The Sub-Saharan Africa (SSA) region remains an excellent hub for future upstream growth with opportunities and a ready market for diversification into other allied areas such as refining, Liquefied Natural Gas (LNG) and power.
These among others were the views of Dr. ABC Orjiako, Chairman, Seplat Energy Plc at the annual Sub-Saharan Africa Oil/Gas Conference held in Houston Texas, where he urged Africans and foreign investors alike to harness the growth potential of African developing countries to boost development and global growth.
Orjiako, the keynote speaker for the Oil/Gas Conference themed, “The Future of Upstream, Advancing Digitization and Gas Development Options in Sub-Saharan Africa” said the challenges of Sub-Saharan Africa (SSA) present a significant opportunity for those seeking returns.
The chairman of Seplat is of firm belief that energy corporations must show responsibility in neutralising their respective emission footprints and sign up for climate change policies that will protect the environment, while SSA policymakers should embrace programmes that will strike the needed balance.
“The fastest-growing economies in the world lie in Africa/developing nations and considering Africa’s electricity/power deficit.”
As the world moves toward energy transition with Climate Change/ESG Advocacy/Policy Changes dominating the energy discussion, Gas will continue to play an increasingly important role. Gas will play a strategic role as a transition fuel, boosting economic growth and development by providing needed energy access.
“While we face headwinds of energy transition and the climate change narrative, we must see these as an opportunity to evolve and be resilient. Oil and Gas will remain part of the energy mix, and as such, we must be creative and environmentally responsible to survive and thrive”, Orjiako told the audience at the conference in Houston Texas.
The African Development Bank (AfDB) Group estimates that over 640 million Africans living in sub–Saharan Africa have no access to energy. This estimate means that the energy access rate for African countries is just under 40percent which is the lowest rate globally.
Africa has 13 percent of the world’s population, but 48 percent of the share of the global population without access to electricity.
On the positive side, Africa is rich in natural resources that can change the narrative on energy access in the continent. Sub-Saharan Africa has 63 billion barrels and 222 trillion cubic feet of proved oil and natural gas reserves, respectively. The energy potential in renewables is quite significant yet remains under-utilized mainly.
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Hydropower accounts for around a 5th of current capacity, but less than 10 percent of its potential is being utilized. Similarly, the technical potential of solar, biomass, wind and geothermal energy is significant.
“While we see a substantial push to cleaner energy and focus on climate change, fossil fuels will remain an essential part of the overall energy mix, especially for emerging markets and developing countries. Fossil fuels (especially cleaner natural Gas) remain a crucial game-changer for Africa regarding energy access”, Orjiako further noted.
“We can draw a direct correlation between energy access and GDP growth where countries with low energy access have low GDP growth rates. Only seven countries in Africa – Cameroon, Côte d’Ivoire, Gabon, Ghana, Namibia, Senegal, and South Africa have electricity access rates exceeding 50 percent. The rest of the region has an average grid access rate of just 20percent”, Seplat chairman noted.
Seplat Energy Plc is on course with its strategic vision to “provide cleaner Energy Solutions to drive sustainable growth”. Seplat is prioritizing Environmental, Social and corporate Governance (ESG) paradigms through its consistent midstream business development which is at the centre of Energy Transition Commitment.
Seplat is driven primarily by addressing climate change, knowing that commercial success will eventually follow.
As a highly responsible and accountable corporate citizen, Seplat is demonstrating a commitment to contributing towards the elimination or reduction of the incidence of gas flaring to the barest minimum in its areas of operation by making strategic investments and partnerships in gas infrastructure development.
“We remain aligned to explore beneficial Renewable options which hold enormous promise – Our Energy, The Seplat Way”, Orjiako told the teeming audience, adding that the theme of the conference is the most appropriate as the world grapples with the increasing risk of Climate change caused by CO2/GHG emissions.
“This new way of thinking has led us to our name change from Seplat Petroleum Development Company Plc to Seplat Energy Plc. Our unique business direction reflects our renewed focus on the entire energy value chain while incorporating cleaner and more sustainable forms of energy to power Nigeria / Africa’s present and future demand”, he added.
The Upstream business as a component source of the overall Energy mix will endure far into the future and in fact beyond 2050, Orjiako said, adding that “what will change are the parameters within which the operation go on.”
“The future will be driven by the disruption of demand growth, but supply adjustments will maintain the market balance and cushion the price but volatility will remain. Companies that will survive will do so from deploying innovative and cost competitiveness as well as champion ESG alignment with Climate Change protection framework.
“Advances in Digitization is the key to promoting clean energy solution and aggressive Carbon dioxide (CO2) CO2/ greenhouse gas (GHG) emissions reduction in the journey towards carbon zero/neutral environment”.
“We need to close the energy gap and translate our resource blessing to exponential socio-economic gains with this estimated growth rate”, Orjiako said.
There are 22 African countries with proven gas reserves – Egypt, Algeria, Nigeria, Libya, Equatorial Guinea, Mozambique, Tanzania, Angola, Congo Brazzaville, Cameroon, Ivory Coast, Gabon, Ghana, Sudan, Rwanda, Namibia, Morocco, Tunisia, Tanzania, Uganda, Mauritania, and South Africa.
Nigeria is the 9th largest holder of proved natural gas reserves in the world. The country currently holds over 200 trillion cubic feet of proved natural gas reserves, accounting for over 80 per cent of the total in Sub-Saharan Africa. Gas is the transition fuel to power Nigeria’s economy. The Nigerian Government’s recent “Decade of Gas” declaration underscores the move in this new direction.
