CPI Energy Finance Forum: Fossil Fuels Remain Integral to the World’s Energy Landscape
The recently concluded 13th Annual Energy Finance Forum, hosted by the Center for Petroleum Information (CPI) in Lagos, marked a significant milestone—celebrating 25 years of CPI’s leadership in delivering critical insights into the energy sector. This year’s hybrid edition, themed “Financing a Fast-Changing Industry Amid Heightened Risks and Hostilities,” couldn’t have been more timely.
Navigating the Shifting Energy Landscape
The energy sector, especially in Africa and beyond, is standing at a crossroads. Traditional models of financing and investment are being disrupted by a combination of global geopolitical conflicts, volatile market conditions, domestic uncertainties, and an ever-evolving regulatory environment. The CPI Forum highlighted the undeniable fact: the road ahead is volatile, uncertain, complex, ambiguous—and increasingly hostile.
The forum sessions were designed to reflect these realities, addressing the cascading effects of global conflicts on energy markets. One key discussion explored how political shifts—such as the possible return of Trump 2.0—might impact the dynamics of energy financing worldwide.
Focused on Solutions, Not Just Risks
The CPI Energy Finance Forum wasn’t solely about dissecting challenges. It was also a platform for presenting forward-thinking solutions. One major highlight of the afternoon sessions was the exploration of transformative initiatives, such as the proposed African Energy Bank, and new strategies for financing Nigeria’s energy projects amid mounting hostilities. Experts delved into securing long-term investments while balancing risk management and sustainable growth—critical in a climate where uncertainty is the norm.
Expert Insights on Financing Challenges
In his opening remarks, Franklin Erebor, Non-Executive Director at United Bank for Africa Plc and Chairman of the Forum, emphasized how shifts in energy financing are fundamentally altering the cost of capital and reshaping investor expectations globally. According to Erebor, escalating global conflicts and trade tensions ripple through financial markets, affecting oil prices, lending conditions, and access to capital—posing direct challenges to Nigeria’s oil and gas industry.
He highlighted local hurdles specific to the African market, such as:
- Currency volatility
- Regulatory uncertainties
- Infrastructure deficits
- Declining reserve-to-production ratios
- Governance challenges
These factors, Erebor stressed, compound the complexity of financing in the sector and necessitate innovative strategies. Despite the world’s accelerated shift towards renewables, he reaffirmed that fossil fuels remain a vital component of the global energy mix, serving as the backbone for various industries—fueling turbines, vehicles, aircraft, and providing essential feedstocks for products ranging from plastics to pharmaceuticals.
Innovative Financing Instruments: The Way Forward
As traditional financing channels tighten, there’s a growing demand for greater transparency, resilience, and flexibility. Erebor outlined emerging innovative financing models shaping the sector, including:
- Green bonds and sustainability-linked loans
- Public market equity financing
- Private capital from equity investors, sovereign wealth funds, and venture capitalists
- Project finance, reserve-based lending, and convertible loans
- Hybrid financial models such as production-based financing and royalties
These instruments are essential for balancing the dual imperative of sustaining robust production while supporting the transition to a more sustainable future.
A Call for Collective Action
Erebor concluded with a rallying call to stakeholders: collaboration is key. The industry’s challenges are not abstract financial puzzles—they directly impact communities, national development, and Africa’s energy security. It’s time to craft dynamic, adaptable financing strategies that go beyond immediate challenges to secure long-term, sustainable growth. Whether it’s through advanced risk management, embracing new technologies, or rethinking capital allocation structures, the focus must remain on making Africa’s energy sector resilient and competitive.
Tough Questions, Clear Tasks
Critical questions linger:
- What stance will the new US government take regarding the energy transition to net-zero?
- Are the proposed energy transition timelines reasonable for an energy-deficient Africa?
- How do we bridge the gap between international finance intentions and Africa’s pressing need to address energy poverty?
With over 600 million sub-Saharan Africans lacking electricity access and 1.2 billion without clean cooking fuels, the forum underscored the urgent need for Africa to leverage its lowest-cost available energy resources while responsibly managing greenhouse gas emissions.
The takeaway is clear: Stakeholders must design financing solutions that not only withstand today’s geopolitical hostilities but also lead the charge in shaping a secured, sustainable energy future for Africa and the world.
