By Ikenna Omeje, Jerome Onoja

Introduction

With worsening impacts of climate change posing significant threats to socio-economic development globally, organisations, governments, climatologists, politicians and energy professionals have continued to debate on which path to take towards a cleaner future. Also, reports have shown that Africa contributes just about 3.6% of the global CO2 emission, yet there is evidence that climate change impacts on Africa are more severe. It is also noteworthy that access to affordable clean energy remain one of the biggest challenges facing the continent. Hence, the push for Net Zero target by 2050 is continually being put in the front burner, examining the possibilities and effects it will have on Africa’s economies.

Only recently, the Chairman and Group Chief Executive Officer, Oilserv Group, Engr Emeka Okwuosa, has added his voice to this global discourse, demanding that the energy transition narrative needs to be fair, just and balanced.

Okwuosa, who stressed the need for energy security, called on African countries to strike a balance between their commitment to the energy transition and addressing energy poverty to achieve development on the continent.
He stated this at the recently concluded Offshore Technology Conference (OTC), which took place in Houston, Texas, United States between Monday, May 2 and  Thursday, May 5, 2022.

Speaking on a panel session at the Petroleum Technology Association of Nigeria (PETAN) organised session themed, “Energy Transition and the Future of Africa”, which was sponsored by Oilserv, he said that nine billion people will be the statistics of the global population by 2040 and they will be needing cleaner 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 the Organisation of Petroleum Exporting Countries (OPEC) in its World Oil Outlook 2040 report, global population is estimated to increase from 7.3 billion in 2015 to 9.2 billion in 2040. The additional 1.8 billion people will mainly come from developing countries in Africa and Asia.

Development

Although Africa has about 125 billion barrels (bbl) of oil reserves and about 600 trillion cubic feet (tcf) of proven gas reserves, these huge hydrocarbon resources have not been fully harnessed to drive the continent’s growth and development.
Over 600 million people on the African continent do not have access to modern energy and by 2035, energy demand in Africa is projected to increase by 40 per cent of its current value. This growth will be driven by industrialisation, an increase in population, and expansion in economic activities.
Okwuosa maintained that Africa could not keep running away from the fact that it needed to develop. According to him, Africa must strike a balance between development, which is driven by energy and transitioning to net-zero; adding that without development, the continent will continue to lag behind globally.
He stated that the development in the world today was driven by energy, particularly fossil fuel, noting that most of the breakthroughs in the area of technology came on the back of the availability of energy.

“When we talk about energy, let us bear in mind critically that it has been proven that there is a direct correlation between availability and use of energy on one hand, and gross domestic product (GDP) level, which translates into the quality of life,” Okwuosa said.
“There is no question at all that we are on the path of development in Africa. We need to develop. We are starting from a low point compared to the developed world when you talk about the energy transition. Now, when you quantify through any model you wish, and you look at where you want to be in terms of development at the time we are talking about goal-zero 2050. And you put the energy requirement together, and you bear in mind that this energy requirement as far as Africa is concerned is primarily around oil and gas as the source.

“There is no question at all that we are on the path of development in Africa. We need to develop. We are starting from a lower point compared to the developed world when you talk about the energy transition. Try to quantify through any model you wish, look at where you want to be developmentally at this time we are talking about — Net-Zero 2050 — and you compute the energy requirement together, as far as Africa is concerned, it is centred primarily around oil and gas.
“Of course, we have renewables and other sources that will be trickling in. And I called it trickling in because the quantum is quite small and will continue to be small relatively. Because as you are possibly increasing investment in trying to drive energy that is termed green, your need for energy overall is also increasing.”
The 2050  net-zero target is a global priority, but Okwuosa said that in the end, the important thing is sustainability, adding that the world needs energy. He explained that countries and people never develop except by increasing the amount of energy that is available and the amount of energy that can be used.