Seplat firmly believes that Gas is a catalyst for Nigeria’s socio-economic growth. Seplat is a leading Nigerian independent, committed to providing energy solutions aligned to the global decarbonization agenda. The energy company has demonstrated its commitment to changing the narrative on energy access in Nigeria and Africa through her continued focus on her Gas business.
“Gas is the transition fuel that will jump-start the energy transition. We aim to replace diesel with Gas as the primary energy source for power generation and LPG to replace biomass in Nigeria,” Seplat chairman said.
Seplat priorities and potential exploits speak to its commitment to cleaner energy road map. Its midstream business supports the Nigerian Government Gas to Power Initiative as Seplat currently provide 30percent of gas to Power in Nigeria per the Oben and Sapele gas processing plants.
“We are well-positioned to increase this by the time ANOH project comes on stream in 2022. Through this initiative, Seplat is leading the drive in providing power in an accessible and affordable manner in Nigeria. This is a critical element in impacting development around the SMEs, entrepreneurship drive, job creation and youth empowerment and all other aspects of sustainable development goal 7,” he added.
Orjiako noted in addition that the midstream business will be the champion of mini- and off-grid which are fundamental to resolving the societal energy poverty. “The environment will be protected in this process through sustained diesel displacement in the off-grid power infrastructure (estimated at about 25MW).”
“Our gas to household (GHH), initiative will drive LPG penetration which will displace firewood and HHK from our homes and provide cleaner cooking energy (about 80percent of total demand in Africa). More importantly, this process will protect the society from the smoke hazards of firewood and HHK in addition to preserving the invaluable forest for environmental Stewardship we preach”.
Seplat chairman said: “We are well rooted in exploring all the potential opportunities in renewable energy as well as potential prospects of Blue Hydrogen from our Midstream Advancements. Overall our approach is to deepen our commitment to the global ESG narrative.
“We shall prioritise environmental stewardship by eliminating gas flares ahead of government targets, promote scope 1 and 2 project implementation and maximise social impacts through job creation, education empowerment and health care promotion.”
The onset of the Covid pandemic led to the most alarming drop in oil demand. The vaccines rollout and subsequent easing of the lockdowns have had a drag-on effect on energy demand recovery. Most interesting is the mixed grill of various forecasts and predictions on future Energy prices -the EIA forecasts Brent crude oil prices will average $72/bbl in the second half of 2021 and $67/bbl in 2022.
This forecast is driven by recent OPEC+ agreements (structured incremental output through 2022 to balance the market). There is also the issue of Climate Change/ESG Advocacy/Policy Changes (notably the EU Green Deal of July 2021) and Projects deferred by IOCs, Shale Revolution downturn, Renewable Revolution, controlled investments, and shortage of capital allocation to fossil fuels, among others.
The bottom-line is the continued market volatility rather than isolated oil/energy price changes. There have been strong implications for the future of fossil fuel businesses. As a result, players in this space have concluded that alignment to Climate Change Advocacy has become imperative for business.
Orjiako urged upstream players to prioritize exploiting existing reserves in the shortest possible time in the most efficient manner. “In doing so, they must emphasize operational and cost-efficiency. In addition, respective players push for exploitation of reserves must be done with a clear line of sight for climate change mitigation of CO2 and Greenhouse Gases (GHG).”
For Nigeria, hydrocarbon export will continue to be a mainstay of the Nigerian economy and fund Nigeria’s growth and energy transition.
Therefore, companies should play a critical role in being responsible stewards of Nigeria’s oil and gas assets, including any new divestments. Lower-emission hydrocarbons, mainly Gas, play a critical role during energy transition by replacing diesel generators and biomass.
Seplat Energy Plc listed on both London and Nigerian Exchanges is well-positioned to increase this and has made significant investments to grow its gas business.
As a result, the company is steadily increasing gas supplies to the domestic market, the dominant share of which supports power generation in the country. These strategic steps are critical in terms of global warming reduction and revenue generation considering Nigeria’s substantial gas reserves.
“Oil and gas companies should also demonstrate leadership in responding appropriately to reduce carbon footprint to pre-empt the adverse effects of the unwanted phenomenon of climate change”.
“We at Seplat are committed to operating in a responsible and accountable manner to protect our planet for the present and future generations by minimizing our environmental impact.
We adopt a responsible approach to using natural resources, minimizing the result of our operations and providing assurance of the quality of wastes discharged to the environment”, Orjiako said.
“We have significantly reduced GHG emissions, and the high level of investments we have so far made in the commercialization of Gas has facilitated our direct and indirect reduction of GHG emissions.
Therefore, we support the goals of the Paris Agreement and are in step with society’s objective to get the world to net-zero carbon emissions by 2050, if not before”, he told the participants at the conference.
“We deploy modern technology to avoid or minimize activities that might result in environmental pollution or degradation, such as oil spills, gas flaring or contamination of fresh water. In addition, Seplat ensures consistent and strict adherence to relevant local and international environmental standards and regulatory provisions.
“We prioritize preventive mitigation measures to ensure that we maintain the original state of the ecosystem, and where there are unavoidable distortions, we work to deploy remedial steps”, Orjiako stated.
Seplat continues to explore ways to contribute to the global effort to limit climate change and find workable, practical, and cost-efficient solutions to this issue.
Protecting the environment is a race we believe we must win to survive on this planet and calls for an all-inclusive partnership that will create low-carbon emission, high growth economic development and a climate-resilient Nigeria. As a top indigenous energy company in Nigeria, Seplat strives to take the lead by monitoring and reducing our GHG emissions to acceptable levels along the supply chain.
Additionally, Seplat creates and builds awareness among its workforce to influence lifestyle changes and produce advocates for a Low Carbon Economy. Hopefully, these advocates will go beyond the walls of the company and influence those in their circle.
