Oil and Gas Industry Leaders Charge Africa to Strike Balance between Energy Transition, Energy Poverty
*Africa needs about $28 trillion to achieve net-zero target by 2050
*With current energy transition narrative, a third of oil reserves, half of the current gas reserves must remain in the ground.
*Africa needs to use its hydrocarbon resources to develop itself

By Jerome Onoja

Industry leaders in the oil and gas industry have called on African to strike a balance between their commitment to energy transition and addressing energy poverty on the continent.

Offshore Technology Conference (OTC)

They gave the charge on Tuesday, at the ongoing Offshore Technology Conference (OTC), which is taking place in Houston, Texas, United States.

Speaking on a panel session at  the Petroleum Technology Association of Nigeria (PETAN) organised session themed, “Energy Transition and the Future of Africa”, they noted that Africa accounts for about 7 percent of the global oil and gas reserves, and with a growing population expected to rise significantly by 2050, Africa should harness its resources for economic growth and development.

The Group Managing Director of Aiteo Eastern E&P Company, Engr. Victor Okoronkwo, said that the global push towards energy transition has put Africa in a dilemma, noting that the challenge it has is how can it produce affordable and reliable energy whereas meeting the goals of the net-zero target.

“Africa lacks access to energy. So, the question for Africa is what do you pursue? Do you ignore energy transition on fossil fuels which will enable you earn the income  and the revenue you need to take your teeming population out of poverty? Or do you focus on trying to follow the global target as set by Paris Accord? That’s the dilemma for Africa,” he said.

Okoronkwo explained that the reserve base of Africa is estimated at over $15 trillion and argued that “If  Africa follows the journey of net-zero as it’s currently being pursued, we’re going to have the whole of that (resources) staranded. And then, you’re also going to be stranded on how to move your teeming population out of poverty.”

Oil and Gas Industry Leaders Charge Africa to Strike Balance between Energy Transition, Energy Poverty
“Today, more than  50 percent of Sub-Saharan African governments’ revenue comes from hydrocarbon sales. And it’s projected conservatively that Africa needs about $28 trillion to achieve net-zero target by 2050. The question therefore is: does Africa and indeed can Africa mobilise this sort of funding and financing to be part of this game?”, he, asked rhetorically.

Citing a study on Paris Accord, he said that the study notes that, to achieve  1.5’ Celsius global warming target, “… a third of the current oil reserves, half of the current gas reserves, and nearly 97 percent of the current coal reserves must remain in the ground.”

Okoronkwo noted that applying this to Africa will mean that nearly $7 trillion worth of fossil fuels will be stranded on the continent and asked what will be the justification if these enormous resources get stranded and many of the growing population on the continent continue to lack access to electricity and clean cooking fuel.

He commended the Nigerian government for adopting natural gas as its transition fuel, and posited that other African countries should converge around Nigeria, and tow its path in adopting natural gas as their transition fuel towards meeting net-zero target.

Also speaking on the panel, an Ex-Officio of PETAN, and the Founder/Managing Director of Aftrac Limited, Ms. Patricia Simon-Hart, said that  there is a direct correlation between poverty and access to energy; and charged Africa to utilize its enormous hydrocarbon resources for economic growth and development.

She said, “For us in Africa, climate change is real. And at the same time, we also have to, as we see new frontiers open, use the resources from Africa to develop Africa, and reduce poverty through economic development. We need to use these resources to help create jobs and reduce poverty in Africa.”

Simon-Hart also emphasized the need for Africa to use its hydrocarbon resources to develop itself and become a global energy hub through formulation of the right policies, adding that the continent’s oil and gas should not be seen as a commodity, but more of a resource for industrialization.

On his part, the Chairman/Group Chief Executive Officer of Oilserv, Engr. Emeka Okwuosa, stated that most of the breakthroughs in the area of technology came on the back of availability of energy, adding that the question on energy transition should not be on whether the world needs energy, but on the quality of the energy needed.

According to him, Africa does not contribute more than 4 percent to the global carbon emissions, adding that there is a direct correlation between availability and use of energy, and Gross Domestic Product (GDP) levels

He said, “When  we talk about energy, let’s bear in mind critically that it’s been proven that there’s a direct correlation between availability and use of energy on one hand, and GDP level, which translates into quality of life.”

Lending his voice to the discussion, the Executive Director of Commercial and Strategy at TotalEnergies, Mr. George Oguachuba, while acknowledging that Africa at this stage cannot do without fossil fuel, noted that Africa should strike a balance between energy transition and addressing energy poverty, through the formulation of right policies.

With right policies from governments on the continent, he said this will encourage investors, innovators,  and scientists to begin to look into the global energy mix, and how it can be applicable within the African context.

Giving his perspectives on the discussion, the moderator of the panel session and Founder/Executive Chairman of AA Holdings, Mr Austin Avuru, said that by 2050, demand for oil will be some 40-50 million barrels per day, down from the current demand of over 100 million barrels per day. This, he said, means that energy transition is not a complete move away from oil.

According to him, there will be just 30 percent reduction in the consumption of gas in the net-zero case by 2050. Africa has about 600 trillion cubic feet of gas reserves. He, however, expressed unhappiness that despite having huge reserves, Africa cannot meet its own energy demand.

“In the most drastic case of net-zero, by 2050 crude oil demand will still be some 40-50 million barrels per day, down from a peak of 113 million barrels per day about now in the next few years. We’re saying by 2050, there’ll still be consumption of 50 million barrels a day, in the most drastic case. So, when we talk about transition, we’re not necessarily moving completely away from the crude oil,” Avuru said.

OTC, which kicked off on Monday, May 2 and ends on Thursday, May 5,  is a platform where energy professionals across the globe meet to exchange ideas and opinions to advance scientific and technical knowledge for offshore resources.

OTC gives attendees access to leading-edge technical information, the industry’s largest equipment exhibition, and valuable new professional contacts from around the world.

PETAN

PETAN, an association of indigenous Technical Oilfield Service Companies, has been responsible for leading and hosting the Nigerian delegation to the event annually.