“So you cannot say let us stop greenhouse emissions, climate change effects, or the impact of human footprints on the Earth, by eliminating human beings or by stopping the use of fossil fuels. No, it is about how you replace fossil fuel utilisation in a sustainable manner without damaging our ability to sustain life. And when you talk of sustenance of life, there is a gap. That gap is between what you see in the developed world where the transition is easier to manage because they have, by and large, the financing to manage that transition. Put that side by side with the scenario in Africa where we are still trying to grow out of poverty. To do that, we need to develop our energy base and utilise it to build our economy. It is a balance that has to be made,” Okwuosa said in an interview with journalists on the margins of the conference.
Nigeria has about 209 trillion cubic feet of gas as of January 2022, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). Okwuosa said that the country needs to develop its gas resource to drive economic growth and development

“Try to quantify through any model you wish, look at where you want to be developmentally at this time we are talking about — Net-Zero 2050 — and you compute the energy requirement together, as far as Africa is concerned, it is centred primarily around oil and gas. 

He said, “Nigeria needs gas to develop. And when we talk of energy transition, we have to transit from oil-based energy supply, which is the crude oil itself and the constituents that come out of refining (whether it is HPFO for or LPFO, diesel, AGO, petrol, kerosene) to gas-based supply. Gas is cleaner, gas is more available in Nigeria. It is not just available, it will last a long time of use in Nigeria. So if we move to gas, it would be easier for us to transit into renewables. I am not saying we shouldn’t go into renewables, we should. But we should pay stronger attention to gas distribution because that is one thing that can change the face of Nigeria’s energy delivery system. My point is that our coming to OTC enables us to share these ideas with various parties and be able to learn a lot and interface, get access to technology and what have you.”

Infrastructure 

Aside from issues around climate change and energy transition, poor infrastructure or lack of it, is a major challenge hampering the development of the oil and gas industry in Africa, particularly pipeline infrastructure.
However, efforts are being made to address it. In February,  Nigeria, Niger, and Algeria signed an agreement to begin the development of the Trans-Saharan Gas Pipeline project, at the third edition of the Economic Communities of West African States (ECOWAS) Mining and Petroleum Forum (ECOMOF) in Niamey, Niger. There are also plans to resume the West African Gas Pipeline by some of the countries in the West African sub-region.
Okwuosa posited that to deepen domestic utilisation of gas on the continent, the right infrastructure needed to be built. He stressed that these facilities should meet qualities and standards of engineering principles, to prevent pollution, adding that in Nigeria for instance, there is a huge amount of pollution going on.
Speaking on the importance of the ongoing construction of the Ajaokuta-Kaduna–Kano (AKK) gas pipeline project, which his company, Oilserv, is handling, he said that the project will stimulate the development of gas infrastructure and industrialisation in Nigeria.

“The AKK gas project, when completed, will boost the agricultural and manufacturing sectors, carbon footprint as part of measures to reduce global warming and provide gas for power generation and gas-based industries,” Okwuosa noted.
“The project is important for Nigeria because the gas is what will help Nigeria to develop. Development cannot happen without energy and our largest form of energy in terms of availability is gas.”

He commended the Nigerian government for its efforts to deepen domestic gas utilisation but noted that infrastructure is key to gas development.
“Gas is not like oil. You can produce crude oil and put it in tanks, leave it there for as long as you want, and then move the tanks when you want. But when you think of gas production, from the day you are thinking about it, you should also be thinking of the infrastructure to move that gas.
“Because you can only store a small quantity of gas and that depends on how you can even store it – at what pressure and how do you contain it? It’s inconceivable that you want to store the gas that you are producing. For you to use gas, you either build pipeline systems which includes all the facilities that go with the pipeline. A pipeline here is not just a piece of pipe, you build the infrastructure, including stripping the gas, being able to move the gas into its various constituents like the Liquefied Natural Gas (LNG), Liquefied Petroleum Gas (LPG) and all sorts. Then you now move them to places where you use them,” Okwuosa said.

Discussion on the AKK pipeline has been on since 2009, he said. But until the current administration came into power, nothing was done to execute the project. He noted that within three months after President Muhammadu Buhari assumed office, the president directed that the project be executed.

Muhammadu Buhari

“Nigeria needs gas to develop. And when we talk of energy transition, we have to transit from oil-based energy supply, which is the crude oil itself and the constituents that come out of refining (whether it is HPFO for or LPFO, diesel, AGO, petrol, kerosene) to gas-based supply. Gas is cleaner, gas is more available in Nigeria. It is not just available, it will last a long time of use in Nigeria.

