By Teddy Nwanunobi
The Organisation of the Petroleum Exporting Countries (OPEC) has expressed serious concern for its members, including Nigeria, as the cartel fears that the energy security risk that would result from too little investment would heavily impact on both producers and consumers.
In his keynote speech on Wednesday, at the 14th Nigerian Association for Energy Economics (NAEE) Annual International Conference in Abuja, the Secretary General of OPEC, Dr. Mohammad Barkindo, therefore, urged OPEC members to re-strategise to maintain their positions in the new global energy mix, including focusing on economic diversification.
Barkindo’s concern was hinged on the transition implications for Nigeria and other African countries, as the world adapts to the rapidly changing dynamics in the energy industry in an effort to mitigate the impacts of climate change.
He called on Nigeria and other oil-producing countries, especially African countries that rely on oil and gas production for revenues to create an investment friendly climate.
“The energy security risk that would result from too little investment would heavily impact both producers and consumers. Oil-producing developing countries, like Nigeria, would be particularly hard hit. History has shown that energy insecurity brings with it economic insecurity and geopolitical instability.
“All OPEC members, including Nigeria, will haveto re-strategise to maintain their positions in the new global energy mix, including focusing on economic diversification. Oil-producing countries, and in particular African countries that rely on oil and gas production for revenues, must create an investment friendly climate – to this end, the PIB (Petroleum Industry Bill) promises to be a huge success in reviving the fortunes of the oil and gas industries in Nigeria. Reduced foreign direct investment into Africa’s industry could be catastrophic for many countries and peoples,” Barkindo advised.
Valuechain recalls that OPEC had already noted that Africa is in a fragile position, adding that the inequalities that were already in place before the pandemic are now in danger of being amplified.
Barkindo further expressed worry that the Environmental, Social and Governance (ESG) criteria were “being written without considering the unique circumstances of developing countries”.
“We are also greatly concerned about increasing pressure on the oil industry coming from many sides, including decision-makers, along with investors. Even within the boardrooms of oil majors, the push is strong to strive for policies and initiatives that could have a drastic negative effect on oil-producing countries. Oil is the lifeblood of our country, thus the importance of this issue cannot be underestimated.
“The ESG criteria are being written without considering the unique circumstances of developing countries. This was seen recently in a Dutch courtroom; Royal Dutch Shell was ordered in a landmark case in May to reduce global carbon emissions by 45 per cent by the end of 2030 compared with 2019 levels – extraneous to the provisions of the UNFCCC and the Paris Agreement.
“Environment NGOs have secured support from investors to install international oil company board members with a stronger focus on climate. There has been a blanket rejection regarding new investment in the fossil fuel industry by investors, and climate-related risk disclosures are to be included as legal requirements,” he noted.
Valuechain reports that the ESG criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments.
On the energy transition, he expressed worry for Sub-Saharan Africans, whom he noted that 47 per cent of them have no electricity.
This was even as he added that 85 per cent of them lack access to clean fuels and cooking technologies.
“We must keep in mind the principal behind the Sustainable Development Goals, including SDG 7 on energy, to leave nobody behind. Oil is essential in forwarding economic advancement and alleviating poverty. We cannot forget that energy poverty continues to disproportionately impact millions across Africa.
“OPEC data show that an estimated 47 per cent of Sub-Saharan Africans have no electricity and 85 per cent lack access to clean fuels and technology for cooking,” he stated.
Earlier, he had revisited the energy transition.
“It is vital for us to remember that oil will remain the largest contributor to the energy mix to 2045, with more than 27 per cent, according to the latest OPEC World Oil Outlook. Renewables are developing most rapidly, but at the same time, the world’s economy is set to double, and all resources will be required to meet this growing need. Cumulative investment of $12.6 trillion in the upstream, midstream and downstream is crucial through to 2045 in order to meet this need. Investment in 2020 dropped by more than a whopping 30 per cent in the face of COVID-19, even worse than the dramatic declines seen in the severe 2015-2016 industry downturn,” he said.