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Effective Gas Utilization Will Guarantee Energy Security For Africa - Austin Avuru

Oil & Gas	1158 VIEWS
Oil & Gas
1158 VIEWS

Wednesday, September 09, 2020 / 2:23 PM/ Nifemi Taiyese for Proshare WebTV / Header Image Credit: WebTV

The effective utilization of gas can guarantee energy security across the African continent and reposition the continent to self-sufficiency in crude oil refining, said Mr. Austin Avuru, the Co-founder and former Managing Director of Seplat Petroleum Development Company Limited at a virtual webinar organized by Sefton Fross Limited.

The forum which discussed the theme "Continental Energy Shifts: Building Resilience Through Collaboration, Combinations and Consolidation" was an opportunity for stakeholders in the energy industry, to explore avenues for developing a vibrant sector.

According to Avuru, Africa's contribution to the global carbon footprint is currently about 3% and noted that as the Continent goes through an energy transition, it would solve its carbon footprint problem.

Avuru was of the view that the Continent needs to stop the use of diesel generators and replace them with power generated from gas. He noted that the continent would also have to address the deforestation problem in tackling the issue of energy security on the continent.

Speaking on the carbon problems in Africa, Avuru said Africa has massive deforestation for basic needs like firewood which is worsening the carbon problem. He highlighted three ways in which Gas can be utilized;

Gas for the production of fertilizer for Agriculture

Gas for Industrialization
Gas to fire textile industries

"With the outbreak of COVID-19 Pandemic, Africa is at a point to look at the interconnection of regional markets. Inside the regional markets, we need African independence to step up capacity and meet the energy needs of various countries" he said.

Avuru was of the view that in the next few years Nigeria would have a capacity of over 1m bpd produced between Dangote and BUA Petrochemical refineries.

He emphasized the need to look at the regional markets and drive collaboration among entrepreneurs to produce energy for the masses, as energy security is the next buzz word for Africa.

Addressing the issue of regulation, Avuru said in the case of the banking sector the regulation is strong and robust, but currently weak in the oil and gas sector which is affecting investments.

Giving her opening remarks Mrs. Olayemi Anyanechi, Founder and Managing Partner, Sefton Fross, said the webinar series was a platform for key players in the energy sector to share ideas and to best explore expanding commercial opportunities in Nigeria.

Anyanechi stated that it was imperative to note that companies must be more bullish to survive through pursuing growth and opportunities. The webinar presented opportunities for collaboration and sustainability in the oil and gas sector through the sharing of ideas for sustainability in the globe today.

The Founder of Sefton Fross said because of the capital intensity of oil and gas transactions, the sector faces the following challenges which make foreign investors very weary;

Challenge of Structure
Issues of Control
Concerns of Risks
Carriage Costs

Defining the joint operating agreement, she said it was a document that states how parties contribute their funds. The legal expert called for stakeholders in the industry to come together and set rules and guidelines as it would help in getting transactions done as opposed to individual companies performing them.

She also called for better judicial oversight as a lot rides on the integrity with which lawyersâ€™ function within the judicial systems.

Also speaking at the forum, Sola Carrena, Head of Corporate Finance at Stanbic IBTC Capital Limited, noted that dialogue with offshore investors is getting difficult, bringing to the fore the need to look inwards into the cycle of the industry.

To attract these investors, Carena called for increased focus on the element of efficiency, a better-operating structure, the need for companies to have a compelling value proposition that will deliver the right return to investors and get the capital required to grow.

Looking at the funding structure of banks, the executive noted that there has been a clamour from SMEs in the oil and gas sector with the CBN through its role nudging banks in supporting SMEs more as this entails them having proper business plans, before approaching the financial institutions.

Outside the banks, she shed light on alternative sources of funding available locally and internationally, through venture capitalist and private equity firms that have an understanding of the risks that come with funding SMEs.

"Despite the ongoing pandemic this period, many banks have been fairly resilient through the crisis from the half-year released results," she said.

The challenge for these financial institutions is not inadequate capital but getting comfortable with the risk and also adopting the right strategy for loan recovery.

Mr. Olusegun Olujobi CEO Vertex Energy Limited said that attracting capital to Nigeria at this point of the pandemic is extremely difficult, and even when the capital comes to Nigeria, security is a big issue because of bad reputation and in such an environment, investors are looking for companies with integrity, a good track record, a company with proper governance that is decent and well managed.

In terms of being able to run marginal fields properly, he believed it was in the hands of the operators. In his opinion, the basic principles of running strong businesses are a clear plan, strong governance and stewardship.