By Obas Esiedesa, Abuja
With Nigeria and several African countries facing acute energy challenges, the African Refiners and Distributors Association (ARDA) has harped on the need for operators to secure alternative funding for oil and gas projects on the continent.
ARDA said issues around Environmental, Social, and Governance (ESG) impacts are affecting availability of finance for oil and gas projects, insisting that unless borrowers like Nigeria and other African oil producers quickly adapt, securing necessary funding for the sector may remain very difficult.
In the face of huge refining, storage and supply deficits, over $15.7 billion (+/- 50%) is reportedly needed to upgrade the existing refineries on the African continent alone to produce cleaner, AFRI-6 fuels (10 ppm sulphur content)) fuels, a clear focus on the ESG contributions of such projects is imperative.
Over $160 billion projects are currently under financial threat in Nigeria’s upstream oil sector even as the Organisation of Petroleum Exporting Countries (OPEC) said oil nations might find it difficult to raise the over $12.6 trillion needed for oil and gas investment before 2045.
Executive Secretary of ARDA, Anibor Kragha who spoke on the “Implications of ESG Standards on Global Oil & Gas Project Financing, at a virtual ARDA Work Group Workshop Series on HSE & Quality, said attracting funding into Nigeria and other African oil producing countries may become tougher without strong consideration for emissions reduction, social development and governance.
Kragha reiterated that financing of the oil and gas sector is in a state of transition, a development which is forcing closure of traditional sources of capital, especially from the World Bank and other national and international development finance institutions (DFIs).
Disclosing that green projects have increasingly attracted more funding than fossil fuel projects since the Paris Climate Agreement was signed in 2015, he urged professionals, especially in the HSE segment to assist the sector in complying with global ESG best practices, particularly in the area of environmental issues.
“Covid-19 and the war in Ukraine have more than ever highlighted the need for refining petroleum products in Africa. We can’t expand our capacity without finance. For us to get sustainable finance we must prioritize HSE,” Kragha noted.
Also speaking at the event, Executive Chairman of Energy & Natural Resource Security, Inc. (ENRS), Derek Campbell said Nigeria and other countries have more to worry about on the security of energy infrastructure.
While speaking on “Energy Security: The Protection of Critical Energy Infrastructure and Natural Resource Assets,” Campbell decried persistent vandalism of infrastructure in the Niger Delta.
By Obas Esiedesa, Abuja