Key players in Africa’s Oil and Gas industry have called for a more robust hydrocarbon development model that is anchored on seeking alternative funding plan, to salvage the continent’s energy sector, amidst energy transition realities and funding constraints.
The stakeholders gathered on Monday, March 7, 2022, at the African Local Content Investment Forum (ALCIF) held at the Eko Hotels & Suites, Victoria Island, Lagos, with the theme: ‘Evolving A Pan-African Strategy Towards Sustainable Funding of Africa Oil and Gas Projects.
The ALCIF according to the organizers, is a follow-up discussion to the First African Local Content Roundtable held in June 2021 at the Towers of the Nigerian Content Development and Monitoring Board (NCDMB) in Yenagoa, Bayelsa State. The objective they said, is to kick-start the development of a framework for establishing a pool of funds for funding major Oil & Gas projects and further attract investors into the industry.
Key speakers at the Forum included the Honourable Minister of State for Petroleum Resources, Chief Timipre Sylva represented by the Permanent Secretary, Dr Nasi Sani Gwarzo. The HMSPR anchored his speech by providing quantitative analysis of the huge resource endowments in Africa which include an estimated 600 trillion standard cubic feet of gas and about 120 billion barrels of crude oil, which make Africa a hydrocarbon-rich province. He elaborated on the binding constraints Africa’s developmental aspirations, and the imperatives to unlock the enormous below and above ground potentials in Africa. He concluded by enjoining the promoters to come up with actionable recommendations on how to create funding pool to convert these resources to economic commodities
The Convener of the Forum and the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr Simbi Wabote in his welcome address, worried that Africa’s hydrocarbon resources are fast becoming “endangered species”, as some global financial institutions and multinational project promoters are pulling out of hydrocarbon development projects, due to commitment to reduce carbon emissions. He added that at country level, Nigeria represents a bright spot in the provision of funds that can be sourced for the execution of Oil & Gas projects, he reminded that such funds include a cumulative $500 Million intervention fund spread across “the Nigerian Content Intervention Fund in partnership with BOI, $100 Million capacity building and women in oil and gas fund in partnership with NEXIM bank and $50 Million Research Fund to support research and innovation”.
It was revealed that NCDMB also deployed the NCDF to establish modular refineries to enhance local refining, local manufacturing of LPG cylinders and gas processing, marketing and distribution facilities. He recommended the creation of special local content development fund for Africa with diverse products that address needs of oil and gas value chain penetration.
Secretary General of the African Petroleum Producers Organization (APPO) Dr. Omar Farouk in his opening remarks, hinged that Africa has come to the full realization that the parts of the world that it has depended on for years to develop its hydrocarbon resources are now moving away from fossil fuel development and there was the need to develop a new business model for development of hydrocarbon sector.
The SG announced the implementation of the Future of the Oil and Gas Industry in Africa in Light of the Energy Transition, which has at its core the creation of a funding framework for development of infrastructure, capacity, institutions and technology needed to sustain oil and gas operations. These initiatives are anchored on optimal utilization of hydrocarbon reserves, investment in renewable energy projects, and development of clean energy technology to achieve the net-zero aspirations of respective African member countries on our own terms.
The event which had over 200 participants and 3 technical sessions, was structured around eliciting discussions among stakeholders on the future of the oil and gas industry in the continent amidst energy transition realities and funding constraints
Presentations by leading financial institutions namely Afreximbank, Africa Energy Investment Corporation, Stanbic IBTC, NEXIM bank, all commended the idea of creating a special pan African fund for oil and gas and affirmed their commitment to support the aspiration.
With the momentum around global energy transition and commitments by countries and international oil companies (IOCs) to reduce carbon emissions, the need to look inwards has never been more urgent as we can no longer depend on global financial institutions to finance the field development projects. These were the views of panelist that discussed financial institutions as the catalyst for sustainable local content development
The model for execution of Africa Continental Free Trade Agreement (AfCFTA) featured as part of discuss on building the institutional capacity for regional cooperation to promote production, intra-continent trade local content development and energy security.
A commitment was made by NCDMB and Afreximbank to follow through key insights from the Forum and produce a workable local content and hydrocarbon development fund for Africa.