“Let me first say on a positive note that this current government in Nigeria has done quite a lot of things for which it has not been given credit. When President Muhammadu Buhari came into power, the AKK pipeline was already under discussion since 2009; it never moved anywhere. Within three months of coming into power, he brought the issue up and said it must be done. His government gives us the support to navigate that process, especially the funding.

“The government has been determined to ensure the Nigeria Gas Master Plan is fully executed because of its impact. That is why we are talking about the (pipeline) to Ajaokuta, which is the last interlink. So, I give them credit for that. There are quite a number of programmes the NNPC has initiated, like the seven gas programmes we have. The Train 7 NLNG is ongoing as we speak. A lot has happened. That is why I keep saying that gas is the mainstay of our transition. If we get gas right, it would be easier for us to transition into renewables. The Nigerian government has done a lot. But, as a developing country, you know we are struggling with so many things for now. It is about focusing on what matters the most,” the Oilserv boss said.

“Currently we are executing half of the Ajaokuta-Kaduna-Kano Pipeline which is 40 inches by 614 km. We are executing 303 km of the 40 inches plus another 15 km of 24 inches, to supply gas to a power plant that is envisaged to be built in Abuja. Make no mistake, this is actually part of the Nigerian Gas Master Plan. And what is the Nigeria Gas Master Plan? It is a master plan conceived by the NNPC to move gas within Nigeria and achieve domestic gas utilisation plans,” he explained.

The Oilserv boss said that on the  Western flank of AKK is the Escravos to Lagos Pipeline that is already in existence.  According to him,  the Obiafu-Obrikom-Oben (OB3) Gas Pipeline, which is the largest pipeline in terms of diameter, is 48 inches in diameter between Obiafu and Oben. He said that Oilserv has built and commissioned its own portion of the project, that is, an interlink between east and west, adding that much of the gas that exists in Nigeria today lies between South-South and South-East. But gas utilisation is all over Nigeria, noting that the only way to utilise this gas is to build pipeline systems that will help in gas distribution.

“So this interlink is important. We are building the AKK Pipeline but on the back of that is what actually will complete the East-South Pipeline which is Qua Iboe Terminal of ExxonMobil, through Obi Igbo Road, then through Umuahia, Enugu, all the way to Ajaokuta. That field is important. That is already being conceptualised as we speak. When we finish AKK, that angle will come in and that will make up the backbone of the Nigeria Gas Master Plan. The rest will just be distribution lines or trunk lines, say from Zaria to Sokoto, Kano, and Maiduguri. And like we are planning to execute now within the South-East – to move gas to Onitsha, Nnewi, Owerri and the likes. All that will be done. Plans are underway. Already, Lagos is fed. As I mentioned, we built the entire gas distribution system in Lagos. There is another concept to move gas from Shagamu to Ibadan, Ilorin and Jebba. All these form the gas distribution system,” he noted.

“Let me first say on a positive note that this current government in Nigeria has done quite a lot of things for which it has not been given credit. When President Muhammadu Buhari came into power, the AKK pipeline was already under discussion since 2009; it never moved anywhere. Within three months of coming into power, he brought the issue up and said it must be done.

Environmental impact

Reducing global carbon dioxide (CO2) emissions to net-zero by 2050 is consistent with efforts to limit the long-term increase in average global temperatures to 1.5˚C. With this target in view, access to credit facilities has been challenging. Without access to credit facilities, which mostly come from the West and are at the vanguard of net-zero, Africa may not be able to harness its huge hydrocarbon resources.
However, according to Okwuosa, Africa does not contribute more than four per cent to the global carbon emissions, adding that there is a direct correlation between availability and use of energy and GDP levels.

“It has been proven already that Africa does not contribute more than four per cent to the impact of fossil fuel usage in the world. So, we bear that in mind. But let us ask ourselves a question: If you look at the world together, part of the areas we have had a significant drop in fossil fuel use is transportation. Take basic vehicle usage.  In the past 10 years, we’ve gradually in the West been increasing the quantum of vehicles that we term electric vehicles,” he said. “Now, put a scenario — you have these electric vehicles, you can stay in the States here or Europe, buy an electric car, have access to plug and charge it for use. And take a scenario like in Africa where if you’ve to buy electric car, you probably will end up charging it with a generator.”

