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Effective Gas Utilization Will Guarantee Energy Security For Africa - Austin Avuru

Sep 09, 2020   •   by   •   Source: Proshare   •   eye-icon 997 views

Wednesday, September 09, 2020 / 2:23 PM/ Nifemi Taiyese for Proshare WebTV / Header Image Credit: WebTV


Proshare Nigeria Pvt. Ltd.


The effective utilization of gas can guarantee energysecurity across the African continent and reposition the continent toself-sufficiency in crude oil refining, said Mr. Austin Avuru, the Co-founderand former Managing Director of Seplat Petroleum Development Company Limited ata virtual webinar organized by Sefton Fross Limited.


The forum which discussed the theme "ContinentalEnergy Shifts: Building Resilience Through Collaboration, Combinations andConsolidation" was an opportunity for stakeholders in the energy industry, toexplore avenues for developing a vibrant sector.


According to Avuru, Africa's contribution to theglobal carbon footprint is currently about 3% and noted that as the Continentgoes through an energy transition, it would solve its carbon footprint problem.


Avuru was of the view that the Continent needs to stopthe use of diesel generators and replace them with power generated from gas. Henoted that the continent would also have to address the deforestation problemin tackling the issue of energy security on the continent.


Speaking on the carbon problems in Africa, Avuru saidAfrica has massive deforestation for basic needs like firewood which isworsening the carbon problem. He highlighted three ways in which Gas can beutilized;

  • Gas for the production of fertilizer for Agriculture
  • Gas for Industrialization
  • Gas to fire textile industries


"With the outbreak of COVID-19 Pandemic, Africa isat a point to look at the interconnection of regional markets. Inside theregional markets, we need African independence to step up capacity and meet theenergy needs of various countries" he said.


Avuru was of the view that in the next few yearsNigeria would have a capacity of over 1m bpd produced between Dangote and BUAPetrochemical refineries.


He emphasized the need to look at the regional marketsand drive collaboration among entrepreneurs to produce energy for the masses,as energy security is the next buzz word for Africa.


Addressing the issue of regulation, Avuru said in thecase of the banking sector the regulation is strong and robust, but currentlyweak in the oil and gas sector which is affecting investments.

 

Giving her opening remarks Mrs. Olayemi Anyanechi,Founder and Managing Partner, Sefton Fross, said the webinar series was aplatform for key players in the energy sector to share ideas and to bestexplore expanding commercial opportunities in Nigeria.

 

Anyanechi stated that it was imperative to note thatcompanies must be more bullish to survive through pursuing growth andopportunities. The webinar presented opportunities for collaboration andsustainability in the oil and gas sector through the sharing of ideas forsustainability in the globe today.


The Founder of Sefton Fross said because of thecapital intensity of oil and gas transactions, the sector faces the followingchallenges which make foreign investors very weary;

  1. Challenge of Structure
  2. Issues of Control
  3. Concerns of Risks
  4. Carriage Costs


Defining the joint operating agreement, she said itwas a document that states how parties contribute their funds. The legal expertcalled for stakeholders in the industry to come together and set rules andguidelines as it would help in getting transactions done as opposed toindividual companies performing them.


She also called for better judicial oversight as a lotrides on the integrity with which lawyers’ function within the judicialsystems.


Also speaking at the forum, Sola Carrena, Head ofCorporate Finance at Stanbic IBTC Capital Limited, noted that dialogue withoffshore investors is getting difficult, bringing to the fore the need to lookinwards into the cycle of the industry.


To attract these investors, Carena called forincreased focus on the element of efficiency, a better-operating structure, theneed for companies to have a compelling value proposition that will deliver theright return to investors and get the capital required to grow.


Looking at the funding structure of banks, theexecutive noted that there has been a clamour from SMEs in the oil and gassector with the CBN through its role nudging banks in supporting SMEs more asthis entails them having proper business plans,  before approaching thefinancial institutions.


Outside the banks, she shed light on alternativesources of funding available locally and internationally, through venturecapitalist and private equity firms that have an understanding of the risksthat come with funding SMEs.


"Despite the ongoing pandemic this period, manybanks have been fairly resilient through the crisis from the half-year releasedresults," she said.


The challenge for these financial institutions is notinadequate capital but getting comfortable with the risk and also adopting theright strategy for loan recovery.


Mr. Olusegun Olujobi CEO Vertex Energy Limited saidthat attracting capital to Nigeria at this point of the pandemic is extremelydifficult, and even when the capital comes to Nigeria, security is a big issuebecause of bad reputation and in such an environment, investors are looking forcompanies with integrity, a good track record, a company with proper governancethat is decent and well managed.

 

In terms of being able to run marginal fieldsproperly, he believed it was in the hands of the operators. In his opinion, thebasic principles of running strong businesses are a clear plan, stronggovernance and stewardship. 


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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