of the UN Climate Conference in Glasgow, Scotland and that “Zero oil companies were included” in official dialogues at COP26.
“We didn’t get a seat at the table there, but we do need a seat at the table going forward,” Hollub said.
Wabote also noted that these pronouncements have direct and indirect implications on the global energy eco-system as nations, businesses, and individuals adjust to the shifting energy landscape.
“The pull back of investments on hydrocarbon development projects is indeed a challenge for oil producing countries such as Nigeria.
This is because in Nigeria, and in Africa at large, fossil fuels remain a very significant part of the energy mix required for industrializing the continent. In addition, the revenues obtained from the sale of the hydrocarbon resources remain key drivers of the economies of the African oil and gas producing countries.
It is also very pertinent to note that some developed countries calling for a cleaner energy never truly completely abandoned their energy resources, as some are still using their coal for energy resource. In September 2020, for example, the UK had to restart some of its coal-fired power plants when it could not cope with the prices of gas. It is also interesting to note that despite the unfavourabe perscepptions about coal, the International Energy Agency in its 2021 Global Energy Review projects that the global coal demand in 2021 was set to exceed 2019 levels and approach the 2014 peak.
China alone is projected to account for over 50% of global growth, coal demand in the United States and the European Union is also on the upswing.
The new resolve to search for green energy seems to be backed by the creport on climate change published in August 2021, which proved that human activities, especially as it concerns industrialization are unequivocally responsible for global warming and changing environmental conditions on earth. By extension, industrialized countries are mostly responsible for climate degradation and destruction.
Speaking at the World Petroleum Congress in Houston in December last year, Mohammad Sanusi Barkindo, OPEC Secretary General argued that attempts to cut investment in oil and gas to combat climate change are “misguided”, adding that producers have a critical role to play during the transition to cleaner fuels.
He noted that a lack of investment in fossil fuels could lead to energy shortages, market imbalances and higher prices. “If the necessary investments are not met, it could have knock on implications and leave long-term scars, particularly for security of supply – affecting not only producers, but consumers too.
“Climate change and energy poverty are two sides of the same coin. We need to ensure energy is affordable for all; we need to transition to a more inclusive, fair and equitable world in which every person has access to energy.
“Any talk of the oil and gas industries being consigned to the past and halting new investments in oil and gas is misguided; the oil and gas industries can be part of the solution to tackling climate change. We have to really think about what the energy transition means,” said Barkindo.
In addition, OPEC estimates the future energy needs of oil and gas in the energy mix at 52% by 2045, with renewables making up the remaining 48%.
For this reason, Nigeria must not again abandon its large reserves of energy resources in the quest to meet the global call for a net zero target, but continue to develop means to utilize all of its already abandoned God-given resources, and must learn to localize world decisions to suit its own peculiar needs.
First published – FEB. 19, 2022 @ 16:44 GMT |
A.I
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