It’s Time Africa Pooled Resources Together for Oil Industry Development ― APPO Sec-Gen
The appointment of Dr. Omar Farouk Ibrahim, a Nigerian as Secretary-General of the African Petroleum Producers’ Organization (APPO) in December last year was greeted with applause across the oil sector owing to his extensive experience in international energy relations and having represented Nigeria at the highest levels of both bilateral and multilateral energy engagements. Dr. Farouk in this interview with the Valuechain Special Edition speaks on ongoing reorganisation in APPO, challenges of the African energy sector and practical measures African Petroleum Producers should adopt to address emerging energy challenges in the continent
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How has it been so far for you as the scribe of APPO?
The experience so far has been one for the books. I assumed office in January with a lot of enthusiasm to implement the approved reforms of the Organization. But we needed to cross one major hurdle: take a final decision on the location of the Headquarters of the Organization. For thirty-one years since its founding, APPO had been headquartered in Brazzaville, Republic of Congo. However, when the Council of Ministers took a decision to reform the Organization and appointed Nigeria as chair of the seven-nation reform committee, the Council also directed that the headquarters of the Organization be temporarily relocated from Brazzaville to Abuja to enable Nigeria give the required leadership and direction. Among the recommendations of the reform committee was that the headquarters hosting right be open to all member countries interested to apply. A minimum criterion for eligibility was approved and four member countries indicated interest to host the headquarters. Republic of Congo also indicated interest in retaining the headquarters. After a lot of back and forth inspecting facilities and politicking, the three other countries agreed to withdraw from the race, provided the Republic of Congo met all the minimum requirements. A team of ministers from eight APPO member countries went on an inspection visit to Brazzaville in February. In March, during the OPEC meeting in Vienna, nine APPO ministers met and reviewed the outcome of the inspection visit, where they expressed satisfaction with what Congo had provided. But since a minimum of ten countries constitute a quorum for a ministerial meeting, the ministers could not turn their informal consultation into a formal session where a resolution could be taken. And by the time we returned to Abuja, COVID-19 had taken a turn for the worse, with many countries closing their airspace. Thus, the decision on the headquarters was put on hold until mid-June when the ministerial council met via zoom and passed a resolution that the headquarters be moved to Brazzaville. We are looking at relocating to Brazzaville as soon as we can get flights. The second challenge was more global, namely the impact of COVID-19 on the global economy and especially on the global oil market. These notwithstanding, we have made some good progress as our member countries have exhibited unparalleled commitment to the success of our Organization.
APPO has been in existence for over 30 years. Yet, unlike OPEC, not many people have heard about it until fairly recently. What explains this lethargy and what are you doing to make a difference?
The mandate of APPO is quite different from that of OPEC and so it is not fair to compare the international visibility of APPO with that of OPEC. OPEC is a truly global organization with membership and presence in four of the world’s five continents – Africa, Asia, the Americas and Europe. But APPO is a continental organization. But more importantly, one of the key mandates of OPEC is to stabilize the price of oil in the global market. APPO is not into oil price stabilization. We do that through OPEC, where we have a majority of the membership, seven of the thirteen members of OPEC belong to APPO.
What is important is that the member countries of APPO came to realize that APPO needed a surgical operation to be able to meet their expectations, and they did not hesitate to embark on the necessary reform that would change not just the structure, but more importantly the focus of the organization, to be able to address the emerging challenges of the times.
I am confident that we are building a much more focused and mission-oriented organization for our continent.
COVID-19 has brought a lot of disruptions as well as impact on global economy and activities. How badly has COVID-19 affected APPO?
APPO member countries’ economies are heavily dependent on oil and gas revenue. And given what happened to the oil market during COVID-19, where in some parts of the world, marketers were literally begging others to come take oil for free, you can imagine what our member countries went through, especially in those trying months of April and May. But COVID19 has also taught us some unforgettable lessons. It has brought to the fore, the weak link among us. It has shown us that the challenges of the African energy sector cannot be solved by individual African oil producing countries.
We need to come together to pool our resources to be able to address the challenges. COVID19 made us see how dependent our economies are to the outside world and how disjointed our own economies are. And going forward, even after COVID19, there are other challenges whose negative impact on our continent are going to be even more lasting, namely the socio-economic impact of the implementation of COP21, which our countries have committed to.
