From Adewale Sanyaolu, Houston, Texas
As plans around energy transition gather momentum the world over, Nigeria, especially indigenous companies operating in the exploration and production, engineering procurement contract (EPC) space, cannot afford to be caught unawares, with the 2050 target date to achieve net-zero emission.
Come that date, focus will shift from the use of fossil fuel to other forms of energy sources, especially renewable, as global lenders, including the World Bank, have announced that there will no longer be funding for oil and gas projects.
However, there have been arguments and counter-arguments that oil and gas will continue to remain relevant as Africa has maintained that it would not be rushed into transiting to other forms of energy because its situation was a peculiar one and, as such, would want to transit at its own pace.
In this interview with Daily Sun on the sidelines of the recently concluded Offshore Technology Conference (OTC) in Houston, Texas, United States, chairman of Oilserv Group, the company handling the $2.8 billion Ajaokuta-Kaduna-Kano gas pipeline project, Mr. Emeka Okwuosa, stated that the firm’s investment in agriculture will help reduce Nigeria’s carbon footprint. Excerpts:
Agriculture as springboard for carbon footprint reduction
Oilserv has got six companies. Oilserv Group, apart from one of its companies, is a group that transacts business in oil and gas and energy sector. One of the companies is Ekcel Farms Limited, which is involved in agriculture. Agriculture is not just about farming, it is also about processing of the products. We have our primary feeds – cassava and tomato. We are trying to develop cassava at the moment. Part of the reasons for this is not to only provide for the teeming population of Nigeria but also provide products or feeds that can be used in pharmaceuticals, in the other food industries. What that means is that it helps us to balance our footprints in the energy industry because one of the aspects of our foray into agriculture is to be able to generate power that we use for agriculture by using biomass and biogas, taking the waste and then converting it to energy. That again helps us to address our carbon footprints as a country.
Having said that, if you look at the energy sector around the world, particularly oil and gas, you will see a lot of discussions going on.
There is actually an energy transition, it’s been ongoing. You listen and they tell you about net-zero goals, 2050 targets and all that. We put out all kinds of statistics. At the end of all this, the important question is: how do we leave this world in a sustainable manner? That is the bottom line. For us to live in this world, we need energy. And like I stated at the panel session, countries and peoples never developed except by increasing the amount of energy that is available and the amount of energy that can be used. There is a direct correlation between energy transition in any country and in any locality and the GDP of that country, by implication, the quality of life and the level of development of the economy. So, you cannot say, let us stop greenhouse emissions, climate change effects, the impact of human footprints on the Earth, by eliminating human beings or by stopping the use of fossil fuels. No. It’s about how you replace the 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 finance, the funding, to be able to manage that transition. Put that side by side with the scenario in Africa, where we are still trying to grow, still trying to get out of poverty. To do that, we need to develop our energy base, utilise our energy base in order to build our economy. So, it is a balance that has to be made. Nigeria, I will say, has done quite a lot in trying to develop its oil and gas industry. We’ve done positive things, we’ve made our mistakes. We have since realised that gas should be the mainstay of our energy delivery.
Energy transition strategy
We have a clear energy transition strategy. Apart from developing it, we sensitize people about it and review it regularly. Earlier, I mentioned that Oilserv has six companies in the group. The one, which is the flagship, is the pipeline engineering and construction company, Frazimex Engineering Ltd. But that is not all we do. We are into gas development right now. We are working to build gas networks, built locally, and then operate. That means that we are already trying to address the issue of energy availability within our group.
We are also working on our agricultural subsidiary. It’s ongoing. As we speak today, one of our companies is working closely with NNPC. There is a tender going on on how to correct the moribund distribution systems for products. We see them all over Nigeria. They are not functional. But we want to buy them over, rebuild them and make energy available, instead of having people transport petrol and diesel from Port Harcourt to Makurdi, for example. Does it make any sense?
There is a pipeline built many years ago but, really, it is not there anymore because it has been damaged and not maintained. We are also addressing that. We’ve also gone into renewables. We are not, at this point, developed in renewables. But we have a partnership with a German company to address the renewables, solar or whatever. We are more concerned about how we can utilise the principle of both green and blue hydrogen. We want to be able to generate power without having to damage the environment. So, we are already moving into that sector.
But going into the new phase of energy delivery takes a lot of time to plan, a lot of investments. And like I said, if you look at Nigeria, we also have some issues. Most of the countries in the world that have developed and are still developing have frameworks to encourage these developments, by way of tax rebate, addressing price issues to make sure that entry points, in terms of costs for these alternatives, will not be too high.
Unfortunately, we don’t see any articulated situation like that in Nigeria. What that means is that there is really no encouragement for any investor to come into that as a business because he cannot compete today in terms of pricing with fossil fuels. But we cannot give up: it’s about engaging the government, it’s about pushing because we have no choice. If we don’t, the train will keep moving and we’ll get to a point where our oil is there but we cannot produce.
It is our duty as a country to make sure we can refine the crude oil we use. We can do that. Nigeria’s utilisation is high enough to actually absorb about a third of our production.
That, again, will speak to energy security. When we have to go and import petrol, AGO and all that, it shows we don’t have security. It means that we can be shortchanged. So, we are looking into distribution systems in Nigeria, and these are the things we are doing strategically.
Bridging infrastructure deficit
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’s 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 government has done a lot, but there is room for more. It needs to make it possible that there is an enabling environment for investors who are interested in the renewables. If we do not deliberately do that, nobody, and I repeat, nobody, will invest. Because you don’t invest to lose money; investment is business and it is not government that should do that. In terms of investing, 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 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. The reason is that there are many factors out there 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 transitioning to renewables, over time. If we do not take a 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 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 African gas. I’m not going to go into that but you can see that it’s about national interest. 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, that 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. Beside 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 economy is an issue that drives people away from their home. 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.