Okwuosa also noted that some of the things that need to be done to achieve the net-zero targets are beyond the control of Africa. There is a projection that Africa needs about $28 trillion to achieve the net-zero target by 2050.  He emphasised the need for the deployment of the right technology to reduce the impact of carbon emissions from the oil and gas exploration and production on the continent and to harness these resources for the development of Africa.
According to him, with the possibility of using carbon capture technologies, Africa can reduce emissions caused by fossil fuels, saying “if more of this is incorporated in our services, it will help a lot.”

Policies and finance

Only $70 billion in investments were made in Africa’s oil and gas industry between 2015 and 2019, according to KPMG.
Okwuosa stated that Africa needed to have its own funding model to harness its hydrocarbon resources, especially with the growing agitation by climate advocates in the West who are pushing for the discontinuation of funding for fossil fuel-related projects.

“Now, put a scenario — you have these electric vehicles, you can stay in the States here or Europe, buy an electric car, have access to plug and charge it for use. And take a scenario like in Africa where if you’ve to buy electric car, you probably will end up charging it with a generator.”

He enjoined African countries to formulate policies that will help drive the availability of energy on the continent. Specifically, he said that the Nigerian government does its best, but noted that there is a need for more to be done.

According to him, because of the seeming energy crisis in the world, there is renewed interest in Africa. Okwuosa said that it is now left for the continent to market itself to the world and let countries outside of the continent understand the need to have their own energy security tied to African own energy security.

The government has done a lot, but there is room for more. It needs to make it possible for there to be an enabling environment for investors who are interested in renewables. If we do not deliberately do that, nobody, and I repeat, nobody will invest. That is because you don’t invest to lose money; investment is business and it is not the government that should do that. In terms of investing, the government only encourages the private sector. Even the government that built power plants 20 to 30 years ago later realised that that was not the right way to go. They have sold them because the government is not the best suitable to run businesses. It can only encourage them. So, renewable needs to be encouraged. I may not be able to give you specifics because I don’t have one now,” Okwuosa said.

“The reason is that there are many factors out there that you have to consider. But what is important is that there is a huge gap between the energy we need and the energy we have today. It is massive and the way to bridge it is to quickly scale up energy availability using gas and slowly transition to renewables, over time. If we do not take deliberate action on it, then we will be caught in the middle where we have oil and gas but will not be able to produce it because there is no finance to do that. I can’t speak the mind of the international community, but when you talk about energy, it is usually about the national interest of any country. It is also about the interests of businesses: where do you put money and make money? Today, because of what is going on in the world, there is a renewed interest again in Africa’s gas. You can see that where national interest is threatened, countries move. It is left for us to market ourselves to the world and let them understand the need to have their own energy security tied to our own energy security, which is key. It is a win-win.

“If it is not a win-win, it is not going to work. But I believe we have a way of making it a win-win. Besides the energy security, you can see what is going on because of the poor economy that we have. Some of our folks are trying to cross the Mediterranean Sea. I can tell you the reason is primarily because of the poor economy of Africa. Most Africans would prefer to live in Africa but the economy is an issue that drives people away from their homes. They want to live a better life. If we take this message to the West and anchor it very well, they will see the nexus in helping us develop in order to keep also the West the way they want it.”

For Africa to attain energy security and in- continent value addition, experts say that it must address limitations such as paucity of funds to finance its oil and gas projects, technology limitations, high skill gaps limitations, inadequate infrastructure to sustain oil and gas operations, underdeveloped internal market for hydrocarbon deliveries, and over-dependent on the sale of crude oil for foreign exchange earning and budget financing. All these, he identified as serious threats to the continent’s oil sector.

“The government has done a lot, but there is room for more. It needs to make it possible for there to be an enabling environment for investors who are interested in renewables. If we do not deliberately do that, nobody, and I repeat, nobody will invest.