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;
"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;
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 lawyers’ 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.
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