Ms Funmi Ogbue, an oil and gas expert, has advised African countries to encourage more participants to invest in the upstream sector amidst divestments by the International Oil Companies (IOCs).
According to a statement posted on the website of Zigma Limited on Monday said its President, Ogbue gave the advice during a panel session at the just-concluded Africa Oil Week 2022 in South Africa.
Ogbue, who is also the Co-Founder, Women in Energy Network, spoke on how to revive the upstream sector and make it an attractive destination for investment.
She addressed concerns about divestments, environmental sustainability and governance (ESG), and policymaking using political, financing and technological considerations.
Ogbue noted that 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.
“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),” she said.
She noted that if successfully implemented, the standards could become legislation to 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 is advisable.
“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.
Ogbue 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 faulted the perception by outsiders that oil and gas companies were weakly committed to decarbonisation.
Ogbue said: “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 one per cent of CAPEX on ESG compliant projects, then Africa doing five per cent will send the right signals and attract investment.”
