Africa Should Target Investors To Revive Oil, Gas Industry – Ogbue

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Posted on October 9, 2022 Author: Anayo Ezugwu

The Managing Director of Zigma Limited, Funmi Ogbue, has advised stakeholders in the oil and gas industry to revive the upstream sector and make it an attractive destination for investment.

Speaking at the Africa Oil Week in South Africa, Ogbue addressed concerns about divestments, environmental sustainability and governance, and policymaking using political, financing and technological considerations.

According to Ogbue, who is also the president and co-founder of Women in Energy Network, industry advocacy groups like Oil Producers Trade Section, OPTS, in Nigeria were a useful tool to help push a clear and harmonised set of standards for implementing ESG goals in African countries and working in tandem with the energy ministries.

She said, “Building blocks for this are already present on the continent like Nigeria with its use of International Finance Corporation (IFC) Performance Standards and South Africa with Code for Responsible Investing in South Africa (CRISA).”

Ogbue noted that if successfully implemented, the standards could become legislation that will enable uniformity and stability on the continent, hence making Africa a more attractive investment destination.

“This presents an opportunity for the African energy industry to set the pace for the development and implementation of ESG standards in consonance with continental realities and growth aspirations.”

To stem the flow of divestments and create stronger ESG and climate policies, financing strategies such as focusing on encouraging new participants in the investment landscape were advisable, Ogbue noted.

“Symbiotic investors such as oil traders whose business model depends on a thriving upstream industry are considerable. In one such recent transaction, Sirius Petroleum, a United Kingdom (UK) independent, executed a senior loan facility with Trafigura in 2021 to fund E&P activities in Nigeria,” she said.

Increased participation of symbiotic investors could lead to a better competitive lending environment on the continent according to Ogbue. “Raise funds from investors who share similar ESG and commercial outlooks.”

She lamented that the perception by outsiders was that oil and gas companies were weakly committed to decarbonisation. Quoting a report by the International Energy Association (IEA), “Global investment in clean energy in 2020 by the oil and gas industry was 1{386c84d99906b098df35b5eeea2fc10f4908f7e59473bd50e4b20e40f56c6e15} of capital expenditure.

“The energy transition to zero-carbon is a journey that will take more time than anticipated as policy meets reality (as witnessed with the current global energy crisis). The oil and gas industry will remain relevant albeit in a diminishing capacity through this period. However only operators that follow rhetoric through with action will survive.

“The opportunity here is for Africa to stay slightly ahead of the curve to attract funding. If the rest of the world is doing 1{386c84d99906b098df35b5eeea2fc10f4908f7e59473bd50e4b20e40f56c6e15} of CAPEX on ESG compliant projects, then Africa doing 5{386c84d99906b098df35b5eeea2fc10f4908f7e59473bd50e4b20e40f56c6e15} will send the right signals and attract investment.”

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