Heineken Lokpobiri, minister of state for petroleum resources (oil), has said the continued decline in investments is a major challenge facing the country’s oil and gas sector.
Lokpobiri said on Wednesday at the Nigeria International Energy Summit in Abuja that efforts were ongoing by the government to ensure that the fiscal and regulatory framework for the sector was competitive enough to attract investment.
According to him, in comparison to the global decline of investments in the oil and gas industry between 2017 to 2022, investments in Nigeria declined by 69 percent when compared to the 28 percent global average decline.
He said: “The window for attracting new investments and exploring our vast reserves is fast narrowing. If the global energy transition accelerates, approximately 60 percent of Nigeria’s reserves could be uncompetitive to produce.
“For us as a government, we are ensuring that our fiscal and regulatory framework is competitive, but our challenge that we are confronted with is that investments are slowing down.”
According to the minister, the role of national oil companies (NOCs) is strategic in ensuring development of the oil and gas industry in any economy.
He said: “In view of the global campaign of abandoning fossil fuels, the NOCs have a role to play in fashioning a new global order for the oil and gas sector.
“As a government, we will always be there to give the needed support to achieve the objectives of setting up the NOC. For us as the government in Nigeria, we are not against transition, but we will transition at our own pace. As a country, we want a situation where people come along with us to harness oil and gas in a more environmentally friendly way and not abandon it. The people asking us to abandon it are not abandoning it themselves.
“But the difference is that they have the funds to finance their oil and gas sector, and we may not have that. So, NOC have a duty to see how they can collaborate among themselves, there is nothing stopping NOCs from collaborating with themselves, there is nothing stopping NNPC from collaborating with Saudi Arabia. NOCs are not just stakeholders but architects of the new global order in the industry.”
The minister stressed the need for African NOCs to decide on best ways to collaborate as well as better funding options to drive development in the sector.
In his address, Benedict Oramah, president and chairman of the board of directors African Export-Import Bank (Afreximbank), decried that despite its huge oil, gas, solar hydro resources, the bulk of the population still lacks access to reliable and affordable energy adding that the current energy deficit was hampering the economic development as well as undermining the social progress in the continent.
He said as efforts heighten towards addressing the issue of energy security, it was important for Africa to pay close attention to energy transition.
He said: “We believe that climate change is real and as Africans, we are already seeing this and seeing the consequences. And it’s important, however, for Africa to pursue a just transition approach which ensures that narrative around transition considers Africa perspective.
“So the universal access to clean and reliable affordable energy must be a priority for the content and the government must work on the legislative environment to attract investors into the sector. We also must strengthen regional cooperation in this area, enabling countries to share resources but demand in an effective manner.”
Represented by Haytham ElMaayergi, executive vice president of global trade bank at Afreximbank, Oramah said the support provided to the sector by the bank was in excess of $30 billion, with Nigeria being one of the largest beneficiaries accounting for almost 60 percent of the total funding of the sector.
He also said that the afreximbank has been able to make those modest contributions in the oil and gas sector because the bank is predominantly African in ownership and control adding that Afreximbank, and Africa Petroleum Producer Organisation were in the final stages of setting up the Africa energy bank.
He said the Africa energy bank being set up under a multilateral financial institution agreement will focus on providing funding for the energy sector on the continent, adding that it was structured to ensure African origin and control again.
He said: “African bank is committed to helping manage and operate Africa energy bank to ensure that it has the best possible chances of success.
“The strategic goal of the Africa Energy Bank is to play a leadership role in shaping the energy landscape in Africa, through strategic partnership with proven African and international financial institutions and investors and also to provide sustainable financing in this area of the oil and gas sector.
“The Africa energy bank will need considerable support to get off the ground. We will need support from member states to achieve the level of capitalisation that is adequate to support the energy sector. We must also think about energy self sufficiency. Despite producing oil and gas that we need in the continent. We still import an excessive amount of oil that is refining capacity in the economy to intervene in this area and help improve the situation.”
