An all-African panel at the Offshore Technology Conference in Houston talked about steps needed to attract major investments and united in a heated discussion aimed at what the speakers saw as double standards from the West as it pushes its climate agenda.
Africa is already facing more severe climate change than most other parts of the world, despite bearing the least responsibility for the problem, the International Energy Agency (IEA) said in its recent Africa Energy Outlook 2022 report.
The continent is home to nearly one‐fifth of the world’s population and to date accounts for less than 3% of the world’s energy‐related CO2 emissions with the lowest emissions per capita of any region, according to the Paris-based IEA.
‘Money is a coward’
Security is a key component of the investment equation, since many investors are scared, Niger Delta Exploration and Production Co. (NDEP) CTO Ebenezer Ageh said during the May 2 panel discussion. He added that creation of an enabling environment was needed.
Joe Mensah, Kosmos Energy’s senior vice president and head of the company’s Ghana business unit, said certainty is needed.
“When you make new rules and rules become retroactive, it’s a no-no. There's no extra dollar that's going to come into your environment. So as a continent, we have to be cognizant of that,” Mensah said. “Yes, there are resources down there, but 100% of zero is zero... so we need to keep the bar low enough to attract people.”
For Ghana Petroleum Commission CEO Egbert Faibille, it was about protecting money and an energy charter framework to give assurances to individual investors.
“Money is a coward and will never go and stay where it will not get protection. And this is where we in Africa should start from if we want to attract and retain investment,” Faibille said.
Regarding a framework, Faibille said: “Either we create our own energy charter framework, we as Africans, or we sign up with an energy charter. Because what is making investors go to Eastern Europe and not come to Africa? It’s because of the energy charter treaty, which gives them a certain level of certainty and assurance of protection of investments.”
Abdulsamad Abdulrahim, founder and chairman for the Association of Tanzania Oil & Gas Services Provider, said investors are looking for two things: a fair, fiscal and profitable regulatory regime and a win-win situation. For East Africa, Abdulrahim said the debate around the energy transition is different for Africa.
“We speak a common language: ‘leave us alone. We will transit at our own pace, but our resources must be utilized in a fair manner,’” Abdulrahim said. “We all recognize the global agenda for a green environment, don't get me wrong. But what we are saying here is, ‘we do not want to be imposed with strong restrictions and standards.’”
Abdulrahim stressed the importance of policies and used an analogy to get his point across about energy affordability. Attractive prospects need to really be affordable, and not just in theory.
“You are not going to sell me a gas that is not affordable. You can be a beautiful lady, but if you are not affordable…,” he said among applause from the panel attendees. “If you are beautiful and telling me every day I have to go to Chanel, I have to go to Gucci, sorry. I might have to say no,” Abdulrahim said.
Senegal versus California hot tubs
As the developed world, which has been using energy for well over a century, pushes the world to make an “urgent” energy transition, many African countries are still developing their resources and trying to boost energy security and reduce poverty. This has created friction between the West and Africa and even countries in Latin America.
For Ageh, the starting point for attracting and retaining foreign direct investment lies in a framework and energy security.
“They always say ‘he who pays the piper dictates the tune.’ To a large extent, we will still be forced [to follow investors demands] because all they need to do is withdraw the funds, support or technology because we've not developed to that point,” Ageh said. “The whole transition thing is a journey, [so] let's develop a framework and say as Africa for Africans, this is how we are going to approach it.”
“Statistics say that more than 44% of the population in Africa doesn't have access to even the basic energy. If we can cleanly develop the fossil fuels that we have, there are investors who are willing [to invest in Africa],” Ageh said. “If we can demonstrate to them that we have a cleaner way, we can be responsible in the way that we develop the fossil fuel they’ll invest.”
The biggest headwinds facing Africa relates to institutions and infrastructure, Mensah said.
“The Western world has a huge benefit over us because they have institutions that work. Our institutions are weaker and therefore, if we don’t sit with well-meaning people to develop an action plan, we'll be going in cycles,” Mensah said. “No one from outside should come and tell you how you have to clean your home.”
Mensah argued that Africa will be one of the last continents to be developed, and a lack of infrastructure continued to weigh heavily on the region. He said continued energy developments are needed to move forward with additional investments and build out the infrastructure.
“The energy they use in the hot tubs and swimming pools in California, it's more than the energy used in the whole of Senegal, so put that in perspective—and that is a fact,” Mensah said. “Germany is now the largest importer of coal from South Africa, [but] because we are in an [energy] crunch, it's okay to do that. If the [transition] is not just then it would be grossly unfair to Africa and Africans.”
Noise from the West continues
Africa continues to hear a lot of noise coming from the West about stopping projects, something that doesn’t sit well with Abdulrahim, arguably the most vocal of the four panelists.
“When it comes to Africa moving, there is always opposition. When it comes to Africa doing the best for their people, you hear opposition,” Abdulrahim said. “Why don't you hear the U.N. sitting in New York talking about Indian coal? You don't hear that. Why don't you hear the same thing about Russia? So, if we keep sitting here and talking about one set of rules for Africa and another set of rules for the West, hey, let's cut this crap.”
Abdulrahim alluded to a fear in the West about Africa moving in the right direction and “decolonizing itself,” as well as certain standards that he objected to.
“So there shouldn’t be a double standard. That's what I'm saying. The West should help Africa develop [its] resources as long as we are applying our social environmental impact [studies] and our protocols of governance are in place.”
“One has to understand… we cannot be told what to do. God has blessed us with the resources we must utilize to eradicate poverty, but also to build our country,” Abdulrahim said. “Africa must be given time to transit and should be left alone because we have our priorities, we want to develop our countries.”
On the point of the West pushing electric vehicles in Africa, Faibille seemed to ridicule the idea.
“If you come to my village, for example, and you are telling me that we should have charging points for electric vehicles, but there are no routes — first of all, where do I place the charging points?”
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