In recognition of this anticipated challenge, the council of ministers has directed that a major study on the Future of the Hydrocarbon Industry in Africa in the Light of COVID19 and COP21 be undertaken by the Secretariat. We hope that the outcome of the study will constitute the foundation of Africa’s long-term strategy.
Furthermore, we have co-sponsored a study with ECOWAS and African Refiners’ Association on the Standardization of fuel emissions in the West African sub-region. hydrocarbon emission and their implication for the oil industry in Africa. At the extra-continental level, we have gone into partnership with OPEC to create a platform for the exchange of thoughts and critical analyses as well as to conduct studies on issues of mutual interest. This is called the Africa-OPEC Energy Dialogue. APPO shall coordinate Africa’s position on energy discourses with OPEC, just like OPEC does with the OPEC-EU, OPEC-China, OPEC-Russia energy dialogues. In this respect, APPO is grateful for the support of OPEC and its Secretary General.
What do you consider are the urgent issues that need to be resolved in the continent’s petroleum sector?
There are quite a few issues that need to be addressed if we are to make any headway on the continent. First is the need for greater cooperation and collaboration in the industry. The hydrocarbon industry is both capital intensive and technology-driven. As individual countries APPO states cannot come up with all the financial resources required to make the necessary difference in the energy sector on the continent. But when we pool our resources together, we can achieve a lot. It is high time we established energy infrastructure that cuts across countries and regions. Nigeria’s effort with the West African Gas Pipeline should be replicated across the continent. So should the Kenya-Uganda crude oil pipeline project and many more.
We also need to realize that in the not-too-distant future, the technologically advanced countries on whom we rely for new technologies in the hydrocarbon industry will abandon the development of fossil fuel technology. They would want to go green. The implication is that we have to innovate or we will be left with our oil in the ground.
To address the liquidity challenge, APPO has established the African Energy Investment Corporation to help raise funds for energy projects in Africa.
Apart from having experience in the international energy landscape, we are aware of your extensive knowledge of the media having served as Head of PR & Information Department at the OPEC Secretariat and General Manager, Media Relations Department, NNPC. How would you describe media coverage of the petroleum sector then and now?
I think we should distinguish between the international media and the local (Nigerian) media. It is very important we do that because the environment in which the two operate are radically different. This is especially with the traditional media, newspapers, television, radio etc. I have often said that if Nigerian journalists were to find themselves practicing in Europe or the United States, they would do much better than the European and American journalists. In the first place they are much more critical in the reporting. They are much more analytical, and to a greater extent are developmental journalists. Most of them do not pretend to be neutral in issues that they report. Of course, this has its advantages and disadvantages.
What has changed in media coverage of the petroleum industry in the last 20 years?
I would say the media is a reflection of the society in which it operates. Look back 20 or 30 or more years and ask yourself, has the society got better? If your answer is in the positive, then the media coverage will also be better. Likewise, if it has degenerated, you cannot expect the media to be different.
But we should always remember that the traditional media today is not the dominant media that it used to be.
What do you think are the challenges facing the media in terms of accurate reportage of the petroleum sector?
I believe the biggest challenge is that today, you have a lot of new comers who are not willing to do due diligence on their reporting. We need to ask ourselves some fundamental questions before putting out a story: Is this report true? Did I ask the right questions from the right sources? Have I done my homework in preparing for interviews or stories? How knowledgeable am I on the issues I am reporting, commenting on, or analyzing?
On the part of the industry leaders, there needs to be a level of transparency that will allow for accurate representation of data.
How can the media overcome these challenges?
Media organizations, both formal and social, need to invest resources into training, getting out there and sourcing the right information and data. The role of journalists in any given industry is very important to the success or failure of that industry.
What do you observe as the major challenge(s) for African petroleum producing countries and what solution(s) can be adopted?
These countries are too dependent on extra-continental sources of financing and technology. They are too dependent on extra-continental sources for their markets. They are too dependent on extra-continental sources for financing their industry. They are too dependent on extra-continental sources for research and technology. It is high time they came together to pool resources together for the development of the industry in Africa. Happily, the new APPO is spearheading this new philosophy.
What is your comment on Valuechain Magazine?
Given its age in the industry, Valuechain can be credited for making a huge success in a very short time. I recall two to three years ago, when your editor-in-chief mentioned to me that he was planning this magazine, I told him that the industry needed a respectable publication and that if he could guarantee professionalism and high quality, he will be filling a big void. I am glad that you guys are living up to expectations.
